On May 13, the Council approved a 17-cent tax rate for the FY26 Budget. This is less than the Manager’s recommended rate of 18.5 cents. The Council voted to lower the tax rate to 17 cents per $100 of valuation, aiming to offset the impact of recent property revaluations. No Council Member made a motion to go to the Revenue-Neutral rate of 12.88 cents. The 17-cent rate is lower than that of most, if not all, surrounding communities.

Since Indian Trail lowered the tax rate, will my property taxes still go up?

Depending on the new value of your property, some properties increased or decreased more than others. On average, property values in Indian Trail increased by 52%. Some property values may have increased more than that, while others may have seen a lesser increase. Neighborhood desirability, proximity to amenities, quality of schools, recent development, local economic conditions, and overall market demand within a specific area can cause different neighborhoods to experience varying levels of property value appreciation. When comparing the new and old values against the tax rates, the median value home of $397,000 would pay approximately $15.52 more in Town taxes per month. Even at 17 cents, this rate is one of the lowest, if not the lowest, among cities offering a wide range of services. This is the first increase since 2021.

What do my Town taxes pay for?

The Town offers a full range of services either directly or through contracts. These services include solid waste management, street maintenance, stormwater management, street lighting, parks and recreation, planning and zoning, code enforcement, engineering, finance, and support services. The town also contracts with the Union County Sheriff’s Office for law enforcement services. This contract will increase from 35 positions to 38 positions with the FY26 budget.

Why didn’t the Town reduce the rates even more?  

The Town has not adjusted rates in four years despite increased costs. Most of the property tax revenue is used to pay for the solid waste contract and the contract with the Union County Sheriff’s Office. Both contracts have been increasing at a rate faster than the annual increase in the tax base and are therefore not viable in the long term. For FY26, the total of the Sheriff’s Office and solid waste contracts consumes 10.97 cents of the approved 17 cents. Five and a half cents of the 17 cents will be allocated to pay for bond debt and help fund capital projects. This leaves about 1 cent for general expenses. For several years, we have relied on sales taxes to cover the difference. The growth of sales tax is decreasing, which puts further pressure on the Town’s budget.

How many new Town employees and vehicles will be added?

No new full-time or part-time Town employee positions are requested. Two trucks, one for the Public Works Department and one for Parks and Recreation, are being replaced. The Parks and Recreation truck was scheduled to be replaced last year, but it was cut from the budget. The Sheriff’s Office is adding a sergeant and two deputies.  

Where does the additional ad-valorem revenue go? 

The additional revenues generated from the increase in valuation are allocated to the Debt Service/Capital Reserve Fund. After making the required debt payments, the remaining funds are allocated to support ongoing and future capital projects in the Town.

What does a revenue-neutral tax rate mean?

The revenue-neutral property tax rate is the rate estimated to produce revenue for the next fiscal year that is equal to the revenue that would have been produced for the same fiscal year by the current tax rate, assuming no reappraisal had occurred. This means residents would pay approximately the same amount in property taxes, even with an increased property value.

Why didn’t Indian Trail go to a revenue-neutral tax rate?

In developing the FY26 budget, the Town considered not only the upcoming fiscal year but also several years into the future, ensuring that Indian Trail can remain financially stable in the long term and protect its AAA bond rating.

The Town Council chose not to set a revenue-neutral tax rate for several reasons:

1. Budget Deficits: If the Town had set a revenue-neutral tax rate, halted all current projects, ceased funding its capital reserve program, and only paid its bond debt, we would have needed an additional $600,000 to balance the budget. If the Town wanted to continue funding its capital reserve program at a revenue-neutral rate, we would have had an estimated $3 million deficit and would likely have received a warning from the State and our auditor concerning the long-term impacts. Furthermore, we would likely lose our AAA bond rating. These deficits would likely increase in future years.
2. Reduced Sales Tax Income: In North Carolina, counties distribute sales revenue to towns based on population or the town’s tax rate. In Union County, the County has chosen to distribute sales based on the ad-valorem method. This means that while Indian Trail is the largest town in the county, we receive less sales tax than other communities, such as Waxhaw or Monroe. Property and sales tax are two of the Town’s largest revenue sources. We have received reports that the growth of sales tax across the state seems to be leveling off or slowing down. Because of this, we must be very conservative in estimating this type of revenue. In addition to the slowing of sales tax, we are also seeing a decrease in our fees, and we must plan accordingly.
3. Increasing Costs: Inflation impacts the Town’s budget just like it impacts household budgets. The costs of contractors, vendors, materials, utilities, and public safety, among other expenses, continue to rise annually. For example, in the proposed FY 26 budget, the Sheriff’s Office contract will increase by more than $800,000, with the addition of a sergeant and two deputies.
4. Future Costs: The Town will have to negotiate a new solid waste contract in 2027. With an increase in population and rising vendor costs, the new contract is likely to increase by more than $1 million.
5. Unfunded Projects: The Town has several partially funded or unfunded projects that residents have said they would like to see, including a community center, Indian Trail Road Complete Street Phase 2, and additional sidewalks. This list does not include additional roadway improvements that will be needed in the future.
6. Impacts of Issues Outside the Town’s Control: Changes at the federal level, particularly those related to transportation and other types of funding, may negatively affect the amount of grant dollars the Town receives. These changes, along with the impact from tariffs, fluctuations in interest rates, and the chances of a recession, create uncertainty. Additionally, the financial impacts of Hurricane Helene will be felt across the state, including reduced sales tax revenue and the costs of recovery efforts.

The Town of Indian Trail is committed to fiscal responsibility and transparency while creating a safe and clean community that improves our residents' quality of life.

If you would like to learn more about the FY26 budget or how it affects your property tax, please call us at 704-821-5401.