FAQs – Debt Service Tax Rate

For more information or additional questions, call 910-798-7300 or email taxadmin@nhcgov.com.

The debt service fund tax rate, or “debt fund” as it is abbreviated on the tax bill, is not a new tax or fee. It is a part of the overall property tax rate charged by the county. The county raised its property tax rate by 2 cents in fiscal year 2016 and by 4.9 cents in fiscal year 2017, for a total of 6.9 cents. Both of these tax rate increases were established in order to make payments on the county’s voter-approved debts.

When citizens vote to approve bonds, the county issues the bonds to raise the money to fund the projects. The county must make payments to the lender, just as an individual would on their mortgage or car loan. The payments that will be made to the lender are called the debt service.

The tax rate increase of 6.9 cents over the past two years is part of the overall New Hanover County tax rate of 62.3 cents per $100 value. However, this rate is being shown separately on the tax bill and tracked separately in a debt service fund to ensure that those funds are used only for their intended purpose, which is paying the debt service payments on voter-approved bonds.

The county has limited means in which it can borrow money. One of those methods is to ask citizens to vote on whether they want the county to borrow the money for the proposed purposes. It is made clear when the question is put to the voters that a corresponding increase in property taxes may be necessary to fund the bonds.

Once the question is put on the ballot for a vote, if a majority of citizens vote yes for the bond, the county has the authority to borrow those funds. This type of borrowing requires repayment using the county’s property tax revenue.

Typically, when the county issues voter approved bonds, it makes debt service payments on those bonds for 20 years. At the end of the county’s 2016 fiscal year on June 30, 2016, the county had over $337 million in outstanding voter approved bonds. This amount increases as new bonds are issued and decreases as debt service payments are made.

The voter-approved debt includes projects that created parks and recreational facilities in our county, such as the expansion and improvement of Northern Regional Park and Veterans Park through the 2006 voter-approved bonds. It also includes projects to construct facilities for Cape Fear Community College, including the Union Station building, the Humanities and Fine Arts Center and the Advanced and Emerging Technologies facilities from the 2008 voter-approved bonds. The latest debt approved by the voters was in 2014 for the county’s public school facilities, and includes the construction of the new Porters Neck Elementary and the replacement of Blair Elementary and College Park Elementary.

The debt service fund tax rate was developed based on the county’s currently known debt service payments. However, the intent is for the tax rate to decrease as the payments on the debt decrease.  The Board of Commissioners would need to enact any tax rate decrease.

Many variables go into calculating the rate, such as future interest rates and future taxable value in the county. These variables, along with others, may change the timing at which the dedicated tax rate can be changed. Any future approval by the voters of additional voter-approved debt would also change the rate needed in the debt service fund.

Yes, even if you voted no for the bonds and even if you don’t use the facilities, all of the county taxpayers must pay this rate. The majority of citizens voted yes to borrow the money and, with that vote, agreed to make payments on that borrowed money. The overall county tax rate of 62.3 cents must be paid by all property owners in the county, which is now comprised of the 6.9 cents dedicated for the debt service payments and 55.4 cents for the general fund. The overall county tax rate is separated on the tax bill and tracked in separate funds to demonstrate that the funds are being spent for their intended purpose.

The county provides a wide range of services for its taxpayers that the 55.4 cents pays for. As an example, the general fund tax rate is used to fund public safety, most notably law enforcement and the county jail through the Sheriff’s office. It provides human services such as the county’s health clinic and health services, programs for individuals and families through the Department of Social Services, and programs for the aging through the Senior Resource Center. It provides management and maintenance of our county parks, libraries and the Cape Fear Museum. Over 30 cents of the rate assists with operating and capital needs of the education system in New Hanover County through the New Hanover County Board of Education and Cape Fear Community College.

In addition to the county tax rate, which is separated into the General Fund rate of 55.4 cents and the debt fund rate of 6.9 cents, if you live in the City of Wilmington, or the towns of Wrightsville Beach, Carolina Beach or Kure Beach your bill will reflect the tax rate of the municipality where your property is located.  If you live in the unincorporated area of New Hanover County (outside the City or the three towns) the fire services district rate will be included on your bill.

Each district or municipality is a separate unit that is authorized to charge a tax for the services that it offers. The rates are different for each district or municipality because they provide different levels of service for its taxpayers. The county collects all the taxes for these districts and municipalities and sends the tax revenue to those units. For instance, if you live in the City of Wilmington, you will see a separate rate on your bill for the City of Wilmington, which the county will collect from you and then send to the City of Wilmington. For specific questions on the rates for the City of Wilmington, Town of Carolina Beach, Town of Wrightsville Beach or the Town of Kure Beach, please contact your municipality directly as New Hanover County does not set the tax rate for those units.

Residents living in the unincorporated areas of New Hanover County will see a fire district tax rate of 7 cents per $100 of assessed value. Only residents living in the unincorporated area pay this established rate.

Tax: 230 Government Center Drive, Suite 190 • Wilmington, NC 28403 • Phone 910-798-7300 • Fax 910-798-7310 • Email taxadmin@nhcgov.com