January 28, 2007

RALEIGH – Charlotte still tops North Carolina’s list of cities with the highest local government costs, according to a new report from the Raleigh-based Center for Local Innovation. But the report also shows the average Charlotte resident paid less money for city and county services in 2005 than in 2004.

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

Local taxes and fees in Charlotte totaled about $2,113 per resident in 2005, down from $2,185 in 2004. Even with the decrease, North Carolina’s largest city ranks No. 1 for local government costs among major cities for the sixth year in a row. 2005 is the latest year for which all numbers are available.

Wilmington, Asheville, Durham, and Chapel Hill rounded out the top five in the rankings of combined city and county costs per person. The list compared the 29 municipalities with at least 25,000 residents. Jacksonville, Thomasville, Kannapolis, Goldsboro, and Burlington ranked lowest among the larger cities. Kannapolis ($1,219) ranked 27th. Among other area cities, Huntersville ranked ninth ($1,749), Matthews 13th ($1,661), Salisbury 15th ($1,629), Monroe 16th ($1,559), Concord 17th ($1,554), Statesville 18th ($1,520), and Gastonia 21st ($1,449).

Among 91 medium-sized municipalities, several Charlotte-area communities ranked above the state median in local government costs, including Cornelius ($2,000), Pineville ($1,975), Mooresville ($1,840), and Davidson ($1,829). Those with tax and fee burdens closer to the median were Mint Hill ($1,544), Albemarle ($1,403), Cherryville ($1,365), Mount Holly ($1,364), Belmont ($1,342), and Shelby ($1,199). Bessemer City ($1,191), Wadesboro ($1,173), Harrisburg ($1,160), Kings Mountain ($1,106), Stallings ($1,067), Indian Trail ($875), Weddington ($837), and Unionville ($778) had costs significantly below the median.

Mecklenburg County (5.52 percent) had the state’s 14th highest rate of taxes and fees as a share of income. Most of the rest of the area’s counties had rates closer to the state median. Anson (5.14 percent), Catawba (5.10 percent), Cabarrus (4.89 percent), Gaston (4.88 percent), Lincoln (4.86 percent), and Stanly (4.70 percent) all had rates higher than the median rate of 4.55 percent. Rowan (4.51 percent), Union (4.48 percent), and Iredell (4.44 percent) had lower rates.

By The Numbers 2007: What Government Costs in North Carolina Cities and Counties is the ninth such report published by CLI, a division of the John Locke Foundation. Policy analyst Michael Lowrey authored the study. He 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. For counties, he also constructed rankings on a share-of-income basis.

2005 looked like 2004 in terms of an increase in the local tax burden in North Carolina, the CLI report stated. “Local tax and fee collections per capita stood at $1,134 in the median county, compared to an inflation-adjusted $1,120 the previous year,” Lowrey said.

While county and municipal revenues outpaced inflation and property growth, income grew at an even faster rate, Lowrey said. That means the local tax and fee burden fell slightly for the average North Carolina taxpayer, from 4.66 percent to 4.55 percent of per-capita personal income. The rate stood at 4.32 percent in 2003.

Among the 10 most populous counties, New Hanover (6.42 percent), Durham (6.17 percent), Mecklenburg (5.52 percent), and Guilford (5.44 percent) ranked relatively high in average cost of local government. Buncombe (5.16 percent), Gaston (4.88 percent), Wake (4.77 percent), Forsyth (4.74 percent), Union (4.48 percent), and Cumberland (4.31 percent) ranked near the middle of the pack.

North Carolina collected more than $17.8 billion in state tax and fee revenues from July 1, 2004, to June 30, 2005. That’s 7 percent of the personal income of state residents. Local governments collected an additional $12.4 billion in property, sales, and other taxes and fees. That’s another 4.8 percent of personal income.

“Combined, they represent a state and local tax and fee burden of 11.8 percent,” Lowrey said. “Federal collections raise the total tax burden on North Carolinians to approximately 31.2 percent of personal income, on average.”

Property taxes alone consumed 2.26 percent of personal income in 2005, or about $563 per person. The range was $1,425 per person in Dare County to $271 per person in Swain County.

“The cost of local government is rising and seems to be doing so at a rate faster than either population or inflation,” said CLI Director Chad Adams. “The ultimate reality is that North Carolinians fund that growth from their personal incomes.”

Lowrey and Adams noted that a high cost-of-government ranking in By The Numbers 2007 does not necessarily mean 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. “The report does not attach the label of ‘good’ or ‘bad’ to a particular ranking. Taxpayers can use the rankings and the numbers to evaluate whether or not the services they receive from local government merit what they are paying for them.”

The Innovation Guide, “By The Numbers 2007: What Government Costs in North Carolina Cities and Counties,” is available at the JLF web site. For more information, please contact Chad Adams at (919) 828-3876 or [email protected]. To arrange an interview, contact Mitch Kokai at (919) 306-8736 or [email protected].