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By Ron Fitzwater
The history of the Land Transfer Tax issue in North Carolina is
a collection of resolutions, referendums and intense debates that
date back to 1985 when the NC General Assembly gave Dare and Currituck
counties authority to levy a land transfer tax by resolution of
the Board of County Commissioners. The tax was presented as one
answer to growing infrastructure needs. In 1986 Chowan and Camden
were also given permission to levy the tax by resolution. In the
case of these four counties the LTT was set at one percent or
$1 per $100 on instruments conveying interest in real estate.
Additionally, the revenue garnered from the LTT was limited to
capital expenditures.
Due to claims by county officials from the first four counties
to have the LTT that they were able to reduce property taxes,
increase funding for economic development, reduce the reliance
on borrowing funds to build new schools and reduce funding disparities
between their school districts and the remainder of the state,
additional counties began to ask permission from the NCGA to implement
the tax. In 1989 permission was granted to Pasquotank, Washington
and Perquimans counties but it came with the requirement that
the tax be put up for referendum by citizens. When the LTT was
brought up for a vote instead of resolution it passed in Pasquotank
and Perquimans counties but failed in Washington.
Since that time all the counties that adopted the LTT have increased
in per capita school capital outlays from the bottom third of
the state to the top 10 for four of the counties. By comparison
Washington County has risen only one place since 1995 from 87
to 86.
All six of the counties now rank in the top 45 counties in education
spending per student with Dare County coming in first, budgeting
more than $7,600 per student. A five-year moving average for public
school capital expenditures prior to the LTT for Camden, Currituck,
Chowan and Dare counties was $59,668. Post LTT the average increased
to $791,381 thereby reducing funding disparities between property-rich/urban
districts and property-poor/rural districts.
Despite the reported success of the LTT in the original six counties
to adopt the program, stiff resistance has risen against it. Last
November the tax came before residents of 16 counties by referendum
and failed to pass in every one. Proponents of the LTT claim it
was a lack of information resulting in a lack of understanding
that led to the defeat while the opposition claims it is simply
a bad move for property owners. Loudest of the opposition is the
North Carolina Association of Realtors who opposes the tax for
a number of reasons. The NCAR claims that the tax lowers property
values, making it more difficult to sell property, thereby causing
a downturn in home sales. The NCAR also contests the tax has been
falsely portrayed as a solution to local funding issues because
revenue generated by the LTT is largely dependant on economic
cycles.
Ashe County Bard of Commissioners Chairman Richard Blackburn calls
the tax "a hard sell" but something that is badly needed
for the county to meet the capital needs for projects.
The revenue from the LTT, if passed in the county, would immediately
begin to fund renovations and improvements to county schools,
aid in the renovations and expansion of the county library and
help to offset the debt service on the future county law enforcement
center.
Commissioners say that they want to implement the LTT so that
they are not forced to increase property taxes to off-set the
increase in debt service. Currently county property tax is set
at 39.5 cents, giving Ashe County one of the ten lowest property
tax rates in the state. The state average is 57 cents.
"Having the lower property tax rate is a catch 22 for us.
We want to keep property taxes low for the citizens but in doing
so it causes us to have to find more revenue sources on our own.
There are instances where we go to Raleigh to ask for help and
they tell us no because we don't have what they consider to be
a high enough tax rate. For education lottery money, if you are
below the state average you get your money back at a lower rate
than if you are above. If you are above the state average, you
get a higher percentage of that money than a county that is below,"
Blackburn said.
That needed revenue is the reason for putting the LTT on the May
ballot and commissioners are hopeful that getting the word out
early will aid in passage of the referendum.
County commissioners could raise the revenue with either a quarter
cent sales tax increase or a four-cent increase in property taxes,
but those avenues are not ones they want to go down until the
citizens have an opportunity to consider the LTT option.
"We want to avoid levying additional property or sales taxes,
but we need some source of revenue other than property taxes and
this [LTT] is a possibility. Why would we look at this as a possibility?
Because, last year, 80 percent of the land transfers in the county
were for persons coming in, now you can assume that the seller
of the property is going to add the LTT into the sale of the property
because that is how consumerism works. Also last year, seven percent
of the sales were by speculators leaving only ten percent of sellers
being county residents and three percent was gifted property and
no LTT would apply. Now I'm not trying to sound anti-newcomer,
because we are not, why not let them help pay for some of the
infrastructure they benefit from if they like being up here?"
Blackburn asked.
"Education is the key," said McMillan adding, for residents
to understand the issue as a whole they need to be given the necessary
information that will allow them to make informed decisions."
To do this, the county commissioners are circulating literature
that outlines the county's position on the LTT and describes what
the revenue would be used for. The literature is being placed
in county offices, the library and area businesses.
Commissioners will be available for questions concerning the proposed
LTT during the public comment segment of regular meetings held
the first and third Monday of each month. Anyone with questions
about the LTT can call the county offices at (336) 846-5501. |
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