City of New Bern’s proposed budget includes tax hike, electric rate increase coming

New Bern Board of Aldermen budget workshop meeting at Pleasant Hill Community Center. (NBN Photo)
New Bern Board of Aldermen budget workshop meeting at Pleasant Hill Community Center. (NBN Photo)

The City of New Bern’s proposed FY 2024-25 budget includes raising the ad valorem tax rate, solid waste rates and other fees. Electric rate increase coming.

City Manager Foster Hughes presented the annual budget to the New Bern Board of Aldermen on May 14, 2024. See the budget here.

Hughes said the $155,421,881 operating budget increased 4.1% compared to the FY 2024 budget.

He said revenues from ad valorem taxes, sales tax and other revenues, “are not enough to cover where we need to be.”

Hughes noted the budget is impacted by increases in costs of materials and supplies, NC retirement rate, insurance premiums, salaries and benefits and debt service.

The Board of Aldermen received a more detailed presentation during two workshop meetings on May 21 and 22 at the Pleasant Hill Community Center in New Bern, NC.

City departments requested $55,500,130 and after cuts, the city manager recommended $50,274,425 for the general fund.

Hughes said the estimated ad valorem tax valuation for the city is $4.9 billion. The tax includes real property, personal property, certified valuation, registered motor vehicle.

He proposed raising the ad valorem tax rate from 38 cents to 41 cents per $100.

After 4 hours of discussion, the board gave the city manager direction to make more cuts.

On May 22, Foster Hughes and Kim Ostrom, director of Finance, presented changes to the budget.

He said they cut the dues and subscriptions, capital expenses, and travel and training. They were able to cut $648,025. He stated, “This brought our deficit down to $785,475.”

Referring to the tax rate, he said, “We went from 3 cents to 1.6 cents.”

He said they will have extra funds if they readjust loan payments until next year’s budget.

Other changes were made and are detailed in the amendment to the proposed budget for FY 2024-25 here.

The board reviewed the 5-year capital plan.

The majority of the board supported a 1 cent increase in the ad valorem tax.

As an example of the impact, an additional ad valorem cost for a property value of $100,000 at 1 cent would cost $10.

Last year, the city lowered the tax rate from 48.22 cents to 38 cents.

George Chiles, director of public works, recommended a 35 cent increase in the residential trash rate per container from $19 to $19.35.

He also noted “an additional one dollar tipping fee at the landfill.”

Charles Bauschard, the director of Public Utilities, expressed concern with the health of the electric utility and gave a detailed presentation of the issues.


He said, “Our substations have a limited capacity… our devices that attach to the wires, they have a limited capacity…Our customers demand more and more power. The wires get stretched out further and further to serve something. Now, the wires are under sized, it doesn’t carry enough power to serve that customer brownout. And that goes all the way back to the substation and we don’t have enough power at the substation, not only does one customer brownout, but we have across the system, it starts to cascade.”

He continued, “It’s hardly the way to operate on a daily basis. Customers can’t grapple with that. They will only tolerate it so long.”

He said he hired Utility Financial Solutions, LLC, to conduct an electric utility financial study to look at the financial health of the utility and develop a three-to-five-year rate plan.

Dawn and Chris Lund from UFS presented their findings to the board.

Dawn Lund said the utility is operating at a loss and recommended the city consider a 5% rate increase for the next three years and power cost adjustment. The PCA is being evaluated and information will be presented to the board at a future meeting.

The majority of the board supported a 5% increase in electric rates over 3 years and a power cost adjustment. Alderman Rick Prill, Bobby Aster, Barbara Best, Johnnie Ray Kinsey, Hazel Royal voting yes. Alderman Bob Brinson said he, “abstained.” Mayor Jeffrey Odham said he “wanted more time to digest.”

After the informal vote, the city manager said, “This will not be adopted in line with this budget approval. It’s going to take time for staff to work with the attorney.”

The public hearing will be announced. It could be at some point late June, possibly first of July, then that process will follow.”

Huges said, “To balance this current budget for the electric utility, there will be fund balance of cash on hand allocated.”

A public hearing on the proposed budget will be held during the Board of Aldermen meeting on May 28 at 6 p.m. at City Hall located at 300 Pollock Street. See the full agenda and packet here.

Video recordings of city meetings are available on City 3 TV here.

Correction: We initially reported the electric rate increase was proposed for this budget. The article was corrected on June 1 to note the proposed electric rate increase will be formally presented to the board after a public hearing in June or July.

By Wendy Card, editor. Send an email with questions or comments.