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Harnett voters have fourth chance since 2007 to reject proposed tax hike

JLF experts question need for $1.2 million sales-tax proposal

Contact: Dr. Michael Sanera
919-828-3876
msanera@johnlocke.org

October 12, 2010

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RALEIGH -- Three strikes have not been enough to stop Harnett County commissioners from pursuing a voter-approved $1.2 million tax increase. In a new Regional Brief, John Locke Foundation researchers set out reasons why Harnett voters might want to call "strike four."

Voters will decide Nov. 2 whether county commissioners can raise the local sales tax rate by 0.25 cents. As they cast their ballots, JLF experts urge them to consider whether conditions have changed since two other proposed sales-tax hikes and a proposed land-transfer tax increase went down to defeat at the polls.

"Harnett County voters also must decide whether county commissioners used money wisely in recent construction projects, whether it's worthwhile to accept an additional sales-tax burden with the likelihood that property taxes will increase as well, and whether county commissioners actually will keep their promise to use the new tax revenue for schools," said Dr. Michael Sanera, JLF Director of Research and Local Government Studies.

Harnett's proposed $1.2 million sales-tax increase is equivalent to a 1.8-cent property tax increase. Sanera assessed county commissioners' proposal with the help of report co-authors Joseph Coletti, JLF Director of Health and Fiscal Policy Studies, and Dr. Terry Stoops, Director of Education Studies.

"County commissioners have not asked voters to trade higher property tax rates for higher sales tax rates," Sanera said. "Instead, county officials have said only that the higher sales tax would lessen the size of a property tax increase."

Voters also should question commissioners' claims that visitors would bear much of the burden of the higher taxes, Sanera said. "Even if nonresidents paid half of the new sales tax, residents would be stuck with the rest of the bill -- along with a likely property-tax increase."

A brochure from Harnett County government suggests the additional sales tax revenue would go toward construction of five new schools. "It's important to note that sales tax revenues clearly will not be enough on their own to cover debt payments for a proposed $158 million school construction plan," Sanera said.

In addition to the total price tag for new school construction, voters have good reasons to question the way Harnett County commissioners have paid for schools in recent years, Sanera said. "Harnett obtained more than $70 million in Certificates of Participation to construct new school buildings between 2007 and 2010," he said. "That's a more expensive approach than the standard General Obligation Bonds."

"If Harnett County needs new schools, county commissioners should place a school bond referendum on the ballot and present a sound district facilities plan," Sanera added. "By doing so, they would give voters the chance to examine the plan and assess the revenue streams proposed to service the debt."

Voters also need to consider outside funding sources that already help Harnett County address school needs, Sanera said. "Harnett schools have received nearly $9 million in state lottery funds since 2005 for school construction projects," he said. "If revenues remain level, lottery proceeds will continue to fund more than two dozen elementary school teaching jobs a year. Existing local sales taxes also generated $19 million during the same period."

"Plus the Federal Education Jobs Fund is slated to send more than $3.7 million to Harnett County to fund almost 70 teaching jobs in the current year," Sanera added. "Harnett also can expect more than $2.3 million from the new Race to the Top education grant."

Since the General Assembly decided in 2007 to give each North Carolina county the chance to seek voter approval for higher sales or land-transfer taxes, voters have rejected higher taxes 68 times in 85 tries.

"Citizens at all levels -- federal, state, and local -- are frustrated with excessive and wasteful government spending," Sanera said. "They believe they are not getting value for their tax dollars. County spending is no different. Harnett County voters have sent commissioners three clear messages in recent years about tax increases. They have a chance to send a fourth message Nov. 2."

Michael Sanera, Terry Stoops, and Joseph Coletti's Regional Brief, "Strike Four? Despite three strikes on tax hikes, Harnett County officials try again," is available at the JLF Web site. For more information, please contact Sanera at (919) 828-3876 or msanera@johnlocke.org. To arrange an interview, contact Mitch Kokai at (919) 306-8736 or mkokai@johnlocke.org.

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