This fact sheet on land transfer taxes from Chatham County is timely, informative, thought provoking and accurate.
So far, the General Assembly has only granted seven counties in the northeastern part of the state (Camden, Chowan, Currituck, Dare, Pasquotank, Perquimans and Washington) [the authority] to levy a land transfer tax. Only Washington County has opted not to levy the tax.
The counties without the land transfer tax must rely on property taxes, state-authorized sales taxes and other limited fees, which rarely keep pace with demands for schools, water-sewer and other important needs.
I've been puzzling over this issue and talking to people about it for a few months now. Besides getting Johnston County off of Aero-Contractors' payroll, I think this is the most pressing moral issue facing our homey little triangle satellite county. I speak about transfer taxes here in relation to Johnston, but this is truly a statewide issue as other BlueNC diarists have noted.
Why? Because ...
FIRST: If counties could trade the Education Lottery for a 1% transfer tax they'd all have a lot more revenue to use.
SECOND: Increasing sales taxes or property taxes to pay for growth is not right. I just don't think it's good fiscal policy to put taxes on our poorest citizens -- those barely getting by -- while those who are benefiting most from Johnston's growth go practically untouched by our need to increase revenue to serve the growing population.
THIRD: I think progressives here and across NC really need to ignite a statewide discussion about how growing counties pay for growth now, and how we all might be able to do a better job of it with more revenue options. They're talking about this in the Legislature more than ever before. We should be discussing it, too.
Who should pay for growth?
New residents who could amortize 1% over 30 years with a home purchase? Or current and new residents through added sales taxes and annual property taxes? What is the best way to do the right thing for the citizens of your county?
From Chatham County:
The land transfer tax would provide substantially more revenue for the county than other revenue options.
The land transfer tax would bring in more than three times as much revenue as a new half-cent county sales tax or about 70% more than a full penny sales tax. ...
The Register of Deeds office estimates that by 2010, a land transfer tax could generate nearly $10.5 million and more than $18.4 million in 2015.
This tax could more than replace our existing school impact fee and would provide a more consistent growth rate.
The school impact fee is a $2,900 fee levied on developers for each new home, regardless of the size or cost of the home. Thus far, this impact fee has not slowed residential growth in the county as some had feared.
One of Johnston County's Commissioner candidates last fall (C.P. Thompson) had some good ideas about using a set-aside system whereby the first year or two of property taxes from every new home would be put aside for infrastructure needs. It's a great idea, but I'm not sure it would be enough.
An idea for helping seniors with rising property tax issues this year will come from the NC Senior Democrats. They will bring a 'Homestead Act Bill' request to the NCDP Convention for consideration. It proposes to set a very modest property tax exemption for seniors. This is something I think Democrats should support as a matter of platform and principle. The proposal will be available at the Johnston County convention for your review.
Personally, in addition to the above ideas, I would happily and enthusiastically support a reasonable transfer tax.
A reasonable transfer tax (up to a max of 1%) has never been shown to have negative effects on growth here in NC, so let's just kick that argument out the door before it gets started.
Chowan's comments on their transfer tax:
“I believe that all real estate agents in the county will confirm that the transfer tax has not impacted real estate sales in a negative manner, but, in fact, has facilitated sales through improved infrastructure and schools.”
This is simply about weighing the options your county could have for raising sorely needed revenue if we can find a way to work together (your Dem and Repub Senators and Representatives need to hear from you!) to get an equitable and fair local option transfer tax revenue bill through the Legislature. I personally think such an equitable and fair option lies in Senator Bob Atwater's bill, S1516, AN ACT to authorize counties to levy a local land transfer tax. Go read the bill and see what you think.
I realize some folks are going to have a knee jerk reaction to 'transfer tax.' But let's leave the hype behind and make this as simple as possible ...
Would it interest anyone out there to know that Dare County has had a 1% transfer tax for over a decade and their tax rate is now 0.25? You read that right ... 25 cents per $100 valuation. The transfer tax had no effect on Dare's growth rate, but the facilities and services their citizens enjoy are top notch even with those rock bottom property taxes. In fact, Dare is in such great fiscal shape that they recently reduced their 1% transfer tax to 1/2%.
Do you suppose your county's Board of Commissioners would like that horrifying situation to deal with ... so much revenue they could actually reduce your property tax rate ten years down the road? Can you say 'political stroke of genius'?
Yes? Well then, your County Commissioner needs to hear from you, too.
A figures sheet I have from the NC Association of County Commissioners shows that a 1% land transfer tax would have netted Johnston County $9.0 Million to $11.2 Million PER YEAR in 2004 and 2005 had it been in place. That's more than twice as much money as the Education Lottery will get us per year ($4.5M).
Combine those facts with the following reality ... Johnston's tax rate is currently $0.78. That's not the highest tax rate in NC, but it's in the upper quarter of tax rates across NC. The rate hasn't changed in recent years, but if you buy the suggestion that the County Commissioners have not raised your property taxes, I've got a bridge on 42 East you might be interested in buying, too. The last property re-valuations in Johnston County saw everyone's tax bills rise and some people's tax bill almost double.
Do you think there is an end in site to the upward property re-valuation trend here in Johnston, and in so many other counties across NC?
Yes? ... Maybe? ... Miracles do happen?
:) Well, let's make an appointment to go look at that bridge this weekend then, shall we?
Promoted to front by gregflynn
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