Policy Report

Durham’s Tale of Two Tax Increases: County seeks $26.5 million’s worth of sales-tax hikes for schools and transit

posted on in City & County Government, Spending & Taxes, Transportation
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Key facts:

Durham County commissioners are asking voters to approve two sales-tax increases on November 8. The requested increases would amount to $26.5 million per year.

Commissioners promise voters that revenue from the proposed quarter-cent sales-tax increase would be used for schools, but there is no legal basis for that promise, so the approximately $9.2 million per year could be used for any legal purpose.

Commissioners are also asking voters to approve a half-cent sales-tax increase for public transit. Under state law, the tax proceeds may be spent only for the benefit of Durham County. Both the “Durham County Bus and Rail Investment Plan” and Durham County referendum materials indicate that the plan is specifically designed to “enhance regional transit.” Spending from this tax increase would benefit Orange County and Wake County also, not just Durham County.

The estimated $17.3 million in new revenue from the half-cent sales-tax increase would more than double the county’s current spending on transit.

Currently, taxpayers pay about $4.50 for each round trip on Durham’s buses.

If Charlotte’s light-rail system is any measure, and the proposed Triangle rail system becomes reality, the taxpayer subsidy could be about $40.30 for each round trip.

The proposed Triangle rail system would not solve the Triangle’s traffic congestion and pollution problems because hardly anyone would ride its trains. Of 22 major U.S. cities with rail transit, only one carries more than 3 percent of all the motorized passenger travel, and 16 of those 22 carry less than 1 percent.

Durham’s spending and revenues have grown faster than population and inflation over the last five years.

Between 2004 and 2010, Durham County has spent more per-pupil dollars on K-12 public education than nearly any other school district in the state.

Between 2004 and 2010, Durham Public Schools spent an average of $1,072 more per student than the state average expenditure.

Despite spending more than the state average, Durham Public Schools have a below-average return on educational investment. Durham’s taxpayers are not getting their tax money’s worth out of the school system.

Regional Brief 81 Durham’s Tale of Two Tax Increases: County seeks $26.5 million’s worth of sales-tax hikes…

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