October 19, 2005

RALEIGH – Weeks before a school-bond vote in Mecklenburg County that could result in another local tax increase, the John Locke Foundation today released a Citizen’s Guide to Local Spending that confirmed Charlotte-Mecklenburg’s rank as having the most expensive local government of any major city in North Carolina.

City and county spending per person in Charlotte averaged more than $3,800 in 2004, up 28 percent in inflation-adjusted terms since 1994, according to Citizen’s Guide author Joseph Coletti, JLF’s fiscal policy analyst. This increase significantly outpaced the 13 percent real growth rate in per-capita income in the city, meaning that local government’s expenses grew more than twice as rapidly as did the incomes of taxpayers shouldering most of that larger fiscal load.

By comparison, Coletti found, both Raleigh-Wake County and Greensboro-Guilford County spent about $2,700 in 2004.

“Government costs 41 percent more in Charlotte than in North Carolina’s next-largest cities,” Coletti said. “Are the quality and quantity of local services really 41 percent higher in Charlotte than in Raleigh or Greensboro? It’s hard to believe that most taxpayers would agree with that conclusion.”

In 2004, local-government spending in Charlotte was 22 percent higher than the average spending in the 10 large cities Coletti studied. In 1994, Charlotte and Mecklenburg spending was just eight percent higher than average.

Both operating and capital expenditure growth from 1994 to 2004 contributed to the trend of soaring costs in Charlotte and Mecklenburg government, he found. On a per-capita basis, capital expenditures in Charlotte-Mecklenburg ($1,038) were by far the highest among North Carolina cities – and this statistic obviously does not include the potential effects of voter approval of four bond issues on the local ballot this November, including a $427 million bond for school construction.

“The city’s rail-transit project is obviously playing a big role in imposing high capital costs on taxpayers,” Coletti said. “Now taxpayers are being asked to shoulder what the Charlotte-Mecklenburg Schools says will be the initial installment of a $2 billion school-construction program over the next 10 years. It carries a staggering price tag.”

Spending per Charlotte-Mecklenburg resident on public education shot up 42 percent in inflation-adjusted terms from 1994 to 2004, while real city and county spending on public safety grew by only 6 percent during the same period, Coletti discovered. The share of total expenditures devoted to public safety shrank in both the city and county budgets.

A report published earlier this year by the John Locke Foundation showed that Charlotte-Mecklenburg had the highest tax burden among North Carolina’s urban communities. Coletti has estimated that even if a state lottery is quickly up and operating, its expected proceeds would pay less than half the costs of financing this year’s $427 million school bond and less than 10 percent of the cost of financing the 10-year, $2 billion school-construction plan CMS is proposing. The equivalent of a 22 percent hike in Mecklenburg property taxes would be required to fund the latter debt.

“Higher spending inevitably compels higher taxes,” Coletti said. “If there was any doubt of that, the recent experience of Charlotte and Mecklenburg County ought to dispel it once and for all.”

The Charlotte edition of the JLF publication Citizen’s Guide to Local Spending is available at the John Locke Foundation’s website. For more information, contact Joe Coletti at [email protected] or 919-828-3876.