Going By The Numbers

RALEIGH — For those cynical, disaffected, or simply busy folks who tune out politics because they don’t think it makes any real difference in their lives, I’ve got news for them: it matters a lot.

I’m not talking about the mechanics of campaigns themselves, necessarily, or the rhetoric wobbling of all too many underwhelming politicians. And I’m not just referring to obvious ways that the distribution of political power can affect us — in matters of war and peace, life and death — but also decisions made at the local level, largely under the radar screen and involving a relative few.

Consider, for example, the lessons contained in the Center for Local Innovation’s fifth-annual report on the cost of city and county governments across North Carolina. “By The Numbers” is one of the signature services of CLI, a special project of the John Locke Foundation. The report uses data compiled by the State Treasurer’s Office on all the taxes, fees, and charges collected by municipal and county governments. It adjusts the data for population (to rank municipalities) and for personal income (to rank counties). The results have to be interpreted carefully, but they can still offer some interesting insights into local government finances — and into the different choices that local officials across North Carolina have made.

Here are some observations about the 2004 edition of “By the Numbers”:

* Once again, Charlotte ranks the highest in local revenues per person among the 25 cities in the state with at least 25,000 residents. This is the third year the Queen City has earned this dubious honor, which is in part due to an extra half-cent sales tax imposed back in 1998 to fund a misguided transit system. For the same reason, Mecklenburg County ranks among the most costly in terms of local revenues as a percentage of income. Indeed, Mecklenburg’s rate of 5.5 percent is significantly higher than the 4 percent rate in the state’s second-most populous county, Wake.

* In general, average tax burdens rise as you move from Western North Carolina to Eastern North Carolina. Far to the west and east, in counties dominated by resorts and tourism, the numbers aren’t really comparable to the rest of the state because of the presence of vacation homes and other taxable property owned by people residing elsewhere. But if you compare most mountain and Western Piedmont counties to most along the coastal plan, you’ll find a substantial difference in the cost of local government. My suspicion is that one of the main factors explaining the discrepancy is political: although there are plenty of exceptions, in general Republican-controlled county commissions, of which there are many more to the west, allow less spending growth and fewer tax increases than their Democratically controlled peers do.

* Local governments in North Carolina cost quite a bit more than they use to just a few years ago. Local taxes and fees totaled nearly $1,000 per person in 2002 (the most recent year available), which is 23 percent higher in inflation-adjusted dollars than the 1994 burden. Remember that the next time a local politician complains about big spending cutbacks or the unwillingness of state legislators to give cities and counties more ways to tax. Apparently, they’ve got more than enough ways to tax and spend already.

* Actually, the trend isn’t entirely of local governments’ making. From 2001 to 2002, there was a sizable increase in the local tax burden across North Carolina. This is surely due in large measure to the decision by state politicians to raid local revenues to balance the state budget, in effect foisting the state’s fiscal troubles onto local levels of government. Quite a few localities responded by raising their property-tax rates and blaming Raleigh.

Local taxes, fees, and charges are not nearly as significant a financial burden as state or federal taxes. But they do bite — and they are going up, contrary to the trend at the federal level of declining real tax burdens. In fact, North Carolina’s total tax burden fell in 2002 to about 30 percent of personal income from 33 percent in 2001. This was entirely due to federal tax reductions, however, because the real cost of local government is going up.

It doesn’t have to be. That’s where public policy comes into the picture. The variation in city and county costs demonstrated in “By The Numbers” offers persuasive evidence that city and county officials have choices, even with the bounds of state and federal mandates and misbehavior. Let’s hope they start making better ones.

Hood is president of the John Locke Foundation and publisher of Carolina Journal.

p.s. While I’m on the subject of JLF items of note, I’d like to direct your attention to the newly redesigned website for the North Carolina Education Alliance, which like CLI is a JLF special project. The NCEA site will have lots of timely news items, research notes, exclusive articles, columns, and other materials dealing with elementary and secondary education in North Carolina. If you are interested in this issue, I think you’ll find the site informative and useful.

Here at Carolina Journal Online, we’re also preparing to add a new page to our standing links to provide readers with a convenient starting-off point to explore North Carolina’s burgeoning online community. If you have a favorite blogger or bulletin board you think we should include in our blogroll, please send us an email to let us know about it.