Kinston Recommended Budget Lowers Tax Rate, Holds Utility Rates Steady

Kinston Recommended Budget Lowers Tax Rate, Holds Utility Rates Steady

Kinston’s recommended budget for fiscal year 2026-27 proposes a lower property tax rate, no increases to major utility rates and the implementation of a new pay and classification plan for city employees.

Interim City Manager Ralph Clark submitted the recommended budget to Mayor Kareem Moore and members of the Kinston City Council on May 27. The proposed all-funds budget totals $126,463,800 for the fiscal year that begins July 1, 2026, and ends June 30, 2027.

The General Fund, which pays for many core city services including police, fire, parks and recreation, streets, planning, inspections, cemeteries, engineering, administration and finance, is recommended at $34,289,200.

The most visible change for residents is the proposed property tax rate. The budget recommends lowering the city’s ad valorem tax rate from 73 cents to 70 cents per $100 of assessed value.

According to the budget document, the city projects a tax base of approximately $2.022 billion for FY26-27, down from the FY25-26 budgeted tax base of about $2.040 billion. At the proposed 70-cent rate, the city estimates it will collect about $13.674 million in ad valorem revenue. The budget states the lower rate would result in an estimated $1.001 million decrease in property tax revenue.

For property owners, a three-cent reduction equals about $30 per year for every $100,000 in taxable value. A property assessed at $200,000 would see a reduction of about $60 compared with the same value taxed at the current rate.

The recommended budget does not include increases to water and sewer rates, electric rates, stormwater rates or solid waste collection fees. The manager’s budget message lists each of those categories as “No Change.” Miscellaneous fees in the fee schedule are described as having minor adjustments.

Clark wrote that the city had two major goals while preparing the proposal: reducing the ad valorem tax burden and implementing the recently approved employee pay and classification plan. Both are included in the recommendation.

“In today’s environment, the current cost of living or in our case, the cost to operate has increased dramatically,” Clark wrote in the budget message, noting the effect of petroleum costs and other operating pressures.

The budget also points to increased investment earnings as a major factor in the city’s financial position. Clark wrote that staff reviewed how reserve funds were being invested and changed strategy, resulting in about $4 million in increased earnings across all funds.

That projected investment growth appears throughout the budget. In the General Fund, investment earnings are recommended at $935,000, compared with $125,000 in the FY26 adopted budget and an estimated $283,000 for the current year ending June 30. Other funds also show higher recommended investment earnings, including the Water Fund, Electric Fund, Environmental Services Fund, Stormwater Fund and Public Services Fund.

The budget also uses fund balance for capital needs. In the General Fund, $1,369,800 in appropriated fund balance is recommended. The budget justification says the money would “fund current year capital requests.”

Clark’s budget message says fund balance has grown in recent years and appears likely to continue growing through the current year. He wrote that while reserves must be maintained for emergencies, such as hurricanes or other events, one accepted use of fund balance is the purchase of capital assets.

Several other funds also include appropriated fund balance. The Water Fund includes $472,200, Environmental Services includes $172,400, and Public Services includes $272,000.

The budget includes $3,885,800 in recommended capital outlay across operating funds. Departments originally requested $4,677,200, meaning the manager’s recommendation reduced capital requests by about $791,400.

Vehicle purchases make up the largest capital category. Departments requested $2,161,600 for motor vehicles, and the manager recommends $1,742,200. Other recommended capital categories include data processing equipment, other equipment, recreation equipment, building improvements, contract labor, distribution system improvements and other capital outlay.

Recommended capital items include police vehicles, police in-car cameras, radio upgrades, a drone kit, water system equipment, a bucket truck for electric operations, stormwater equipment and several facility-related improvements.

The Law Enforcement budget is recommended at $10,354,400. That includes $654,900 in capital outlay. Recommended police capital items include five Axon Fleet 3 in-car cameras, a mobile radio upgrade, a Matric 4T drone kit and multiple replacement vehicles. The police budget also includes $237,900 for service and maintenance contracts, including software and technology services.

Fire and Rescue is recommended at $5,968,400. The position funding summary shows Fire requested 55 funded positions, while the manager recommends 53. No fire capital outlay is recommended in the proposed budget.

Citywide, departments requested 349 funded positions. The manager recommends 345. Clark wrote that departments requested three additional full-time positions and one salary upgrade, but none were recommended. The budget also notes that one position was eliminated through reassignment of duties, which the manager estimated would save about $45,000.

The General Fund also includes support for outside and joint activities. Organizational Support is recommended at $653,400, including $215,200 for the public library, $92,200 for the Municipal Service District, $303,000 for the Tourism Development Authority and $43,000 for Downtown Kinston Revitalization.

The budget includes $126,600 for economic development incentive agreements. The budget identifies current agreements as Masterbrand, Butterfield Subdivision and Cardon Rehabilitation.

The recommended budget also includes a transfer from the Electric Fund to the General Fund. The General Fund revenue section lists $2,400,000 from the Electric Fund, up from $2,300,000 in the FY26 adopted budget. The budget justification says the amount is based on either 3% of gross fixed assets or 5% of revenues.

The Electric Fund itself is recommended at $48,987,800, making it the largest city fund. The General Fund is the second largest, followed by Water at $12,351,200, Wastewater at $8,056,000, Environmental Services at $5,198,400 and Public Services at $3,215,800.

The Kinston Community Center Fund is recommended at $1,720,500. The budget shows the fund is projected to end the current year with a $142,017 deficit, but the recommended FY26-27 budget is balanced. KCC goals listed in the budget include increasing membership revenue, developing a personal training program and expanding community partnerships.

Several parks and recreation capital requests were reduced or not recommended. In Recreation Programs, the department requested $125,000 in capital outlay, and the manager recommends $23,000. Recommended items include Holloway Park playground repair and Holloway floor covers. Items not recommended include Mock Gym windows, Emma Webb Playground workout equipment and a Mock Gym fitness machine.

In Recreation Parks, the department requested $475,200 in capital outlay, and the manager recommends $205,200. Recommended items include two trucks, a fairway mower and trailers. Items not recommended include a mulcher attachment, replacement of four light poles at Barnet Park, roofing at the Parks Office and parking lot resurfacing at Emma Webb and MCF.

The General Fund also includes a $65,000 transfer to the Capital Reserve Fund for Grainger Stadium, described in the budget as a $20,000 annual contribution plus field naming revenue. The Recreation Stadium budget is recommended at $614,600.

The City Council budget is recommended at $201,100, down from the FY26 adopted amount of $268,572. Within that budget, salaries for mayor and council are recommended at $75,000, up from $74,187, and board member allowances are recommended at $24,000, up from $23,427. The total salary and allowance lines increase from $97,614 to $99,000.

Several council travel and training lines are reduced. Mayor travel is recommended at $2,500, down from $15,000. Council travel is recommended at $12,500, down from $25,000. Mayor training is recommended at $5,000, down from $7,000, and council training is recommended at $14,000, down from $20,000.

The budget process now moves to the public hearing and council review. The proposed budget is scheduled for a public hearing at the regular Kinston City Council meeting on Tuesday, June 2, 2026, at 5:30 p.m.

A copy of the proposed budget is available for public inspection in the City Clerk’s Office, on the city website and at the Kinston-Lenoir County Public Library.