Whiteville was in a financial jam.
Rising costs left the city with a roughly $350,000 deficit heading into the new fiscal year that began July 1, according to City Manager Sean Martin. To fill the gap, the city council passed a budget last month that raised the property tax by 5 cents per $100 valuation.
About 2 cents of the tax hike will cover increased costs associated with the North Carolina State Health Plan, which provides health insurance to about 90 city employees, Martin said. Starting this summer, participating organizations must pay 2.4% more for health care benefits.
Whiteville will pay an additional $125,000 this year, bringing its total to about $925,000, Martin said. That follows an increase of $65,000 last year.
“There’s only so much money,” Martin said. “The costs of doing business have risen and continue to rise year over year, which leaves us in a difficult position.”
Whiteville is among 61 municipalities and 19 counties that participate in the state health plan. Many of them are rural and strapped for cash: Ten of the counties are among the most economically distressed in the state.
The General Assembly passed the state health plan increase in August 2025 but postponed its implementation until this month. The plan has a deficit of about $58 million.
Loretta Boniti, a spokesperson with the Office of State Treasurer, said in a written statement that “certain local governments” needed to increase their contribution rates to align with the 2025 statute. All members “are now on equal footing with their contribution rates” of 7.33% for health benefits, she wrote.
Kevin Leonard, executive director of the North Carolina Association of County Commissioners, said the cost hike is one of several “unfunded mandates” the state has passed on to local governments. Under a provision of the One Big Beautiful Bill Act that was signed into law by President Donald Trump a year ago, more administrative costs for the Supplemental Nutrition Assistance Program, commonly called food stamps, shifted to states. North Carolina is funneling the majority of those costs to counties.
The N.C. General Assembly in June passed a 12-month freeze on property tax increases for some counties, including Bladen in the Border Belt. Bladen County is also among the counties paying more for the state health plan.
“I think there’s a test going on right now,” Leonard said. “The test is to see how far they can push it in terms of deciding what county governments can pay for.”
Columbus County budgeted $500,000 to cover the state health plan’s rising costs in this year’s budget, said Heather Woody, the county’s finance director. She said the plan currently covers 487 of its employees and family members.
The higher price tag meant the county couldn’t afford to give employees raises, according to Woody. She said the cost increase was about equal to what the county needed to provide a 3% cost-of-living adjustment.
“We have no choice in this half a million dollars, and it hurts our employees,” Woody said. “We’re behind the eight ball because we’re not increasing salaries, but everything else around us is increasing.”
To avoid raising the property tax rate, Columbus County commissioners agreed to use more than $2.36 million in reserves to balance the budget, Woody said. The spending plan leaves “very limited flexibility” for any unexpected expenses, she said.
Columbus County has the ninth-highest property tax rate in the state at 80.5 cents per $100 valuation. An average homeowner with a property valued at $194,000 pays a little over $1,560 in property taxes a year.
But the county struggles to generate enough revenue to pay for services like libraries and police. Woody said the county took a hit on tax revenue when International Paper stopped production on its pulp machines and cut 200 jobs in Riegelwood in 2023.
“A lot of these rural counties are where you see areas that have some of the highest property tax rates in general, because they don’t have the sales and industry to help boost their other forms of revenue,” said Joy Hicks, director of advocacy and policy for the North Carolina Association of County Commissioners.
More than 19% of Columbus County residents live in poverty, more than 1.5 times the state average, according to the U.S. Census Bureau. In Whiteville, the figure is even higher at almost 21%.
Martin, the Whiteville manager, said the city evaluates its health insurance options every year to determine which is most cost-effective.
State law makes participation in the health plan “irrevocable.” The only way for a city or county to be released from the plan is to ask the General Assembly, according to Hicks.
More changes could come the state health plan on Friday, when its Board of Trustees will vote on a premium increase for 2027 and a new tiered, preferred provider structure.
“I think the state health plan, as an organization, is evaluating a lot of the benefits that they provide and continuing to adjust accordingly–most of the time in a detrimental way,” Martin said.