Press Release

JLF report critiques Orange County’s $2.5 million sales tax proposal

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RALEIGH — Orange County commissioners are courting special interests and “cynically manipulating” the voting process to win support for a $2.5 million sales tax hike. The John Locke Foundation makes that case in a new Regional Brief.

Orange County voters will decide Nov. 8 whether to allow county commissioners to add 0.25 cents to the local sales-tax rate. Voters have rejected tax hike referendums twice before.

“As in the two previous failed campaigns to raise local taxes, voters still have many reasons to question Orange County commissioners’ ability to manage scarce taxpayer dollars efficiently,” said report co-author said Dr. Michael Sanera, JLF Director of Research and Local Government Studies. “Commissioners have only themselves to blame for continuing a pattern of government overspending during the last economic boom and overtaxing during tough economic times.”

“Voters can decide whether it makes sense to fork over more money to county commissioners in the wake of the longest-running economic downturn since the Great Depression, with little prospect of rapid recovery,” Sanera added.

Sanera analyzed Orange County’s case for additional tax revenue with help from co-authors Dr. Terry Stoops, JLF Director of Education Studies, and Fergus Hodgson, Director of Fiscal Policy Studies.

Among their concerns was the timing of the latest sales tax referendum. “Just last November, Orange County’s rural voters rejected a sales tax hike by a 2-1 margin, while the margin was much closer for the county as a whole,” Sanera explained. “It seems commissioners are attempting to win approval this time by cynically manipulating the process.”

“Turnout is likely to be low in rural county precincts, where there are no candidates on the ballot,” he added. “Meanwhile, town voters are more likely to turn out for municipal election races. In addition to boosting the chances that more liberal Chapel Hill and Carrboro voters will have a disparate impact on the referendum’s results, this vote manipulation costs taxpayers an extra $85,000. That’s the price tag for opening rural precincts for this single ballot issue.”

Beyond the referendum’s timing, JLF experts target the substance of county commissioners’ promises. “In order to attract supporters for the tax hike, commissioners promise benefits to specific interest groups,” Sanera said.

Proceeds from the sales tax hike would be split between economic development infrastructure projects and school facility and technology projects, according to county commissioners’ official resolution.

“There’s nothing legally binding about this resolution,” Sanera said. “Commissioners have talked about setting up a separate account for these tax funds, but it’s unclear how the money would be distinguished from Orange County’s general fund. It would be available for spending on any legal purpose. Plus the current group of county commissioners cannot bind any future board with spending promises.”

Even if commissioners could be trusted to keep their promises, voters have good reasons to question both stated goals for new tax proceeds, Sanera said.

“It’s unlikely that spending half of this new money — $1.25 million — will do anything to improve Orange County’s economy,” he said. “The county, Chapel Hill, and Carrboro have a long record of anti-business policies. Land-use restrictions, lengthy development review processes, farmland and historic preservation, and other policies lead to inevitable negative economic consequences. New spending on infrastructure won’t erase that problem.”

In addition to courting business interests, county commissioners are seeking support from teachers, administrators, and some parents by promising more money for schools, Sanera said.

“It’s important to note that Orange County taxpayers already provide ample resources for public schools — one of the highest rates of local per-student expenditures in the state,” he said. “That includes capital projects. That’s not to mention the hundreds of thousands of dollars a year flowing to the local school systems from the state lottery.”

School technology budgets tell a similar story, Sanera said. “While state sources provide most funding for purchase of computer equipment in public schools, local funds already help the Chapel Hill-Carrboro system spend more than $1 million a year on instructional technology,” he said. “That spending tops $500,000 for the Orange County schools. There is no evidence that either school system requires a significant outlay of new funds for instructional technology.”

Since the General Assembly voted in 2007 to permit county tax hike referendums, voters have rejected 82 of 101 requests from county commissioners across the state. “Citizens are frustrated with excessive, wasteful government spending at all levels,” Sanera said. “They believe they are not getting value for their tax dollar. The Nov. 8 referendum offers voters another chance to decide if they have confidence in commissioners’ stewardship of taxpayer dollars.”

The John Locke Foundation’s Regional Brief, “Orange Crush Revisited: County commissioners ask voters a third time for a tax increase,” is available at the JLF website. 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.

The John Locke Foundation is a 501(c)(3) research institute and is funded solely from voluntary contributions from individuals, corporations, and charitable foundations.