RALEIGH – Wilmington Mayor Bill Saffo let the cat out of the bag on annexation reform last week – and make no mistake, it’s not a cute little house cat. Its back is arched, its claws are sharp, and it’s in no mood to be stroked.
In arguing against new bills that would halt and reverse recent involuntary annexations and require voter referendums for future ones, Saffo made the obvious point that defenders of North Carolina’s extreme annexation law usually deny: It’s about the money.
Forget all the high-minded talk about “orderly growth” and “fiscal responsibility.” North Carolina municipalities use involuntary annexation as a means of scooping up new revenue without raising their property-tax rates. That’s the whole point. They target communities outside their jurisdiction that can be expected to generate more property-tax revenue than they will cost in municipal services. Indeed, the fewer services these neighborhoods actually need and receive, the better.
By allowing annexations only when a majority of affected residents approve in a referendum, the 2012 legislation will force cities to make unpopular decisions, Saffo told the Wilmington Star-News:
Saffo also warned that the city’s inability to annex would lead to higher taxes for existing city residents, in the long term, if not sooner. “In the long haul, absolutely,” he said. “No doubt about it.”
The city, he said, must continue to pay escalating costs of maintaining streets, parks and other infrastructure but with little chance of increasing the tax base through annexation, he said.
Now, defenders of forced annexation argue that people living outside city limits ought to be paying for city services because they are currently using them for free. This may sound like a plausible argument, but it’s not. In the case of streets, nonresidents who drive into town to work or shop bear the incidence of property and sales taxes remitted by the industrial and commercial locations to which they are headed. In the case of parks, nonresidents either impose little marginal cost (if they drop by to eat a sandwich on a park bench) or can be made to pay fees to enroll in city recreational programs or swim in city pools.
What city politicians really want to do is provide services to the existing city residents who elected them without charging those residents the full price. Annexation is a handy device for foisting the cost onto someone else.
Annexation reformers got wise to this trick years ago. Some of them moved to North Carolina from states where the trick hasn’t been legal for decades. Others are natives who grew up outside city limits and were accustomed to buying their own services from private vendors. When the city came calling, they know what it was after – their money, not their well-being. They didn’t like it. So they formed grassroots organizations, networked with others across the state, petitioned their lawmakers for redress of grievance, and supported a 2011 compromise that promised to end the practice in a creative way.
Reformers had long sought what citizens of most other states already enjoyed – a requirement that voters in targeted neighborhoods approve an annexation via referendum. But they settled for a petition system. A referendum puts the onus on the city to sell the benefits of annexation to residents. What the 2011 bill did was put the onus on those who opposed a given annexation to gather signatures of at least 60 percent of affected property owners in order to halt it.
The deal was struck. The bill became law. Immediately, many cities began trying to figure out to subvert the deal. They decided to pursue legal action to have the petition system struck down as an unconstitutional election. The strategy succeeded in the short run, but is about to backfire as the urban lobby gets exactly what it never wanted: a referendum requirement.
Be careful what you wish for. And don’t let the cat out of the bag unless you don’t mind being scratched.
Hood is president of the John Locke Foundation.