New JLF guide urges limits on local government action

April 7, 2009

RALEIGH — Local governments will serve their communities best through policies that limit taxes and regulation, while protecting private property from unnecessary government intrusion. Those are some key concepts driving recommendations in the Center for Local Innovation’s new City and County Issue Guide 2009.

Click here to view and here to listen to Dr. Michael Sanera discussing the City and County Issue Guide.

The center is issuing the guide as N.C. cities and counties make the budget choices that will drive local government policy in the budget year that starts July 1. “This guide covers everything from taxes to transit, from smart growth to stadiums, but the common theme is freedom,” said Dr. Michael Sanera, John Locke Foundation Research Director and Local Government Analyst. “By emphasizing individual freedom, local governments can promote prosperity for all North Carolinians.”

The 34-page guide addresses 16 of the most important topics local governments must address. It focuses on services governments provide, steps those governments take to fund their services, and the impact of government action on private property rights. Sanera and other members of the JLF research staff analyze key challenges linked to each issue.

For example, one section warns local governments about the negative consequences of so-called “smart growth” policies. “North Carolina cities that have implemented smart growth techniques have experienced far more housing problems than those that have not,” Sanera said. “North Carolina leaders should embrace a market-friendly approach to growth to avoid these restrictive and counterproductive policies. Leaders should favor consumer choices and prices over bureaucratic planning and guesswork.”

The Issue Guide also urges local governments to prove that they need more funds before seeking any tax increases. “Local government cost a typical North Carolinian $1,633 in fiscal year 2007,” said Joseph Coletti, JLF Fiscal and Health Care Policy Analyst. “That figure represents 5 percent of per-capita personal income. For a family of four, the cost of local government is $6,532. Spending on municipal golf courses, economic incentive packages, convention centers, and other non-essential services received higher priority in some local budgets than school buildings, sewer systems, and roads. Local governments must earn the trust of taxpayers.”

Speaking of economic incentive packages, another section in the Issue Guide warns local governments about the negative consequences associated with targeted tax breaks.

“There’s no such thing as a free subsidy,” said Dr. Roy Cordato, JLF Vice President for Research and Resident Scholar. “When a county decides to use tax dollars to entice a new company to set up shop in a community, that money has to come from somewhere. Existing local businesses and their employees must pay more in taxes and other costs to support the subsidized industry.”

The Issue Guide urges city and town leaders to avoid forced annexation. “The primary purpose of forced annexation has been lost,” said Daren Bakst, JLF Legal and Regulatory Policy Analyst. “Forced annexation is not used to promote sound urban development. Areas that need to be annexed are not annexed, while areas that do not need to be annexed are annexed against the wishes of the people who live in those areas.”

County officials can make better decisions about funding school-related programs, according to the Issue Guide. “Local government appropriations to school districts should be tied to performance-based measures and innovative practices that ensure sound expenditure of local tax dollars,” said Terry Stoops, JLF Education Policy Analyst. “Some general principles can help, such as closely monitoring county appropriations to school districts and measuring the effectiveness of the funding.”

The City and County Issue Guide is designed to complement CLI’s annual By The Numbers report, which ranks cities and counties based on the costs of running local government.

“People can use the Issue Guide as a resource when they question local government costs,” Sanera said. “Elected leaders can use the Issue Guide to find savings. By following the guide’s recommendations, local governments can avoid the spending growth that takes more and more of our paychecks each year.”

The Center for Local Innovation’s “City and County Issue Guide 2009” 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].