June 2, 2008
RALEIGH – Local governments can help their communities by keeping a lid on local taxes and fees, avoiding unnecessary regulation, and allowing private property owners to use their property without fear of government meddling. Those are some key ideas offered in the Center for Local Innovation’s new City and County Issue Guide 2008.
Click here to view and here to listen to Chad Adams discussing the City and County Issue Guide 2008.
The guide arrives as N.C. cities and counties get closer to setting their budgets for the fiscal year that starts July 1. “The common thread in these recommendations is freedom,” said CLI Director Chad Adams. “By increasing individual freedom, local governments can foster prosperity for all North Carolinians.”
The 34-page guide addresses 16 topics that challenge many local governments across North Carolina. Those topics include services governments provide, their funding sources, and their dedication to private property rights. The John Locke Foundation research staff analyzes key challenges for each topic and offers recommendations.
For example, a section on land use and zoning recommends simplified rules. “Too many land-use regulations allow too much discretion on the part of the planning staff, planning boards, and elected bodies,” said Dr. Michael Sanera, JLF Research Director and Local Government Analyst. “Housing costs are driven up by a time-consuming process. Cities and counties must establish a clear set of simple, flexible written rules. Once a development meets these requirements, the approval should be automatic.”
The Issue Guide also spells out the risks for governments who use Tax Increment Financing to fund new development projects. “This type of financing allows local governments to borrow money without voter approval,” said Joseph Coletti, JLF Fiscal Policy Analyst. “But TIFs hide the diversion of funds from government services that is inherent in borrowing.”
“TIFs put taxpayers at risk for repayment, and they are more expensive than other types of borrowing for capital projects,” Coletti added. “Just as lenders and borrowers underestimated some of the risks from subprime mortgages, there is great potential for negative surprises with TIFs.”
JLF analysts also warn local governments about the negative consequences of using targeted tax incentives. “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.”
Local municipal leaders should also resist the urge to turn to forced annexation for a “financial bailout,” said Daren Bakst, JLF Legal and Regulatory Policy Analyst. “If an individual knows that he can always steal money from his neighbor in case of financial trouble, he will take inappropriate risks and make poor decisions. He can steal his way out of mistakes. The same problem exists for municipalities that have the power of forced annexation.”
The City and County Issue Guide 2008 is designed as a companion piece to CLI’s annual By The Numbers report, which ranks cities and counties based on the costs of running local government. “The rankings are important, but they don’t tell the whole story,” Adams said. “The Issue Guide helps taxpayers and voters put the rankings in perspective.
“People can use the Issue Guide as a resource when they question the growing costs of local government,” he added. “Elected leaders can use the Issue Guide to find savings. By following the recommendations in this guide, 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 2008” 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].