A serious discussion NC counties need to have ...

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

Comments

Local Options

Great post Leslie, I bumped it. Once people understand what this is about they get passionate. I did a legislative budget exercise last year and when you realize how few individual sources of revenue there are it is paralyzing.

I Agree

Once we put the stake through the heart of this OLF, I'll be able to devote more time to this.

I look forward to seeing the 'Homestead Act Bill'. Florida has a homestead exemption for all it's citizens. Not just seniors, not just the poverty stricken or the 100% disabled. I don't believe they're taxed at 'market value' either. (Half of south Florida would have to move)

NC is a great state but hiding from problems staring us in the face ... well, we won't be great very long if we end up paving paradise and replacing it with parking lots. (Again - see what's happened to other states who did that)

Fantastic, Leslie

This is a major issue facing Moore County, too. On March 15, 2007, HB715 was introduced adding Moore County to a list of counties allowed to levy transfer taxes. I have a couple of thoughts about this.

  1. I think it's a good basic solution in paying for basic infrastructure needs, especially in areas where growth is exponential. I'm not sure I support the bill, however, because I don't like the singularity of it. Why Moore, and not Johnston? Why not all 100 counties? I know Hoke County is experiencing phenomenal growth right now, and has staggering infrastructural needs.

  2. I want to hear from real estate agents themselves (not the association, actual people)about what they think. Those of you who are agents, do you think that this would hurt business?

  3. A transfer tax, as well as impact fees on new buildings (domestic and commercial) are a much better option to raising sales tax. Sales tax hurts the poorest citizens the most. It's regressive, and should not be considered.

"Be the change you wish to see in the world." - Gandhi

Leslie...I wrote a long comment

and my computer ate it. I'm on the laptop and can't backtrack to bring it back up like I can on my mac. I have to get back to work packing so we can sell this sucker BEFORE the transfer tax takes effect. :)

I promise to read the bill and get back to this. I just hope it's in our lifetime.

Great post.

Robin Hayes lied. Nobody died, but thousands of folks lost their jobs.



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Vote Democratic, the ass you save may be your own.

Thanks to everyone

who's commented so far. Excellent points, all of you. I have to rush off this morning early but wanted to peak in ...

Greg -- I've spoken extensively to Stan Norwalk and Linda McCarley in recent weeks. They've been gracious enough to share all manner of actuarial facts and figures that even surprised me. I've liked the idea of modest transfer taxes for a while, but now I'm sold ... totally convinced they're the only way to go.

Unique -- I also think that a modest homestead bill ($50-$150) is actually needed for all NC citizens. The one the senior dems have crafted is much more modest than that even.

lcloud -- Up until now, these revenue bills have always been purely local bills. H715 is just how everyone has always done it. Rep. Michaux and Senator Atwater are kind of 'breaking the mold' with the statewide bills, and it's because more local governments are clammoring and requesting this authority than ever before. The outcry is like a dam ready to break.

SD -- Well, fark your computer! No doubt that's mild compared to your comments when it happened. ;) Hope you get a chance to get back to this but happy packing in the meantime!!

[edited to correct spelling]

"They took all the trees and put them in a tree museum Then they charged the people a dollar 'n a half just to see 'em. Don't it always seem to go that you don't know what you've got till it's gone? They paved paradise and put up a parking lot."

ive known

Stan Norwalk for a while. He doesnt know I blog though.

Anyway, he is a great guy, completely knows the ins and out of Growth policy and Cary/Wake County politics. If you can get his ideas some traction in other counties it would be an amazing win for our state.

Draft Brad Miller -- NC Sen ActBlue :::Liddy 44 Brad 33

"Keep the Faith"

Good idea ...

... in terms of revenue and homestead exemption potentials. Low wealth counties benefit, too; highest taxed Scotland ($1.10) would get about 4.5 cents on the dollar. It's a top priority for the NC Association of County Managers as well.

The good news: all it should take is to get the good news out. Even realtors benefit, by being able to do business where there is decent infrastructure, etc. etc.

Thanks, Leslie, for pointing out this positive issue for us to promote.

zate

Good stuff

I'm using a hotel computer and trying to catch up. So much good stuff to read. This is a great post.

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We are not amused.

I am glad

my county has this transfer tax. I was in a discussion about 2 years ago and saw how my county was going to explode shortly.

I have come to the realization that my county will be part of the virginia beach metropolis in about 20 years.

Folks are just now finding my county. We just raised our water bills from $12.50 to $16.50 for me. First raise in water bills since the 1990s, I think.

Anyways, this transfer tax will enable far reaches of my county, along with my county manager being proactive in making the developer pickup most, if not all the costs for water pipes to his development is helping keep the costs down in my county.

So heck yea, I am all for this transfer tax.

When I bought my house 3 years ago, I was so in love with the community, that I would have just rolled that fee into my mortgage without batting an eyelash. So the county would have gotten $10,000 from me for nothing.

My county just approved a housing development of 800 houses. Dang, thats going to be alot of transfer tax plus additional revenue for my county. Being proactive with this vice being reactive is going to enhance my county without greatly impacting my taxes, or the new guys taxes. And thats a good thing.