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Rocky Mount drops out of top five list of lowest tax burdens

JLF study ranks N.C. cities, counties in per-person government costs

Contact: Chad Adams
919-828-3876
cadams@johnlocke.org

February 17, 2009

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RALEIGH -- Local taxes and fees in Rocky Mount totaled about $1,530 per person in the 2007 budget year, ranking the city No. 26 out of North Carolina's 31 largest cities in local government costs, according to a new report from the Raleigh-based Center for Local Innovation. Wilson, at $1,580 per person, ranked No. 22.

Click here to view and here to listen to Chad Adams discussing the By The Numbers report.

Rocky Mount's tax burden grew a bit larger than Fayetteville's, meaning Rocky Mount fell out of the top five list of cities with the lowest per-person tax burdens. Jacksonville, Thomasville, Goldsboro, Kannapolis, and Fayetteville all had lower tax burdens among the larger cities. Goldsboro ($1,371) ranked No. 29.

Charlotte, Asheville, Chapel Hill, Cary, and Wilmington topped the rankings of combined city and county costs per person. The list compared the 29 municipalities with at least 25,000 residents.

Among North Carolina's 89 ranked medium-sized municipalities, Tarboro ($1,486) and Roanoke Rapids ($1,398) had local revenues per person calculated near the state median.

Four area counties ranked among the state's top 25 for heaviest tax burdens, when that burden was expressed as local taxes and fees as a share of income. They were Warren (5.71 percent), Edgecombe (5.50 percent), Wilson (5.50 percent), and Pitt (5.27 percent). Most other area counties had tax burdens closer to the state median of 4.71 percent: Halifax (5.19 percent), Johnston (4.88 percent), Nash (4.70 percent), Franklin (4.58 percent), Northampton (4.35 percent), and Wayne (4.18 percent). Greene County (3.68 percent) ranked among the 25 counties with the lowest local tax burdens.

By The Numbers: What Government Costs in North Carolina Cities and Counties FY 2007 is the 11th such report published by CLI, a division of the John Locke Foundation. Lowrey used the most recent data available from the State Treasurer, Census Bureau, and Bureau of Economic Analysis to construct rankings of local government cost on a per-person basis. For counties, he also constructed rankings on a share-of-income basis.

"The typical resident of the median county in North Carolina paid $1,275 in taxes and fees to county and municipal governments," said report author Michael Lowrey, a John Locke Foundation policy analyst. "That amounted to a 1.27 percent increase over the 2006 budget year and represents a nearly 5 percent increase from 2005."

That average resident in the median county forked over 4.71 percent of personal income to local government, but Lowrey says the average North Carolinian actually fares worse. "The average North Carolinian actually pays a higher percentage, since many of the state's larger counties have above-average local tax and fee burdens. When this is factored in, a state average would amount to 5.08 percent of personal income."

Lowrey made some small changes this year, such as treating stormwater fees for the first time as part of a municipality's total government collections. He also warned against comparing the relatively high per-capita tax numbers in resort communities to those in other N.C. cities. Communities with larger numbers of second homes and resorts -- combined with small year-round populations -- will see larger per-capita tax burden figures, he said.

Two counties also helped skew this year's numbers, Lowrey said. "Graham and Scotland counties have not yet filed their figures for the State Treasurer's Annual Financial Information Report, so they are omitted from the calculations," he said. "Rankings are based on the other 98 counties."

Among the 10 most populous counties, New Hanover (6.39 percent), Mecklenburg (6.18 percent), Durham (6.10 percent), Buncombe (5.56 percent), and Guilford (5.52 percent) ranked relatively high in average cost of local government. Union (5.13 percent), Wake (5.06 percent), Gaston (4.99 percent), Forsyth (4.83 percent), and Cumberland (4.21 percent) ranked near the middle of the pack.

North Carolina collected more than $19.1 billion in state tax and fee revenues from July 1, 2006, to June 30, 2007. That's 6.7 percent of state residents' personal income. Local governments collected an additional $14.5 billion in property, sales, and other taxes and fees. That's nearly 5.1 percent of personal income.

"Combined, they represent a state and local tax and fee burden of about 11.9 percent," Lowrey said. "Federal collections raise the total tax burden on North Carolinians to approximately 32.6 percent of personal income, on average."

Property taxes alone consumed 2.23 percent of personal income in the 2007 budget year, or about $613 per person. The range was $1,861 per person in Dare County to $329 per person in Swain County.

"Cities and counties continue to struggle with oppressive mandates from both state and federal government," said CLI Director Chad Adams. "This is not to say that some communities don't also create some of their own fiscal problems as well. What we do know is that the cost of local government is rising and seems to be doing so at a rate faster than either population or inflation."

Lowrey and Adams stress that a high cost-of-government ranking in the By The Numbers report does not equal a judgment that a city or county is poorly governed.

"By The Numbers is a tool that represents factual data only, without editorial comment or bias," Adams said. "If you want to compare your city or county to others, you should find municipalities or counties of similar size and demographics."

"This report helps taxpayers evaluate whether the services they receive from local government merit what they are paying for them," he added. "We hope that taxpayers will continue to ask about the proper role of local government and its relationship to the state. Vigilance is necessary to keep these discussions alive and to help to ensure that our local leaders remain accountable to the taxpayers."

The Innovation Guide, "By The Numbers: What Government Costs in North Carolina Cities and Counties FY 2007," is available at the JLF Web site. For more information, please contact Adams at (919) 828-3876 or cadams@johnlocke.org. To arrange an interview, contact Mitch Kokai at (919) 306-8736 or mkokai@johnlocke.org.

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