In June, the Board of County Commissioners officially adopted the Fiscal Year 2025-2026 budget. This annual budget represents a collaborative effort involving the Board of Commissioners, County staff from every department, and community partners. The budget document serves as the most important annual planning tool for Cleveland County, allocating and aligning limited resources with the vision, priorities, and goals established by the Board of Commissioners. A key responsibility for the Board is to demonstrate sound stewardship of taxpayers' money while balancing the funding allocations to meet the expectations of our citizens.
The Fiscal Year 2025-2026 Budget included the additional requirement of balancing the budget in light of the results of the revaluation of real property and identifying a revenue-neutral tax rate. In broad terms, the formula for calculating a revenue-neutral tax rate includes two main variables: the value of your property multiplied by the tax rate. The property value is determined through an analysis of the real estate market, utilizing the schedule of values established by the North Carolina Department of Revenue. Among these variables, the Commissioners have oversight and direct input only over the tax rate.
According to North Carolina General Statute § 105-286, all one hundred counties in North Carolina must conduct a reappraisal of all real property at least once every eight years. Additionally, Cleveland County and other counties with populations greater than 75,000 must conduct a reappraisal if the county's sales assessment ratio falls below 85% or exceeds 115%. The sales assessment ratio compares actual market values with the county's assessed value. Cleveland County follows a four-year revaluation cycle, which prevented the sales assessment ratio of 74.98% (in 2024) from necessitating a revaluation on its own.
There are over forty unique and distinct taxing districts in Cleveland County. The Board of Commissioners has the authority to adjust and set tax rates for only three of these districts. Taxing districts, which the Commissioners do not control, include fifteen municipalities and Cleveland Water. The Commissioners oversee the County's tax rate, the school tax rate, and the Fire District tax rate. However, after setting the tax rates for the School and Fire Districts, the County only collects and transfers the revenues to these districts. The respective districts then utilize these revenues to provide services. For Fiscal Year 2025-2026, the County's tax rate is 40.5 cents, which is three cents below revenue neutral and 14.25 cents lower than the Fiscal Year 2024-2025 rate. The school tax rate is 14.0 cents, which is three cents above revenue neutral, while the Fire District tax rate is 7.0 cents, which is revenue neutral. Overall, the combined County and School District tax rates are revenue-neutral.
For context, approximately 81% of Cleveland County's budget is directly tied to program mandates or funding mandates dictated by the State of North Carolina.
The Fiscal Year 2025-2026 Budget reflects a decrease of approximately $4.5 million from the Fiscal Year 2024-2025 General Fund. Additionally, the tax revenues projected for Fiscal Year 2025-2026 are expected to be around $1.5 million lower than the current year's tax revenues.