Robeson County voters have plenty of good reasons to question a proposed sales tax increase scheduled for a special election next week. John Locke Foundation experts highlight those questions in a new Regional Brief.

Robeson voters will head to the polls Tuesday to decide whether the county can raise the local sales tax by 0.25 percent.

“Robeson County commissioners are trying to sell this tax increase as a tax cut — it’s a bill of goods,” said report co-author Joseph Coletti, JLF Director of Health and Fiscal Policy Studies. “Though commissioners promise voters that property tax rates would go down, the real impact is an increased tax burden of $1.1 million. This is roughly equivalent to a 2-cent property tax increase.”

Voters should not be surprised by the sleight of hand, Coletti said. He and co-author
Dr. Michael Sanera, JLF Director of Research and Local Government Studies, document the way Robeson is following a “winning strategy” that has helped a half dozen counties win support this year for sales tax increases.

“First, promise that your sales tax increase will fund vital services,” Coletti said. “In Robeson’s case, the promise involves jail and courthouse improvements and increased funding for emergency services. Voters should ask county commissioners why such truly vital services haven’t topped the list of funding priorities in the past.”

“Why have vital public safety needs been neglected so long that the county now needs tax increases to fund them?” Coletti asked. “What low-priority services have taken precedence over these vital needs in the past? Does this indicate county commissioners are unable to set proper spending priorities?”

The winning strategy also involves a promise of property tax relief, Coletti said. “Property owners are more likely to vote, so commissioners believe a promise of property tax relief will help them increase the chances of winning support for a tax increase.”

Robeson voters should examine county commissioners’ recent actions before taking their word about property tax relief, Coletti said.

“Just this year, Robeson County commissioners tried to pass off a 2-cent property tax increase as a tax cut,” he explained. “Because of revaluation, Robeson taxpayers saw their property tax rate dip by one penny per $100 of assessed value. That sounds like a tax cut until you realize that the revenue-neutral tax rate would have been 2 cents lower than the rate Robeson adopted. In essence, commissioners raised property taxes by 2 cents, or about $1.3 million a year.”

Now commissioners promise that a sales tax increase would enable them to roll back the property tax rate to that revenue-neutral rate, Coletti said. “Since the sales tax increase would generate about $2.3 million a year, and the property tax decrease would amount to $1.2 million, county taxpayers still would face about a $1.1 million tax increase.”

Those numbers would apply only if Robeson County commissioners keep their word, Coletti said. “Commissioners’ verbal commitments are not legally binding, as voters in nearby New Hanover County learned this spring,” he said. “After voters approved a sales tax hike, county commissioners broke a pre-election promise and raised the local property tax.”

If Robeson County commissioners follow suit, local taxpayers will end up facing a $2.3 million tax increase, Coletti said. “This would be equivalent to increasing the property tax to 81 cents, or about a 5 percent tax increase.”

Robeson voters should ask whether any tax increase is necessary, Coletti said. “Spending increases in just three parts of the county budget equal the amount that would be raised with a sales tax hike,” he said. “The budget for wellness programs, communications, and the emergency telephone fund grew by a total of $2.3 million from 2009-10 to 2010-11. Wellness programs alone increased 237 percent in one year. And commissioners really believe they need a tax increase?”

The third part of Robeson County’s strategy involves the election schedule, Coletti said. “It’s unusual to hold an election in early August, but that’s part of the plan,” he said. “Taxpayers will spend $18,000 to $25,000 to hold a special election with this one item on the ballot. Why? It’s much more likely to pass.”

Since the General Assembly voted in 2007 to give counties the option of seeking local sales tax increases, voting results have been clear, Coletti said.

“When the sales tax vote is scheduled for May or November, when more voters head to the polls, just 16 of 60 sales tax measures have passed,” he said. “That’s a success rate of 26 percent. But when the votes are scheduled at odd times, outside normal election schedules, four out of five sales tax votes have passed. That’s a success rate of 80 percent.”

Robeson County voters should consider these numbers as they head to the ballot box, Coletti said.

“Before casting their ballots, voters also should remember that governments that have more ways to tax their residents have higher tax burdens than those with fewer ways to tax,” he said. “Whether Robeson County commissioners follow through with plans to reduce the property tax rate, they’ll always be able to raise that rate again in the future, but voters will have no chance to get rid of the extra sales tax.”