Mooresville knocks Charlotte off top perch of annual JLF tax burden list

April 21, 2013

Click here to view and here to listen to Michael Lowrey discussing this report.

RALEIGH — The local annual tax and fee burden now tops more than $2,000 per person in seven of North Carolina’s largest cities. Mooresville ended Charlotte’s 11-year run as the large city with the highest per-person local government bill. That’s according to a new John Locke Foundation report.

Meanwhile, the average North Carolinian surrendered almost 4.4 percent of his personal income to fund city and county government in the 2011 budget year, down from 4.5 percent in 2010.

“The typical resident of the median county in North Carolina paid $1,242 in taxes and fees to county and municipal governments in the 2011 budget year,” said report author Michael Lowrey, a JLF policy analyst in economics and regulatory policy. “That’s down from an inflation-adjusted $1,288 figure for 2010. But the numbers look different when you factor in the fact that many of the state’s more populous counties also have above-average local tax and fee burdens.”

Adjusting for population, the state average local government tax burden was 4.39 percent in 2011.

Local governments collected $15.2 billion in property, sales, and other taxes and fees during the budget year that stretched from July 2010 through June 2011, Lowrey reports. “Local government revenues increased by $400 million in that year,” he said. “This is not to say that all revenue sources increased. Sales tax revenues were flat, while property tax receipts increased by about $150 million. Water department revenues and other tax and fee income also saw significant increases.”

Since the onset of the Great Recession, local governments have become increasingly dependent on property tax receipts, Lowrey said. “In 2007, property taxes made up 56.5 percent of nonutility local revenues,” he said. “In 2011 that figure had increased to more than 65 percent.”

Among North Carolina’s largest cities, Mooresville ($2,311 per person) displaced Charlotte as having the state’s largest local government burden. Chapel Hill also moved ahead of the Queen City to rank No. 2. Charlotte, Wilmington, and Durham rounded out the top five. They topped the list of 34 ranked municipalities with at least 25,000 residents. Jacksonville ($1,197 per person), Indian Trail, Thomasville, Asheboro, and Goldsboro ranked lowest in local government burden among the larger cities. Lowrey calculates the burden by adding all local taxes and fees collected in the city, then dividing by the total population.

Three coastal communities — Oak Island, Kill Devil Hills, and Carolina Beach — had the highest local per-person tax burdens among the 92 ranked N.C. communities with populations between 5,000 and 24,999 people. The report ranks each of these communities, along with 180 municipalities with populations between 1,000 and 4,999 people. Even residents of more than 190 municipalities with populations of fewer than 1,000 people can see how their communities rank against their peers.

By The Numbers: What Government Costs in North Carolina Cities and Counties FY 2011 is the 15th 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.

Lowrey continues to highlight a continuing problem that helps skew data. Four counties and nearly 40 municipalities missed state deadlines to file their State Treasurer’s Annual Financial Information Report.

“Whether those local governments filed the statements after the deadline or not, the information still is not available from the treasurer’s office,” Lowrey explained. “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 annual 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, Durham (5.86 percent), Mecklenburg (5.31 percent), Guilford (5.19 percent), New Hanover (5.12 percent), and Buncombe (4.75 percent) ranked among the top 25 N.C. counties in average cost of local government. Wake (4.60 percent), Gaston (4.56 percent), Forsyth (4.56 percent), and Union (4.22 percent) ranked near the middle of the pack. Cumberland (3.22 percent) ranked No. 85 of the 96 ranked counties.

North Carolina collected $21.9 billion in state tax and fee revenues from July 1, 2010, to June 30, 2011. That’s 6.3 percent of state residents’ personal income. Local governments collected an additional $15.2 billion in property, sales, and other taxes and fees. That’s another 4.4 percent of personal income.

“Combined, they represent a state and local tax and fee burden of 10.7 percent,” Lowrey said. “Federal collections raise the total tax burden on North Carolinians to approximately 27.3 percent of personal income, on average.”

Lowrey stresses 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,” Lowrey 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 2011,” is available at the JLF website. For more information, please contact Michael Lowrey at (704) 569-4269 or [email protected]. To arrange an interview, contact Mitch Kokai at (919) 306-8736 or [email protected].