CHARLOTTE, N.C. -- A city of Charlotte property tax hike and one proposed by Mecklenburg County this week suggest the area s largest local governments can no longer rely on explosive growth and annexation for balanced budgets.

For a generation or more, the city of Charlotte was able to build hundreds of thousands of dollars of infrastructure, all without a property tax increase. For a 20-year stretch, from 1986 to 2006, there was not a city tax rate hike.

The City Council Monday voted to approve a 3.17-cent property tax increase. A day later, Mecklenburg County Commissioners tentatively approved a 2.35-cent property tax increase.

Under the hikes, the owner of a home with a taxable value of $200,000 would pay an additional $110.40 next year in city and county taxes. Water, sewer and stormwater rates are also increasing, and will cost the average homeowner about $25 a year.

And city officials have warned that another tax increase of .8 cents may be needed next year to balance the budget.

Most residents in neighboring counties continue to have lower property tax rates. Mecklenburg s towns also have lower tax rates.

We are in a different universe now, said Republican City Council member Warren Cooksey. Cities have identifiable growth cycles, and Charlotte is entering into a new one.

Cooksey was one of two council members to vote against the city budget and tax increase. He said he believes that voters should decide whether or not to raise taxes, just as they will vote in the future on whether to approve bonds for new capital projects.

He said he believes the tax increase could have been reduced if the city had cut some projects from its capital program, and by cutting funding for what the city calls its financial partners, like after-school programs.

But he said it would be impossible to build the hundreds of millions of dollars of roads, sidewalks, police stations and neighborhood improvements without a tax hike of some size.

In order to achieve the goals of the (Capital Improvement Program) some tax increase was necessary, he said, adding that Charlotte is a more complex and much larger city than when Republican Pat McCrory was first elected mayor in 1995.

Under the proposed tax increases, a Charlotte resident s combined city-county tax rate would be $1.284 cents for every $100 of assessed value.

In Union County, a property owner in Monroe would have a combined tax rate of $1.215. Weddington which is just across the county line and a home for many affluent residents has a combined rate that is significantly lower, at 71 cents.

Concord s city-county rate is $1.18 and Mooresville s rate is $1.07.

A Gastonia resident, however, faces a significantly higher property tax bill than someone in Charlotte. Their combined city-county rate for the upcoming fiscal year is $1.42.

Gaston has struggled as one of the most slow-growth counties in the region.

Unsustainable path

Charlotte Mayor Anthony Foxx and the Democratic City Council majority said that the city s $816 million capital investment program is critical to make less-affluent areas attractive for development. City leaders have said repeatedly that because Charlotte has run out of room to grow and annex, it must be able to grow organically.

The capital plan is designed to bring economic development to low-income areas that are west, north and east of uptown. Former City Manager Curt Walton, who designed the capital plan, warned that the city was on an unsustainable path by having one section of the city south Charlotte generating about half of the city s property tax revenue.

During his last year in office, Walton said the city was no longer growing fast enough to pay for large new capital projects and programs without higher taxes.

Mecklenburg County lowered its property tax rate in 2012 by 2.44 cents. But the county lost revenue due to people winning property revaluation appeals, and commissioners said a tax increase was needed to make up for the loss.

A big chunk of Mecklenburg s additional spending would go to education: more than $19 million to Charlotte-Mecklenburg Schools and $3.8 million to Central Piedmont Community College, including $750,000 more than what interim County Manager Bobbie Shields had recommended.

Some experts question the city s narrative that the future may require sizeable capital spending - and higher taxes - to keep attracting affluent residents.

John Chesser, a senior analyst with the UNC Charlotte s Urban Institute, said the city s proposed capital investments are important to attract young, well-educated people to the city.

But as the city ages, he said it s not all gloom and doom.

He pointed to recent data from the U.S. Census that showed Charlotte and other large cities nationwide growing faster than many suburban areas.

From 2010 to 2012, Mecklenburg grew by a little more than 5 percent. That is a faster growth rate than all of its neighbors, including Union County, which had been one of the nation s fastest-growing counties in the 2000s.

There are lots of young people in Charlotte, said John Hood of the conservative John Locke Foundation in Raleigh. Let s not get carried away with the idea that Charlotte is a geriatric city.

Hood said that cities have long said that they needed to annex new land to ensure people were paying their fair share.

They denied it was a way to get more money, he said. Now they say because we can t annex anymore, we have to raise taxes. That gives the game away.

He said Charlotte and other cities have an alternative to raising taxes: Spending less.

You have to make some tough choices, Hood said.

Competitive environment

Union County Chief Financial Officer Jeffrey Yates said the county tries to maintain the lowest cost of services possible to keep the tax rate low.

When companies are moving into different areas, any tax that you can keep as low as possible provides a competitive environment, Yates said.

Iredell County Manager Ron Smith said the low tax rate contributes to the quality of life in the county.

He said the low tax rate has helped with economic growth. We have been very attractive to businesses and residents, Smith said. We have a lot of people that come from up north who have been taxed to death.

Charlotte officials often compare themselves to other large N.C. cities, and argue their tax burden is favorable.

City Manager Ron Carlee said that urban life requires more services and higher taxes. He said that money pays for amenities such as museums and parks, but also professional fire departments.

He said that if a house catches fire and is destroyed in the countryside it s a tragedy for that family. If an apartment catches fire in a city, many people can be impacted.

If you live in a dense urban area, you have a huge community and societal risk that you can t afford to take, he said.

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