RALEIGH — Local taxes and fees in Charlotte totaled about $2,132 per resident in 2003, ranking North Carolina’s largest city No. 1 for local government costs among major cities for the fourth year in a row, according to a new report from the Raleigh-based Center for Local Innovation.
Wilmington, Durham, Asheville, Hickory, and Chapel Hill rounded out the top six in combined city and county costs per person out of 25 municipalities with at least 25,000 residents. Rocky Mount, Burlington, Kannapolis, Thomasville, Goldsboro, and Jacksonville ranked lowest among large cities — although the presence of major military bases in the latter two cities was a major factor in reducing their apparent tax burdens.
By the Numbers 2005: What Government Costs in North Carolina Cities and Counties is the seventh such report published by CLI, a division of the John Locke Foundation. Policy analyst Michael Lowrey authored the study, which used the most recent data available from the State Treasurer, the Census Bureau, and the Bureau of Economic Analysis to construct rankings of local government cost on a per-person basis — as well as, for counties, a share-of-income basis.
Local government costs rose in the vast majority of North Carolina counties from 2002 to 2003, the CLI report stated. In the median county, city and county taxes, fees, and charges consumed 4.34 percent of personal income in 2003, up from 3.91 percent two years before. The 2003 median were about 20 percent higher than the median measured for FY 1993-94.
Among the 10 most populous counties, New Hanover (6.47 percent), Durham (5.97 percent), Mecklenburg (5.69 percent), Buncombe (5.1 percent), and Guilford (5.07 percent) ranked relatively high in average cost of local government. Forsyth (4.71 percent), Gaston (4.58 percent), Wake (4.35 percent), and Cumberland (4.18 percent) were in the middle of the pack, while Davidson (3.22 percent) ranked low.
Expressed in terms of dollars per resident, local tax and fee collections in the median North Carolina county stood at about $1,047 in 2003, up from $993 in 2002 and $938 in 2001. Unlike in previous years, a majority of the 2003 increase came from higher tax and fee collections outside of the traditional property and sales tax sources. Property tax collections were also up. Despite the fact that localities had enacted a higher tax rate beginning halfway through the fiscal year, overall sales tax collections were flat when adjusted for population or income.
“Taxpayers are paying an increasing share of their income to city and county governments in North Carolina, for a variety of reasons,” said Chad Adams, director of CLI and the vice-chairman of the Lee County Board of Commissioners. “One of the causes has been the willingness of officials in Raleigh to balance the state budget by imposing additional costs on local government or taking away their traditional revenue streams.”
On average, the report concluded, North Carolinians paid nearly 29 percent of their household income in taxes and other government fees and charges in 2003 — 17.3 percent to the federal government and 11.2 percent to the state and local governments. This total burden was significantly lower than the 33 percent estimated for 2001, but the change was due entirely to lower federal tax collections after a series of tax cuts by Congress and the Bush administration. In North Carolina, property taxes alone consumed more than 2 percent of personal income in 2003, or about $515 per person.
On a regional basis, high-tax counties were somewhat more likely to be found in Eastern North Carolina and in major urban centers, while low-tax jurisdictions were more common in the western Piedmont and mountain regions. Sixteen of the 25 counties with the highest local government costs as a share of income were located in the Coastal Plain and Sandhills regions, while 16 of the 25 lowest-ranking counties were in the western Piedmont or mountains.
Lowrey and Adams were careful to note that a high cost-of-government ranking in By the Numbers 2005 does not necessarily mean that a city or county is poorly governed.
“Debate concerning what taxpayers are getting for their money,” Adams said, “is not only healthy but necessary in a free society.”