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In 2007, the General Assembly set the base local sales tax rate to 2.00 percent and gave counties the option to levy an additional 0.25 percent after a supportive vote by county residents. Eight counties immediately approved the additional sales tax, and since then 18 more counties have voted to increase their sales taxes to the 2.25 percent rate.

Counties also have the right to ask for an additional 0.50 percent sales tax to be used for local transit. Only four counties have had this tax on the ballot, and it was approved in three, allowing those counties to have the highest combined state and local sales taxes in North Carolina at 7.50 and 7.25 percent.

The 2007 law that set the current sales tax rates was also responsible for giving the counties the option to increase the land transfer tax. More than 20 attempts were made by local governments to pass additions to the transfer tax, but they were rejected by voters every time. The 2011 General Assembly voted in bi-partisan agreement to repeal the land transfer tax option for counties. There are currently six counties that have land transfer taxes of 1 percent, which were created by individual state laws in the late 1980s and were not subject to the law repealed in 2011.

Unfortunately, too many local governments have misused the money they now have. In Wilmington, the city is negotiating the building of a downtown "passive waterfront park" costing the city between $3.5 and $4 million, while police have had one pay raise in three years. Charlotte City Council approved $87.5 million from the local occupancy and food and beverage taxes to renovate the Panthers' stadium instead of expanding road capacity to alleviate traffic congestion.

Spending comes first with governments; if they did not spend money, they would not need to tax their citizens. Officials need to convince their citizens that they are spending wisely before imposing new taxes, fees, or other costs.

Analysis

After a decade of property value increases, the markets saw marked declines in 2009. Governments need to prepare for a reset. Fifty-seven of the state's counties haven't revalued property since the recession in 2009, causing taxpayers to pay property taxes on inflated property values.

County governments need to live within their means and stop taking over-inflated property tax collections from citizens. All counties should have revaluations on their properties after 2009 to assess taxpayers at a fairer rate.

The median cost of local taxes and fees per person was $1,242.17 in 2011. That figure represents 4.15 percent of per-capita personal income.

Local governments must earn the trust of taxpayers. Spending on municipal golf courses, economic incentive packages, downtown parks, privately owned athletic stadiums, convention centers, and other non-essential services have at times received higher priority in local budgets than school buildings, sewer systems, police, fire departments, and roads. For local governments that typically face funding constraints, prioritization is the key.

The entire 2014 City & County Issue Guide, is available for download as a 3.6MB Adobe Acrobat file.
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