January 31, 2006

RALEIGH – Local taxes and fees in Durham totaled nearly $1,778 per resident in 2004, ranking the city 4th out of 26 major North Carolina cities for local government costs, according to a new report from the Center for Local Innovation. Chapel Hill ($1,771 per person) ranked fifth, Cary ($1,757) ranked sixth, and Raleigh ($1,680) ranked 10th.

Durham dropped one slot in 2004, while Chapel Hill, Cary, and Raleigh all moved up from last year’s rankings. Apex ($1,632) ranks 12th in this year’s list. Durham trailed Charlotte, Wilmington, and Asheville in the rankings of combined city and county costs per person. The list compared the 26 municipalities with at least 25,000 residents. Jacksonville, Thomasville, Goldsboro, Kannapolis, and Rocky Mount ranked lowest among the larger cities.

Among 90 medium-sized municipalities, most Triangle-area communities had local revenues per person higher than the state median: Holly Springs ($2,009), Morrisville ($1,894), Fuquay-Varina ($1,767), Hillsborough ($1,737), Wake Forest ($1,701), Carrboro ($1,689), Garner ($1,669), Clayton ($1,602), and Knightdale ($1,598). Other area municipalities were closer to the median, including Roxboro ($1,575), Smithfield ($1,561), Siler City ($1,332), Henderson ($1,306), Selma ($1,291), and Oxford ($1,214).

Durham County (6.04 percent) ranked eighth among the 100 counties in local taxes and fees as a share of income. Vance County (5.43 percent) ranked 16th. Most of the rest of the area counties ranked closer to the state median of 4.64 percent. That includes Johnston (4.92 percent), Person (4.86 percent), Orange (4.86 percent), Wake (4.75 percent), Franklin (4.28 percent), and Granville (3.99 percent). Chatham County (3.64 percent) ranked 87th in the state.

“By the Numbers 2006: What Government Costs in North Carolina Cities and Counties” is the eighth 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.

Local government costs rose in more than two-thirds of North Carolina counties from 2003 to 2004, the CLI report stated. In the median county, city and county taxes, fees, and charges consumed 4.64 percent of personal income in 2004, up from 4.35 percent in 2003 and 4.14 percent in 2002.

Among the 10 most populous counties, New Hanover (6.53 percent), Durham (6.04 percent), Mecklenburg (5.90 percent), and Guilford (5.22 percent) ranked relatively high in average cost of local government. Buncombe (5.07 percent), Gaston (4.99 percent), Forsyth (4.93 percent), Wake (4.75 percent), and Cumberland (4.29 percent) ranked near the middle of the pack, while Onslow (3.46 percent) ranked low.

Expressed in terms of dollars per resident, local tax and fee collections in the median North Carolina county stood at $1,088 in 2004, up from $1,071 in 2003 and $1,016 in 2002. A somewhat stronger economy combined with a higher sales-tax income produced the greatest increase in local revenues, though property tax revenues also grew at a faster rate than inflation and population growth, the report stated.

“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, CLI director and a Lee County commissioner. “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.”

North Carolinians paid an average of 29 percent of household income in taxes and other government fees and charges in 2004, the report concluded. State and local governments made up 11.7 percent of that burden. Property taxes alone consumed 2.22 percent of personal income in 2004, or about $537 per person.

Lowrey and Adams noted that a high cost-of-government ranking in “By the Numbers 2006” does not necessarily mean that a city or county is poorly governed.

“Debate concerning what taxpayers are getting for their money is not only healthy but necessary in a free society,” Adams said.

The Innovation Guide, “By the Numbers 2006: What Government Costs in North Carolina Cities and Counties,” is available on the Locke Foundation’s web site. For more information, please contact Chad Adams at (919) 828-3876 or [email protected]. To arrange an interview, you may also contact JLF communications director Mitch Kokai at (919) 306-8736 or [email protected].