Press Release

JLF experts question Orange County’s proposed $2.3 million tax hike

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Click here to view and here to listen to Michael Sanera discussing this Regional Brief.

RALEIGH — Orange County voters have plenty of good reasons to question county commissioners’ request for a $2.3 million tax hike. John Locke Foundation researchers set out those reasons in a new Regional Brief.

Voters will decide Nov. 2 whether county commissioners can raise the local sales tax rate 0.25 cents. As they cast their ballots, JLF experts urge them to consider Orange County’s business climate, a taxpayer-funded campaign to approve the tax hike, and the promises county commissioners are making about how they would spend additional tax revenue.

“Orange County’s requested tax increase offers voters the opportunity to decide if they have confidence in commissioners’ stewardship of county taxpayer dollars,” said Dr. Michael Sanera, JLF Director of Research and Local Government Studies. “Our research points out many reasons to question the commissioners’ abilities to manage scarce tax dollars efficiently.”

A tax increase fits with a pattern of government bloat, Sanera said. “This $2.3 million tax increase would follow the longest-running recession since the Great Depression, with little prospect for rapid recovery,” he said. “A tax increase now would transfer money into the public sector when it’s needed in the private sector to support job creation.”

County commissioners are spending $40,000 in taxpayer money on a political campaign designed to urge voters to support the tax hike, Sanera said. “It’s officially billed as a public education campaign, but an action plan makes clear that it’s designed to boost the number of ‘yes’ votes for the tax hike,” he said. “Many voters believe that the commissioners’ decision to spend this money to sway their votes is insulting.”

In addition to the taxpayer-funded ad campaign, county commissioners have promised benefits to their favorite interest groups, targeting specific percentages of new tax revenue for items such as “economic development” and school facility and technology projects.

“These promises to spend new tax revenue on certain ‘needs’ are really just a political move designed to gain support from special-interest groups to motivate them to vote for the tax hike,” Sanera said.

“Regardless of the commissioners’ promises, all of the new revenue from a tax increase would go into the county’s general fund,” he added. “It could be spent for any legal purpose. There is no way for the public to know whether commissioners actually spent 42.5 percent of the money on economic development or 7.5 percent on emergency services.”

Sanera examines the commissioners’ promises 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.

For example, commissioners hope to attract support from the Chamber of Commerce, housing, and real-estate interests by promising to spend more than 40 percent of increased tax revenue on “economic development,” Sanera said.

“It is unlikely that any amount of spending on economic development would improve the position of Orange County,” he said. “A long record of anti-business, anti-development policies has sent a loud and clear message to the business community: Go somewhere else to create new jobs. Until those policies change, spending more money on economic development will mark a clear case of throwing good money after bad.”

JLF researchers also question the promise to steer more than 40 percent of new tax revenue toward school projects. “County commissioners say much of this money would pay for facility improvements at ‘older’ schools,” Sanera said. “There’s a way to pay for these needs: It’s called a bond referendum. Besides, Orange County’s two school districts have spent $175 million on capital projects in seven years.”

For the past four years, the state lottery also has provided nearly $2 million a year to address school construction and renovation projects. “That’s more than the amount allocated to schools from the proposed sales tax increase,” Sanera said.

There’s also no evidence that schools in either district require a significant boost in funding for technology, Sanera said. That’s another item county commissioners placed on their list of tax hike promises.

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 the option 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. Orange County voters have a chance to send commissioners a clear message Nov. 2.”

Terry Stoops, Joseph Coletti, and Michael Sanera’s Regional Brief, “Orange Crush: Tax hike would crush taxpayers and county economy,” is available at the JLF Web site. For more information, please contact Sanera at (919) 828-3876 or [email protected]. To arrange an interview, contact Mitch Kokai at (919) 306-8736 or [email protected].

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We are North Carolina’s Most Trusted and Influential Source of Common Sense. The John Locke Foundation was created in 1990 as an independent, nonprofit think tank that would work “for truth, for freedom, and for the future of North Carolina.” The Foundation is named for John Locke (1632-1704), an English philosopher whose writings inspired Thomas Jefferson and the other Founders.

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