January 28, 2008
RALEIGH – Local taxes and fees surpassed $2,000 per person in Chapel Hill during the 2006 budget year, as the Orange County town surpassed Durham to compile the highest per capita local government burden among the Triangle’s largest cities. A new report from the Center for Local Innovation ranked Chapel Hill No. 2 among the state’s 29 largest cities.
At $2,055 per person, Chapel Hill’s local government burden jumped from No. 5 in 2005 to its new No. 2 ranking. Durham ($1,991) fell two spots to No. 5. Cary ($1,976) maintained its No. 6 ranking, while Raleigh ($1,816) held on to No. 11. Apex ($1,754) dropped two spots to No. 15.
Charlotte topped the rankings again in 2006, followed by Chapel Hill, Wilmington, Asheville, and Durham. The list compared the 29 municipalities with at least 25,000 residents. Jacksonville, Thomasville, Goldsboro, Rocky Mount, and Kannapolis ranked lowest among the large cities.
Among North Carolina’s 91 medium-sized municipalities, most Triangle-area communities recorded rates of local revenues per person higher than the state median: Holly Springs ($2,424), Morrisville ($2,198), Hillsborough ($1,945), Carrboro ($1,935), Knightdale ($1,891), Wake Forest ($1,875), Fuquay-Varina ($1,866), and Clayton ($1,795). Other area municipalities were closer to the median, including Garner ($1,771), Roxboro ($1,746), Smithfield ($1,685), Wendell ($1,642), Siler City ($1,566), Henderson ($1,414), Selma ($1,355), and Oxford ($1,355).
Durham County (6.47 percent) ranked No. 7 among the 100 counties in local taxes and fees expressed as a share of income. Vance County (5.41 percent) ranked No. 25. Most other area counties ranked closer to the state median of 4.75 percent. That includes Person (5.15 percent), Wake (5.09 percent), Orange (4.95 percent), Johnston (4.90 percent), Franklin (4.46 percent), and Granville (4.26 percent). Chatham County (3.69 percent) ranked among the 25 counties with the lowest tax burdens.
By The Numbers: What Government Costs in North Carolina Cities and Counties FY 2006 is the 10th such report published by CLI, a division of the John Locke Foundation. Lowrey 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.
The average resident of the median North Carolina county paid $1,236 to fund city and county government in the 2006 budget year. That number jumped 4.2 percent from the previous year.
The bill for the typical taxpayer in that median county amounted to 4.75 percent of his personal income, according to the report. “The percentage is even higher for the average North Carolinian,” said report author Michael Lowrey, a John Locke Foundation policy analyst. “That’s because many of the state’s larger counties have above-average local tax and fee burdens. When this is factored in, the statewide average local tax burden would amount to 4.98 percent of personal income.”
Taxpayers are devoting a larger portion of their personal income to city and county government, Lowrey said. “The share of personal income devoted to local taxes grew in one year from 4.65 percent to 4.75 percent in the median county and from 4.87 percent to 4.98 percent statewide.”
Among the 10 most populous counties, New Hanover (6.56 percent), Durham (6.47 percent), Mecklenburg (6.06 percent), and Guilford (5.42 percent) ranked relatively high in average cost of local government. Buncombe (5.15 percent), Wake (5.09 percent), Gaston (5.07 percent), Forsyth (4.92 percent), Union (4.97 percent), and Cumberland (4.02 percent) ranked near the middle of the pack.
North Carolina collected $17.2 billion in state tax and fee revenues from July 1, 2005, to June 30, 2006. That’s 6.7 percent of state residents’ personal income. Local governments collected an additional $13.6 billion in property, sales, and other taxes and fees. That’s another 5 percent of personal income.
“Combined, they represent a state and local tax and fee burden of 11.7 percent,” Lowrey said. “Federal collections raise the total tax burden on North Carolinians to approximately 31.5 percent of personal income, on average.”
Property taxes alone consumed 2.25 percent of personal income in the 2006 budget year, or about $595 per person. The range was $1,780 per person in Dare County to $318 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 are having to fund this growth from their personal incomes.”
Lowrey and Adams noted that a high cost-of-government ranking in the By The Numbers report 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. “People who hope to compare their communities to others across the state should look for municipalities or counties of similar size and demographics.”
“This report helps taxpayers evaluate whether or not the services they receive from local government merit what they are paying for them,” Adams added. “We hope that taxpayers will continue to ask about the proper role of local government and its relationship to the state. Vigilance is necessary to keep these discussions alive and to help ensure that our local leaders remain accountable to the taxpayers.”
The Innovation Guide, “By The Numbers: What Government Costs in North Carolina Cities and Counties FY 2006,” is available at the JLF Web site. For more information, please contact Adams at (919) 828-3876 or [email protected]. To arrange an interview, contact Mitch Kokai at (919) 306-8736 or [email protected].