RALEIGH – North Carolina’s rapidly growing areas – the urban counties, the coastal and mountain resort communities, the suburbs – are full of earnest, well-meaning, enthusiastic local politicians and civic boosters who are convinced that growth is good and that it confers more fiscal costs than benefits on local governments. Not coincidentally, many are in the real-estate business.
They sign onto efforts to enact school bonds that force up the tax burden. They are among the supporters of bills to give local governments “new revenue options” to supplement property taxes, which are highly visible and thus highly resented. They complain about inadequate spending on the infrastructure needed to attract new jobs and people to their communities, and recommend various tax and fee increases to finance the necessary “investment” in growth-enhancing assets. But then, citing the impact of all those new people on schools and roads, they recommend various tax and fee increases to finance construction and program expansions.
Growth is much to be desired, they say, but it doesn’t pay for itself. So “we” must pay if we want to continue to grow. If we continue to grow, however, we must pay more.
The charitable explanation for all this is that the folks I’m talking about have never spelled out their views with enough clarity to spot the problem. As Wake, Mecklenburg, Forsyth, and other counties prepare for growth/school bond debates over the coming couple of years, the politicians and boosters need to think critically about what they think they know and what they hope to accomplish. Presumably, their goal is not to trigger an anti-growth backlash from testy taxpayers. But if they keep repeating the aforementioned two statements – we need more tax money to attract growth and growth costs more to service than it generates in tax money – that’s what they will get.
A better approach would be to seek ways to make local growth pay for itself by restructuring government policy and finances. Here are some of the elements I’d like to see included:
• Make public schools less expensive to build, more efficient to operate, and less favored over private alternatives. There is no shortage of sound public policies to further these objectives.
• Build new limited-access highway lanes with the maximum amount of private investment and user finance via electronic tolls, both policies used in other states and countries to provide needed transportation capacity.
• Alleviate the financial burden counties shoulder for programs, such as Medicaid, over which county officials have little to no control. If the state picked up the entire non-federal share of Medicaid, the resulting savings to counties would be the equivalent of a new stream of revenue growing far more rapidly than any other tax.
• Abolish the use of targeted tax breaks to attract business start-ups or expansions. They punch holes in the tax base while simultaneously increasing demand for government services. There are other reasons to oppose tax incentives, but this one is obviously relevant to the local-growth debate.
Make no mistake: if the taxpayers of North Carolina come to believe that continued growth will raise their taxes, they will become opponents of growth and a constituency for heavy-handed regulations designed to choke or manipulate it.
Hood is president of the John Locke Foundation.