January 28, 2008
RALEIGH – Local taxes and fees in Rocky Mount totaled about $1,359 per person in the 2006 budget year, ranking the city 26th out of North Carolina’s 29 largest cities in local government costs, according to a new report from the Raleigh-based Center for Local Innovation. Wilson, at $1,500 per person, ranked 22nd.
Burlington and Kannapolis topped Rocky Mount’s tax burden in the latest rankings, allowing Rocky Mount to fall two spots from its No. 24 ranking in 2005. Only Jacksonville, Thomasville, and Goldsboro had lower tax burdens among the larger cities. Goldsboro ($1,297) ranked No. 27.
Charlotte, Chapel Hill, Wilmington, Asheville, and Durham topped the rankings of combined city and county costs per person. The list compared the 29 municipalities with at least 25,000 residents.
Among North Carolina’s 91 medium-sized municipalities, Tarboro ($1,450) and Roanoke Rapids ($1,412) had local revenues per person calculated near the state median. Roanoke Rapids’ tax burden jumped from a No. 73 ranking to No. 52 in a single year.
Five area counties ranked among the state’s top 25 for heaviest tax burdens, when that burden was expressed as local taxes and fees as a share of income. They were Warren (5.66 percent), Wilson (5.62 percent), Halifax (5.49 percent), Edgecombe (5.46 percent), and Pitt (5.42 percent). Most other area counties had tax burdens closer to the state median of 4.75 percent: Johnston (4.90 percent), Franklin (4.46 percent), Northampton (4.28 percent), Nash (4.28 percent), and Wayne (4.16 percent). Greene County (3.61 percent) ranked among the 25 counties with the lowest local tax burdens.
By The Numbers: What Government Costs in North Carolina Cities and Counties FY 2006 is the 10th such report published by CLI, a division of the John Locke Foundation. Lowrey used the most recent data available from the State Treasurer, the Census Bureau, and the 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.
The average resident of the median North Carolina county paid $1,236 to fund city and county government in the 2006 budget year. That number jumped 4.2 percent from the previous year.
The bill for the typical taxpayer in that median county amounted to 4.75 percent of his personal income, according to the report. “The percentage is even higher for the average North Carolinian,” said report author Michael Lowrey, a John Locke Foundation policy analyst. “That’s because many of the state’s larger counties have above-average local tax and fee burdens. When this is factored in, the statewide average local tax burden would amount to 4.98 percent of personal income.”
Taxpayers are devoting a larger portion of their personal income to city and county government, Lowrey said. “The share of personal income devoted to local taxes grew in one year from 4.65 percent to 4.75 percent in the median county and from 4.87 percent to 4.98 percent statewide.”
Among the 10 most populous counties, New Hanover (6.56 percent), Durham (6.47 percent), Mecklenburg (6.06 percent), and Guilford (5.42 percent) ranked relatively high in average cost of local government. Buncombe (5.15 percent), Wake (5.09 percent), Gaston (5.07 percent), Forsyth (4.92 percent), Union (4.97 percent), and Cumberland (4.02 percent) ranked near the middle of the pack.
North Carolina collected $17.2 billion in state tax and fee revenues from July 1, 2005, to June 30, 2006. That’s 6.7 percent of state residents’ personal income. Local governments collected an additional $13.6 billion in property, sales, and other taxes and fees. That’s another 5 percent of personal income.
“Combined, they represent a state and local tax and fee burden of 11.7 percent,” Lowrey said. “Federal collections raise the total tax burden on North Carolinians to approximately 31.5 percent of personal income, on average.”
Property taxes alone consumed 2.25 percent of personal income in the 2006 budget year, or about $595 per person. The range was $1,780 per person in Dare County to $318 per person in Swain County.
“The cost of local government is rising and seems to be doing so at a rate faster than either population or inflation,” said CLI Director Chad Adams. “The ultimate reality is that North Carolinians are having to fund this growth from their personal incomes.”
Lowrey and Adams noted that a high cost-of-government ranking in the By The Numbers report does not necessarily mean that a city or county is poorly governed.
“By The Numbers is a tool that represents factual data only, without editorial comment or bias,” Adams said. “People who hope to compare their communities to others across the state should look for municipalities or counties of similar size and demographics.”
“This report helps taxpayers evaluate whether or not the services they receive from local government merit what they are paying for them,” Adams added. “We hope that taxpayers will continue to ask about the proper role of local government and its relationship to the state. Vigilance is necessary to keep these discussions alive and to help ensure that our local leaders remain accountable to the taxpayers.”
The Innovation Guide, “By The Numbers: What Government Costs in North Carolina Cities and Counties FY 2006,” is available at the JLF Web site. For more information, please contact Adams at (919) 828-3876 or [email protected]. To arrange an interview, contact Mitch Kokai at (919) 306-8736 or [email protected].