The average North Carolinian surrendered more than 4.5 percent of his personal income to fund city and county government in the 2010 budget year, according to a new report from the John Locke Foundation. That’s one of the key conclusions in the latest edition of By The Numbers, JLF’s yearly look at tax and fee collections by local government in North Carolina.
“The typical resident of the median county in North Carolina paid $1,242 in taxes and fees to county and municipal governments,” said report author Michael Lowrey, a John Locke Foundation policy analyst.
Nominal (not adjusted for inflation) local collections essentially were flat in fiscal year 2010 as compared to the previous year. Because of inflation and population growth, those dollars went further for local governments in 2009, though, when inflation adjusted revenues for the median county was $1,321 per capita.
Local government taxes and fees came to 4.08 percent of per-capita personal income in the median county in fiscal 2010, down from a 2009 tally of 4.33 percent of per-capita personal income.
“The impact of the Great Recession was not felt equally throughout North Carolina, however,” says Lowrey.
“In the median county in the state, nominal per capita per¬sonal income actually was up slightly from 2008 to 2009 ($30,427 to $30,494). The state’s major urban areas — and Mecklenburg County in particular — saw sharp declines in per capita personal income, result¬ing in a $800 drop in PCPI statewide. As a result, the statewide local tax burden remained the same at 4.52 percent of personal income in both FY 2010 as in 2009.”
Calculating burdens
State law requires each county and municipality to file audited reports, which are available on the Web, with the N.C. Treasurer’s Office each year.
By The Numbers builds on that data and examines property taxes, sales taxes, and total local government collections of all taxes and fees for counties and municipalities for fiscal 2010 (July 1, 2009 to June 30, 2010), the latest year for which data are available.
For each of the three categories, a revenue per-capita figure was computed. Countywide figures also were calculated as a percentage of per-capita personal income.
Counties also are ranked against each other for both their per-capita collections and collections as a percentage of personal income. Municipalities are sorted by population and ranked within four population ranges (less than 1,000 population; 1,000-4,999; 5,000-24,999; and 25,000 or more).
While BTN shows the cost of local government, it does not attempt to measure the quantity or quality of services provided in exchange for those dollars. Nor does the report consider the additional out-of pocket costs to individuals for services that their local governments may not provide.
In unincorporated areas, for example, homeowners might have to contract privately for garbage pickup, while those living in a town or city might receive this service, paid for through municipal property and other taxes. Municipalities also might use some of tax dollars to provide a higher quality of fire protection, which might translate into lower homeowners insurance rates.
“Importantly, this means that whether a jurisdiction is ranked high or low in cost of government is not the end of the debate over fiscal policy — it is merely the beginning,” the report said. “Citizens of North Carolina’s cities and counties must decide whether the services they receive are worth the price they and their fellow taxpayers (residential and business) are paying in local taxes and fees.”
Work on this year’s report was complicated by a number of localities not filing audit reports with the state in a timely manner. Two counties — Hoke and Sampson — and 53 municipalities did not file their reports in a timely manner and information on them is still not available from the treasurer’s office. Harnett County’s report was incomplete.
The cost of local government
Dare County residents paid the highest amount in taxes and fees to county and municipal governments ($3,926 per capita). The counties of Mecklenburg ($2,460), Currituck ($2,398), Orange ($2,219), and Durham ($2,156) also ranked in the top five in revenue col¬lected per capita. The results for several of these counties reflect their popularity as vacation destinations. Second homes and resorts do appear on local tax registers. Because owners or renters rarely live in these dwellings year-round, however, such localities typically have small permanent populations. High tax values divided by a small permanent population will produce a high per-capita tax burden.
Residents in the counties of Caswell ($770), Gates ($801), Greene ($814), Alexander ($857), and Yancey ($857) paid the lowest average amounts in taxes and fees to local governments.
As per-capita personal incomes varies widely across the state — from a high of $47,925 per person in Orange County to a low of $24,807 in Yancey County — looking at tax burdens as a percentage of personal income produces somewhat different results. Dare County again led the way with county and municipal revenue accounting for 10.46 percent of per-capita personal income. Second through fifth were the counties of Hyde (7.23 percent of per-capita personal income), Brunswick (6.90 per¬cent), Currituck (6.74 percent), and Mecklenburg (5.77 percent).
By comparison, taxes and fees collected by local governments accounted for 2.47 percent of per-capita personal income in Onslow County. Next lowest were Caswell and Jones counties at 2.58 per¬cent and 2.87 percent of per-capita personal income respectively. In 42 counties, total collections were at 4 percent of per-capita personal income or less.
Among the 35 municipalities with a population of 25,000 or greater (see table), Charlotte residents again paid the greatest about in taxes and fees to support local government, with combine city and county revenue coming to $2,290 per person. The next highest tax and fee burdens were in Chapel Hill ($2,282), Wilmington ($2,140) Asheville ($2,126), and Mooresville ($2,096).
The entire By the Numbers report is available online by clicking here.