Triad Cities Flip Spots in Annual Tax Ranking

January 28, 2007

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RALEIGH – Greensboro has the highest local tax burden of the Triad’s three major cities, leapfrogging Winston-Salem in a new report from the Center for Local Innovation. Local taxes and fees in Greensboro totaled about $1,765 per resident in 2005, ranking the city 7th out of 29 major N.C. cities in local government costs. High Point ranks 10th, and Winston-Salem 12th.

All three Triad cities shifted spots in the latest rankings. Greensboro ranked 11th among the same group of cities in 2004. High Point, with local government costs of $1,744 per person, moved up from 14th to 10th. In contrast, Winston-Salem’s ($1,681) ranking dropped from 8th to 12th.

Burlington ($1,326) ranked 25th among the 29 cities, while Thomasville ($1,129) ranked 28th.

Charlotte, Wilmington, Asheville, Durham, and Chapel Hill constituted the five municipalities with the highest combined city and county costs per person. That’s among the 29 municipalities with at least 25,000 residents. Jacksonville, Thomasville, Kannapolis, Goldsboro, and Burlington ranked lowest in tax and fee burden among the larger cities.

Among 91 medium-sized municipalities, only one Triad community had local revenues per person significantly higher than the state median: Mount Airy ($1,703). Some communities had local revenues per person close to the median, including Kernersville ($1,561), Mebane ($1,458), Reidsville ($1,387), Eden ($1,311), Asheboro ($1,266), and Lexington ($1,197).

Other communities are ranked among the bottom quarter of medium-sized communities, including King ($1,195), Graham ($1,145), Elon ($1,100), Summerfield ($1,094), Lewisville ($1,063), Archdale ($1,050), Clemmons ($986), Pleasant Garden ($890), and Trinity ($786).

Only Guilford County (5.44 percent) ranked among the state’s top 25 counties in local taxes and fees as a share of income. Several other counties ranked near the state median of 4.55 percent: Rockingham (5.00 percent), Forsyth (4.74 percent), Montgomery (4.56 percent), Alamance (4.54 percent), and Surry (4.39 percent). A half-dozen area counties ranked significantly lower than the state average: Randolph (3.64 percent), Davie (3.55 percent), Stokes (3.32 percent), Yadkin (3.31 percent), Davidson (3.29 percent), and Caswell (3.22 percent).

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].