Members of the General Assembly are working to keep taxes stable for in-state residents along the N.C. coast despite recent 80-percent-to-200-percent increases in property revaluations, an economist says.
Meanwhile, county officials also say they are lowering tax rates to mitigate the rise in property values.
Mike Walden, an NCSU economist, said the skyrocketing tax rates accompany a 25-year trend of booming development on the Outer Banks and other coastal properties.
Newspapers across the state have reported the increases as causing “sticker shock” among retirees and longtime residents living on fixed incomes. Walden discounted the effects of the tax increases, because, he said, most of the affected properties are second homes owned by the wealthiest and most mobile generation in U.S. history.
“We’ve got a very different economy now,” he said. “This is all being fueled by Baby Boomers, high-income households and affluent retirees who have reaped the benefits of a global economy. They can afford to buy second homes and they’ve fueled a very elastic increase in demand, especially in waterfront properties because water is a very attractive feature.”
As a result, Walden said, the prices along the Outer and Inner Banks have risen dramatically in the past few years.
The hardship on a few longtime coastal residents and retirees living on fixed incomes hasn’t gone unnoticed in Raleigh. Walden said some members of the General Assembly are planning to overhaul the taxes. One of the legislators’ main concerns, he said, is providing tax relief to those families.
“Many people don’t want the state to have a tax system that forces them out of the home,” Walden said. “I’m working with a subcommittee right now on this very issue. We’re searching for the middle ground. One of the proposals on the table is providing a delay in taxes or a lien on the property that won’t have to be paid until the family sells the house.”
Carteret County Tax Assessor Carl Tilghman said his county is currently in the middle of a property tax evaluation cycle. The value of waterfront land and homes has increased by more than 200 percent since they were last evaluated six years ago, he said.
However, Tilghman said, the county Board of Commissioners has responded to the dramatic increase by applying a revenue-neutral rate to the property. This means that residents who paid 44 cents per $100 of value last year will now pay 22 cents per $100.
“We’re not looking at the rise in property taxes as a windfall to the coffers of the county,” Tilghman said. “The overall amount of money that is brought in will remain just the same.”
The number of residents in Carteret County seeking homestead exemptions, which allows them to pay a lower tax rate on their property, also has increased, he said.
Currituck County Tax Assessor Tracy Sample said the revenue-neutral tax rate already applies to residents living in the county, where property values along the ocean and waterways increased by 179 percent in last year’s assessment.
Property owners who live out of state are affected by the increase, he said, but he downplayed the effect of revaluation on in-state residents. “Personally, I live on a mainland property and the tax increase didn’t affect me at all,” he said. “It mostly affected commercial land and resort properties in our county. Other than that, the property tax increase didn’t affect anyone that I know of.”
In accordance with the law, Sample said, Currituck County’s tax base decreased from 60 cents to 32 cents per $100 of value. County residents’ property taxes will rise by two cents per $100 of value. County officials approved the increase to help finance the building of a new school.
Onslow County Tax Assessor Harry Smith said the tax rate in his county fell from 67 cents to 53 cents per $100 of value after property revaluations increased by 80 percent.