The cost of local government continues to climb, according to the recent edition of By The Numbers, the John Locke Foundation’s analysis of tax and fee collections by localities in North Carolina.

The report shows that during fiscal 2006, the typical resident of the median county in North Carolina paid $1,236 in local taxes and fees, up 4.2 percent from an inflation-adjusted $1,186 a year earlier. That amounts to 4.75 percent of personal income in the median county, up from 4.65 percent a year earlier. Because many of the state’s larger counties also have above-average local tax burdens, the statewide average is actually higher, at 4.98 percent of personal income.

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 2006 (July 1, 2005 to June 30, 2006), the latest year for which a complete set of data is 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 are also 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).

The recent edition of By The Numbers contains a change in methodology. It uses population figures for the beginning of and not the end of the fiscal year, as has previously been the case. Though not the reason for change, this will allow future editions of By The Numbers to appear closer to the end of the fiscal year. The edition covering the July 1, 2006 to June 30, 2007 fiscal year should be out in late summer.

While By The Numbers 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 government might 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 their municipal property and other taxes. Municipalities might also use some of their 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. 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,” the report says.

The cost of local government

Dare County residents paid the highest amount in taxes and fees to local government, at $4,152 per capita. The counties of Mecklenburg, at $2,605; Currituck, $2,396; Brunswick, $2,323; and Durham, $2,178, also rank in the top five in revenue collected per capita by county and municipal governments. The results for Dare and Currituck reflect in part their popularity as vacation destinations, with relatively small permanent populations for the property tax base that exists there.

Residents in the counties of Caswell, at $743; Hoke, $753; Gates, $758; Alexander, $768; and Jones, $798, 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 $42,984 per person in Mecklenburg County to a low of $20,169 in Hoke County — looking at tax burdens as a percentage of personal income can be illuminating.

Dare County again leads the way with county and municipal revenue accounting for 12.41 percent of per-capita personal income. Second through fifth were Brunswick, at 8.65 percent of per-capita personal income; Hyde, 8.05 percent; Currituck, 7.99 percent; and Bladen, 7.79 percent, counties.

By comparison, taxes and fees collected by local governments accounted for only 2.68 percent of per-capita personal income in Onslow County. Second lowest was Alexander County at 2.79 percent of per-capita personal income. In 23 additional counties, total collections were at 4 percent of per-capita personal income or less.

Among the 29 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 $2,409 per person. The next highest tax and fee burdens were in Chapel Hill, at $2,086; Wilmington, $2,046; Asheville, $1,996; and Durham, $1,992.

The lowest combined city and county tax burdens were in Jacksonville, at $1,025; Thomasville, $1,169; Goldsboro, $1,297; Rocky Mount, $1,360, and Kannalopis, $1,373.

The entire By the Numbers report is available on line at johnlocke.org/policy_reports/.

Michael Lowrey is an associate editor of Carolina Journal.