RALEIGH – Members of local school boards and county commissioners are straining under the cost of school construction in many of North Carolina’s fast-growing communities. I understand that. But I can’t agree with the preferred response among many of them: authority to impose impact fees on new development.
Let’s break the issue down a bit. First off, the budget crunch that many counties are experiencing this year, and attributing to the need for school capacity, actually has multiple causes. A big one is that North Carolina’s counties pay about 6 percent of the Medicaid bill, which has been growing at an 8 percent or faster rate for years. With most property-tax bases growing at a slower rate, that’s not a sustainable financial trend.
The state legislature is currently considering a bill to phase out the county’s share of Medicaid, which would create the fiscal equivalent of a sizable new revenue source (essentially, the measure would transfer the funding mechanism for Medicaid from property taxation to income taxation, which makes more sense, while forcing lawmakers to consider the full cost of their Medicaid decisions, which also makes sense and may lead to needed reforms of the program).
Another cause is a failure to set firm priorities with taxpayer dollars – various “economic development” and “quality of life” expenditures, whether funded through general taxation or special excises, need to yield in priority to school construction. Here’s a good rule of thumb in budget discussions: you never raise taxes or fees to pay for high priorities, such as schools. You also raise them to pay for the lower-priority items you won’t cut to fund the schools.
Still another problem is education policy. In many communities, the space and size standards for new schools are too expansive and put too much emphasis on non-academic facilities. Plus, school boards and county commissions are penny wise and pound foolish in not supporting more charter schools, which don’t get capital dollars from taxpayers and whose enrollment includes many students who would otherwise be in district-public schools.
Using impact fees to fund school construction is an example of grabbing a hammer to turn a screw. It’s the wrong tool for the job. Impact fees are appropriately levied when there is a direct nexus between new-home construction and the capacity to deliver public services. For example, a new housing development will often increase traffic flows along the road serving it and necessitate more water and sewer capacity.
But the effects on school enrollment are not so straightforward. Obviously, some people moving in have school-aged children, and some of them will choose public schools. But others won’t. Besides, public education is not a business enterprise run by government strictly for practical reasons, like streets and sewer grids are. Under the state constitution, public education (funded though not necessarily delivered by government) is an entitlement. It is no more appropriate to “charge” parents directly for school construction than it would be to charge victims directly to apprehend their robbers.
Durham has already asserted its right to levy impact fees for schools. Other communities would love to follow suit, or to jack up the fees they already have. Perhaps a more lucrative way to raise funds would be a fee on bad ideas, of which we seem to have a surplus.
Hood is president of the John Locke Foundation.