or Truth
The John Locke Foundation
is a501(c)(3) nonprot, nonpartisan researchinstitute dedicated to improving public policy debate in North Carolina. Viewpoints expressed by authors do not necessarilyrefect those o the sta or board o the Locke Foundation.
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regional
brief
Does Anson Need aSales-Tax Increase?
County already has over $5.8 million in available funds
D
r
. M
ichael
S
anera
, J
oSeph
c
oletti
, t
erry
S
toopS
O
ctOber
2008
No. 66
e
xecutive
S
uMMary
The Anson County commissioners are asking county residents to
approve a sale-tax increase on November 4. County ofcials indi
-cate that the revenue from the tax increase, if passed, would be usedfor school construction and other facilities needs.
Statements by county ofcials regarding the use of possible sales-tax
revenue are not legally binding. Once passed, all new revenues, bylaw, may be used for any legal purpose.This
Regional Brief
nds that Anson County’s problems are not cre
-ated by a lack of funding. The more than $5.8 million in savings
and revenues identied in this report is more than 17 times the
amount that the proposed sales-tax increase is estimated to produce
(see Figure 1). If the county used this money instead, it could delaya sales-tax increase for over 17 years.County revenues have grown 17 percent faster than populationand ination since Fiscal Year (FY) 2002 (see Figure 2). The totalamount of revenue for FY 2007 was over $3.4 million more than inFY 2002. By FY 2007, the average family of four paid $544 morein taxes than in FY 2002. It would take a 33 percent increase infamily income (current dollars) to match the increase in revenues
••••
The authors thank John Locke Foundation research intern Clint Atkins for his assistance with this report.
does Anson county need A sAles-tAx increAse?regionAl brief
Figure 1. Anson County Projected Revenue and Savings
that the county has received over those ve
years.
Anson County’s cash reserves are only 7.2
percent of its annual budget. The staterequires all counties to have eight percentof their budgets held in cash for emergen-cies, but Anson County is in violation of the state minimum.
If Anson County were to restrict its reve
-nue increases to the increases in population
and ination, the county’s revenues wouldincrease 23 percent over the next ten years.
Over the next ten years, the number of students in Anson County public schoolswill
decrease
by 595 students, or by about
14.6 percent.If the school district has facility needs,
the county commission and school boardneed to show taxpayers how they wouldspend the almost $6 million in state moneyprovided for capital improvements over thenext ten years.
Anson County beneted from the Medic
-
aid swap above the state’s promised “holdharmless” amount of $500,000 a year for
ten years. Anson County receives over
$1.4 million the rst full year and a totalof almost $25.2 million over ten years (seeFigure 1).
•••••
From FY 2004 to FY 2006, Anson Countygave nearly $253,000 per year in incen
-tives to a few selected private businesses.This practice is unfair to the hundreds of businesses in the county who are, at times,forced to compete with tax-subsidized busi-nesses.
B
ackgrounD
In its 2007 session, the North Carolina Gen
-eral Assembly relieved all counties of paying
the portion of Medicaid expenses that had
been forced on counties, in exchange for thehalf-cent sales tax that the counties leviedto help pay those expenses.
1
In addition, the
legislature voted to give counties the optionto ask voters to approve new tax increases.Options include increasing the sales tax byone-quarter cent, tripling the land-transfer
tax rate from 0.2 to 0.6 percent, or not hiking
taxes at all.The legislature also required counties toput those tax increases to an advisory vote of
the people. If voters approved, county com
-missioners were allowed but not required
to increase taxes. If both tax increases were
on the same ballot and both were approved,commissioners could impose only one taxincrease, not both.
Since November 2007, county voters
•
Revenue Gains1 year10 years
Gain from Medicaid swap (FY 2008-09)$1,428,073$25,165,108Estimated school capital (Avg based on projections)
$700,351$5,981,698
Potential Savings
Eliminate economic incentive giveaways (2004-2006 Avg)
$252,667$2,526,667
Revenue Growth
Revenue in excess of population and inflation (FY2006)$3,450,831$34,508,313
TOTAL$5,831,922$68,181,786
Potential extra availability$5,831,922 $68,181,786Revenue from Sales Tax Increase$320,123 $4,183,464
John locke foundAtiondoes Anson county need A sAles-tAx increAse?
across North Carolina have voted 58 timeson such tax increases, rejecting nearly all of them. Voters have approved only eight of those 58 proposed tax increases. Undeterredby voter opposition, some county commis-sions have put the tax increases on the ballotmore than once.There is no limit to the number of timesthat county commissioners can place aproposed tax increase on the ballot, or howmuch tax money commissions can spend on
public “education” campaigns requesting
that voters approve the tax increase.
p
uBlic
S
chool
S
penDing
2
By far, counties spend more money on public
education than any other area. Total localgovernment spending on public education
was $2.68 billion or $1,934 per pupil for the2006-07 school year. Nearly 25 percent of all
expenditures on public schools come from
local tax revenue. Given the amount of tax
-payer money involved, sympathetic appealsfor school funding should not come at the
expense of sound scal policy
County governments and school boardsshould spend local tax dollars for education,as well as hire public school personnel, inproportion to changes in their school popula-
tion. In Anson County, from 2002 to 2007,
there was a seven percent decrease in student
population. At the same time, there was a 13percent increase in local, ination-adjusted
per-pupil expenditures.
Over the last ve years, the state in
-creased per-pupil expenditures in Anson
County by 16 percent, adjusted for ination.
Federal per-pupil expenditures increased by
29 percent during the same period. Thus,
local, state, and federal spending on the
Anson County Schools signicantly outpaced
changes in enrollment.The North Carolina Department of
Public Instruction (DPI) projects that Anson
County Schools will lose 595 students over
the next ten years, a 14.6 percent increase.The state’s Public School Building Capi
-tal Fund, which includes lottery funds, willprovide Anson County with an estimated $6million over the next ten years.
If school facilities are needed, the school
system should redirect funds away from lowpriority projects, reduce the size of the schoolbureaucracy, pursue ways to reduce construc-
Figure 2. Anson County Locally Generated Revenue Per Person,
FY 2002–FY 2007 (adjusted for ination, FY 2006 dollars)
$942$806
$700$750$800$850$900$950$1,000200720062005200420032002
Fiscal Year
Source: State Treasurer's Office
Amount actually collectedGrowth pays for itself
17%
(2006 $)
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Does Anson need a sales tax increase?
The Anson County commissioners are asking voters to approve a sales-tax increase on November 4. This report identifies more than $5.8 million in revenue and savings the county could use to meet its needs — more…
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