News: Charlotte Exclusives

The Tax and Spend Trap

Will fiscal discipline ever return to Mecklenburg?

Surprise, surprise. The tax hike that has lurked in the weeds since last November’s election is finally out in the open and look at the size of that beast. Mecklenburg County is on the cusp of its biggest tax increase in history, one will that sock every homeowner in the county right between the eyes.

To close a $35 million budget shortfall county officials are mulling a tax hike twice the size of the $16 million one they imposed just last year. And that is just for starters. Should Charlotte-Mecklenburg Schools ask for more than an additional $14 million to cover growing enrollment, taxpayers will have to shell out even more.

The tax hike fever is on despite the fact that tax collections are expected to grow by $28 million in 2006 even without a tax hike. The county commission is explicitly saying that $811 million, up from $752 million in 2004 and $783 million this year, is not enough money for their plans. Where will it end?

It didn’t have to be this way. Contrary to the storyline coming from county commission chairman Parks Helms, Mecklenburg had a choice to spend prudently but did not. Even now, at this late date, the county can choose between spending restraint or tax increases far into the future.

The county simply did not have to go debt happy in recent years to the point where $172 million in debt service gnaws at the county budget. Cost-overruns and the price of cement in China have nothing to do with matters. Dubious projects like a $41 million “environmentally sound” uptown library and millions in “economic development” handouts to well-connected developers are not essential functions of government.

Mecklenburg officials also need to remember that borrowed does not mean free. Racking up debt today pushes tax increases tomorrow. As the debt burden grows and eats up more of county revenue, less is left over for the other functions of government. This pattern goes on as long as that debt is on the books. This persistent nature of public debt is why a public vote on debt is required by North Carolina law, because it commits the wealth of entire communities to a project long after the politicians, boosters, and consultants are gone.

Unfortunately Mecklenburg County, along with the rest of the state of North Carolina, reacted to the economic slowdown that started in 2001 with a frenzy of debt issuance, finding ways around the requirement for a public vote with certificates of participation and other gimmicks. But by any name, the bill is starting to come due.

If county leaders are remotely serious about getting the county back on sound financial footing, they must act to tighten the 2006 budget as much as possible. County manager Harry Jones should be directed to institute a county-wide hiring freeze until the county arrives at a sustainable budget glide-path. In addition, department heads should forgo any bonuses or raises until the county has a viable red-ink solution. Even the entire $7 million in planned merit pay raises for county workers must be on the table until the current crisis is past.

In addition, all economic development spending should be zeroed out for 2006 and its return contemplated only after a thorough audit of recent grants and loans made by the county. If then.

Harsh? No, not compared to other jurisdictions that have lived beyond their means and tried to make up the difference on the backs of taxpayers. In New York, Erie County residents recently demanded that county government actually lay off county workers rather than institute yet another tax increase on a community already staggering under high taxes.

The lesson is clear. Residents of Mecklenburg County will not get fiscal responsibility unless they demand it. Now.