February 27, 2012
RALEIGH — Local taxes and fees in Rocky Mount totaled about $1,581 per person in the 2010 budget year. The city ranked No. 22 out of North Carolina’s 34 largest ranked cities in local government costs per person, according to a new John Locke Foundation report. Wilson, at $1,782 per person, ranked No. 17.
Rocky Mount jumped seven notches in the latest rankings, while Wilson climbed three spots from its 2009 ranking.
Jacksonville, Thomasville, Indian Trail, Asheboro, and Goldsboro all had lower tax burdens among the larger cities. Goldsboro ($1,349) ranked No. 30.
Charlotte, Chapel Hill, Wilmington, Asheville, and Mooresville topped the rankings of combined city and county costs per person. The list compared 34 municipalities with at least 25,000 residents.
Among North Carolina’s 89 ranked medium-sized municipalities, Tarboro ($1,527) and Roanoke Rapids ($1,468) had local revenues per person calculated near the state median.
Four area counties ranked among the state’s top 25 for heaviest tax burdens, when that burden was expressed in terms of local taxes and fees as a share of income. They were Wilson (5.50 percent), Warren (5.39 percent), Pitt (5.32 percent), and Edgecombe (5.21 percent). Most other area counties had tax burdens closer to the state median of 4.08 percent: Halifax (4.28 percent), Northampton (4.25 percent), Nash (4.22 percent), Johnston (4.07 percent), and Franklin (3.84 percent). Wayne (3.50 percent) and Greene (3.02 percent) counties ranked among the 25 counties with the lowest local tax burdens.
By The Numbers: What Government Costs in North Carolina Cities and Counties FY 2010 is the 14th 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.
“The typical resident of the median county in North Carolina paid $1,242 in taxes and fees to county and municipal governments in the 2010 budget year,” said report author Michael Lowrey, a JLF policy analyst in economics and regulatory policy. “That’s down from an inflation-adjusted $1,321 figure for 2009. 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 remains constant at 4.52 percent for a second straight year.
“The impact of the Great Recession was not felt equally throughout the state,” Lowrey said. “While income per person rose slightly in the median county, the state’s major urban areas saw sharp declines in personal income per person. Statewide, per capita personal income dropped $800 from 2008 to 2009. So the smaller dollar figure for the tax-and-fee burden did not translate into a smaller burden on a percentage basis.”
The average resident in the median county forked over 4.08 percent of personal income to local government in 2010, but Lowrey says the average North Carolinian actually fares worse. “The average North Carolinian actually pays a higher percentage, since many of the state’s larger counties have above-average local tax and fee burdens. When this is factored in, a state average would amount to 4.52 percent of personal income.”
Lowrey continues to highlight a growing problem that helps skew data. More than 50 communities missed state deadlines to file their State Treasurer’s Annual Financial Information Report.
“Hoke and Sampson counties and 53 municipalities missed the deadline to submit audited financial statements to the state,” Lowrey said. “Whether those local governments filed the statements after the deadline or not, the information still is not available from the treasurer’s office. 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, Mecklenburg (5.77 percent), Durham (5.57 percent), Guilford (5.16 percent), New Hanover (5.01 percent), Forsyth (4.97 percent), Buncombe (4.79 percent), and Wake (4.74 percent) ranked among the top 25 N.C. counties in average cost of local government. Gaston (4.55 percent), Union (4.51 percent), and Cumberland (3.56 percent) ranked near the middle of the pack.
North Carolina collected $21 billion in state tax and fee revenues from July 1, 2009, to June 30, 2010. That’s 6.4 percent of state residents’ personal income. Local governments collected an additional $14.8 billion in property, sales, and other taxes and fees. That’s another 4.5 percent of personal income.
“Combined, they represent a state and local tax and fee burden of 10.9 percent,” Lowrey said. “Federal collections raise the total tax burden on North Carolinians to approximately 28.9 percent of personal income, on average.”
Taxpayers should consider the role their elected leaders play in setting tax and fee burdens, said Dr. Michael Sanera, JLF Director of Research and Local Government Studies. “Cities and counties often pay the costs of mandates from the state and federal governments, but many local governments also create their own fiscal problems through overspending.”
Lowrey and Sanera stress 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,” Sanera 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 2010,” is available at the JLF website. For more information, please contact Dr, Michael Sanera at (919) 828-3876 or [email protected]. To arrange an interview, contact Mitch Kokai at (919) 306-8736 or [email protected].