October 12, 2010

RALEIGH — Columbus County commissioners are overselling the value of a proposed sales-tax increase by at least $300,000. That’s the assessment of John Locke Foundation experts, who raise red flags about the mistaken estimates in a new Regional Brief.

Voters will decide Nov. 2 whether county commissioners can raise the local sales tax rate by 0.25 cents. It’s the third time since 2007 that Columbus County has placed a tax increase on the ballot. Both previous tax-hike proposals failed.

As voters head to the polls this year, JLF experts urge them to consider the real value of a sales-tax increase, along with the likely impact on county government’s plans for addressing school and government building needs.

“County commissioners have said repeatedly that a new quarter-cent sales tax would raise $1 million a year, but they’re way off the mark,” said Dr. Michael Sanera, JLF Director of Research and Local Government Studies. “The county finance officer says that $1 million figure is two years old. She recently put the estimate closer to $700,000. Missing the estimate by $300,000 — or 43 percent — is a pretty big goof.”

“If county commissioners cannot even get the size of the tax increase right, it would be reasonable for county taxpayers and voters to question a tax hike for unspecified projects,” Sanera added.

The lower figure of $700,000 is equivalent to a 2.2-cent property-tax increase. Sanera analyzes the sales-tax proposal 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.

Columbus commissioners have allocated $5,000 for a new committee selected to “educate” voters about the sales tax, Sanera said. “It’s hard to imagine that this taxpayer-funded campaign would offer an objective view of the tax increase, especially since three county commissioners are serving as nonvoting committee members.”

One of the committee’s likely selling points is the potential use of new sales-tax revenue for school facilities and other capital projects, Sanera said. County commissioners approved a resolution this summer dedicating new sales-tax revenue to those two purposes.

“The important thing to remember is that capital projects are short-term, while this higher tax would have no sunset,” he said. “The tax would continue after the capital projects are completed. Voters who approve the new tax because it would pay for facilities should recognize that their vote is first and foremost for a permanent tax increase.”

Voters also need to keep another fact in mind, Sanera said. “This resolution does not bind either the current board of commissioners or future boards to stick to those priorities,” he said. “State law allows the tax revenue to be spent on any legal purpose. Voters supporting a tax hike for one purpose might be in for an unpleasant surprise when the money is spent.”

Even if commissioners stick to their plans, it’s not likely a sales-tax increase would do much to address county building needs, Sanera said. “The educational committee’s brochure lists 10 grade schools, six middle schools, four high schools, Southeastern Community College, the Department of Aging, and the county courthouse as ‘facilities in need of improvement.'”

“Splitting the money evenly between school and nonschool projects would leave just $350,000 per year to share among 21 different school facilities, or just $16,667 per school,” Sanera explained. “If county commissioners plan instead to use the funds for a handful of specific projects, voters have a right to know which projects they’ll select for the first round of repairs.”

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 higher taxes 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. Columbus County voters have sent county commissioners this message in two previous tax votes. They have a chance to send commissioners another clear message Nov. 2.”

Michael Sanera, Terry Stoops, and Joseph Coletti’s Regional Brief, “Get The Math Right: Columbus County officials are wrong about size and need for new taxes,” 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].