RALEIGH — Local taxes and fees in Rocky Mount totaled about $1,552 per person in the 2008 budget year. The city ranked No. 26 out of North Carolina’s 32 largest ranked cities in local government costs per person, according to a new John Locke Foundation report. Wilson, at $1,629 per person, ranked No. 23.
For a second straight year, Rocky Mount missed the list of cities with the five lowest per-person tax burdens. Rocky Mount ranked No. 27 in 2007.
Jacksonville, Indian Trail, Thomasville, Fayetteville, and Goldsboro all had lower tax burdens among the larger cities. Goldsboro ($1,421) ranked No. 28.
Charlotte, Mooresville, Asheville, Chapel Hill, and Wilmington topped the rankings of combined city and county costs per person. The list compared 32 municipalities with at least 25,000 residents.
Among North Carolina’s 87 ranked medium-sized municipalities, Tarboro ($1,529) and Roanoke Rapids ($1,523) had local revenues per person calculated near the state median.
Three area counties ranked among the state’s top 25 for heaviest tax burdens, when that burden was expressed as local taxes and fees as a share of income. They were Warren (5.89 percent), Wilson (5.50 percent), and Edgecombe (5.36 percent). Most other area counties had tax burdens closer to the state median of 4.71 percent: Northampton (5.09 percent), Halifax (5.03 percent), Pitt (4.74 percent), Johnston (4.66 percent), Franklin (4.45 percent), Nash (4.38 percent), and Wayne (4.06 percent). Greene County (3.74 percent) ranked among the 25 counties with the lowest local tax burdens.
By The Numbers: What Government Costs in North Carolina Cities and Counties FY 2008 is the 12th such report published by the John Locke Foundation. Lowrey used the most recent data available from the State Treasurer, Bureau of Labor Statistics, and 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.
“The typical resident of the median county in North Carolina paid $1,330 in taxes and fees to county and municipal governments,” said report author Michael Lowrey, a John Locke Foundation policy analyst. “The good news is that total is down from the inflation-adjusted figure of $1,355 for the 2007 budget year. The bad news is that a price spike early in the 2008 calendar year bears some responsibility for the decrease. Next year’s report is bound to show an increase in local tax burden as 2009 and 2008 figures are compared on an inflation-adjusted basis.”
The average resident in the median county forked over 4.71 percent of personal income to local government in 2008, but Lowrey says the average North Carolinian actually fares worse. “The average North Carolinian actually pays a higher percentage, since many of the state’s larger counties have above-average local tax and fee burdens. When this is factored in, a state average would amount to 4.93 percent of personal income.”
Lowrey made no changes in this year’s analysis, but he warned of a growing problem that can skew data. More than two dozen communities missed state deadlines to file their State Treasurer’s Annual Financial Information Report.
“As of February, Graham and Hoke counties and 29 municipalities had failed to submit audited financial statements to the state as required,” Lowrey said. “Without those reports, By The Numbers cannot include local tax burdens for those communities. Complete reporting would result in a somewhat higher combined county municipal median tax burden.”
Lowrey also repeated his warning against comparing the relatively high per-capita tax numbers in resort communities to those in other N.C. cities. Communities with larger numbers of second homes and resorts — combined with small year-round populations — will see larger per-capita tax burden figures, he said.
Among the 10 most populous counties, New Hanover (6.10 percent), Mecklenburg (5.91 percent), Durham (5.85 percent), Guilford (5.42 percent), and Buncombe (5.28 percent) ranked among the top 25 N.C. counties in average cost of local government. Union (4.91 percent), Gaston (4.89 percent), Forsyth (4.81 percent), and Wake (4.70 percent) ranked near the middle of the pack. Cumberland (3.83 percent) ranked among the 25 N.C. counties with the lowest tax burdens.
North Carolina collected $19 billion in state tax and fee revenues from July 1, 2007, to June 30, 2008. That’s 6.2 percent of state residents’ personal income. Local governments collected an additional $15.1 billion in property, sales, and other taxes and fees. That’s another 4.9 percent of personal income.
“Combined, they represent a state and local tax and fee burden of about 11.1 percent,” Lowrey said. “Federal collections raise the total tax burden on North Carolinians to approximately 30.6 percent of personal income, on average.”
Property taxes alone consumed 2.29 percent of personal income in the 2008 budget year, or about $650 per person. The range was $1,919 per person in Dare County to $345 per person in Swain County.
“Cities and counties often pay the costs of mandates from the state and federal governments, but many local governments also create their own fiscal problems through overspending,” said Joseph Coletti, JLF Director of Health Care and Fiscal Policy Studies. “While inflation and some communities’ failure to report data this year skew the results, we know that the long-term trends show that the cost of local government is rising in North Carolina.”
Lowrey and Coletti stress that a high cost-of-government ranking in the By The Numbers report does not equal a judgment that a city or county is governed poorly.
“By The Numbers is a tool that represents factual data only, without editorial comment or bias,” Coletti said. “The best way to compare your city or county to others is to find municipalities or counties of similar size and demographics.”
“This report helps taxpayers evaluate whether the services they receive from local government merit what they are paying for them,” he added. “We hope taxpayers will continue to ask about the proper role of local government and its relationship to the state. It’s important to keep these discussions alive and to ensure our local leaders remain accountable to taxpayers.”
The John Locke Foundation Policy Report, “By The Numbers: What Government Costs in North Carolina Cities and Counties FY 2008,” is available at the JLF Web site. For more information, please contact Joseph Coletti at (919) 828-3876 or [email protected]. To arrange an interview, contact Mitch Kokai at (919) 306-8736 or [email protected].