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Regional Brief 80: Orange Crush Revisited: County commissioners ask voters a third time for a tax increase

Regional Brief 80: Orange Crush Revisited: County commissioners ask voters a third time for a tax increase

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Key Facts
• Orange County commissioners are asking voters for a $2.5 million sales-tax increase at a time of high unemployment.
• Twice before Orange County voters rejected tax increases. Just last November, rural county voters rejected a sales-tax increase by 2 to 1.
• It seems that commissioners are attempting to win approval this time by cynically manipulating the process. • Turnout is likely to be low in the rural county precincts because there are no candidates on the ballot, while urban voters, who are more likely to support an increase, are more likely to turn out because they will also be voting for candidates for city offices.
• This cynical vote manipulation also costs county taxpayers an extra $85,000 to open rural precincts.
• Promises to spend the increased tax money for schools and economic development are attempts to gain support of special-interest groups and motivate them to vote for the tax increase.
• Regardless of the county commissioners’ promises, all of the new sales-tax revenues would be available for spending on any legal purpose. Taxpayers have no legal recourse if the commissioners break their promises.
• Since the special county taxing authority was established by the legislature in 2007, voters have rejected 82 of 101 requests for tax increases, sending the message that county commissioners must be more responsible stewards of taxpayers’ hard-earned money.
Key Facts
• Orange County commissioners are asking voters for a $2.5 million sales-tax increase at a time of high unemployment.
• Twice before Orange County voters rejected tax increases. Just last November, rural county voters rejected a sales-tax increase by 2 to 1.
• It seems that commissioners are attempting to win approval this time by cynically manipulating the process. • Turnout is likely to be low in the rural county precincts because there are no candidates on the ballot, while urban voters, who are more likely to support an increase, are more likely to turn out because they will also be voting for candidates for city offices.
• This cynical vote manipulation also costs county taxpayers an extra $85,000 to open rural precincts.
• Promises to spend the increased tax money for schools and economic development are attempts to gain support of special-interest groups and motivate them to vote for the tax increase.
• Regardless of the county commissioners’ promises, all of the new sales-tax revenues would be available for spending on any legal purpose. Taxpayers have no legal recourse if the commissioners break their promises.
• Since the special county taxing authority was established by the legislature in 2007, voters have rejected 82 of 101 requests for tax increases, sending the message that county commissioners must be more responsible stewards of taxpayers’ hard-earned money.

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Published by: John Locke Foundation on Oct 12, 2011
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The John Locke Foundation
is a501(c)(3) nonproft, nonpartisan researchinstitute dedicated to improving public policy debate in North Carolina. Viewpoints expressed by authors do not necessarilyreect those o the sta or board o the Locke Foundation.
200 W. Morgan, #200Raleigh, NC 27601
phone:
919-828-3876
fax:
919-821-5117www.johnlocke.org
regional
brief 
Orange Crush Revisited
County commissioners ask votersa third time for a tax increase
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•
Orange County commissioners are asking voters for a $2.5 millionsales-tax increase at a time of high unemployment.
•
Twice before Orange County voters rejected tax increases. Just lastNovember, rural county voters rejected a sales-tax increase by 2 to 1.
•
It seems that commissioners are attempting to win approval this timeby cynically manipulating the process. Turnout is likely to be low inthe rural county precincts because there are no candidates on the bal-lot, while urban voters, who are more likely to support an increase, aremore likely to turn out because they will also be voting for candidatesfor city ofces.
•
This cynical vote manipulation also costs county taxpayers an extra$85,000 to open rural precincts.
•
Promises to spend the increased tax money for schools and economicdevelopment are attempts to gain support of special-interest groupsand motivate them to vote for the tax increase.
•
Regardless of the county commissioners’ promises, all of the newsales-tax revenues would be available for spending on any legal pur-pose. Taxpayers have no legal recourse if the commissioners break their promises.
•
Since the special county taxing authority was established by the legisla-ture in 2007, voters have rejected 82 of 101 requests for tax increases,sending the message that county commissioners must be more respon-sible stewards of taxpayers’ hard-earned money.
 
2
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Orange County commissioners are asking  voters to approve a $2.5 million tax increasein the midst of the longest-running economicdownturn since the Great Depression, withlittle prospect for rapid recovery. County com-missioners have only themselves to blamebecause they increased spending during theeconomic boom. They seek to continue thepattern of excessive spending during a boomand overtaxing during a recession.Unemployment in North Carolina hasbeen above nine percent since January 2009and is currently at 10.4 percent, 33 monthslater. A tax increase now would mean thatmoney needed in the private sector to support job creation would be transferred to the publicsector.
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In order to attract supporters, commis-sioners promise benets to specic special-interest groups. This time they are promising to use half of the $2.5 million in new revenueper year for various corporate welfare infra-structure projects to attract new businessesand half for school facility and technologyprojects in the Orange and Chapel Hill-Car-rboro schools. According to the commissioner’s ofcialresolution,
50% of the funding will be allocated to fundinfrastructure improvements needed foreconomic development initiatives that recruitnew businesses, expand existing businesses,provides funding for small business loans togrow businesses in Orange County
1
50% of the funding will be allocated in anequitable manner between the County’s twoschool systems for the dedicated purposeof facility improvements at ‘older’ schoolswithin all of Orange County and the procure-ment of technology. Each school system willestablish a list of prioritized needs for olderschools within the County. Funding providedby the passage of the referendum will beallocated to those prioritized projects. Prog-ress will be evaluated annually and adjust-ments made according to needs agreed uponby the school Boards and Board of CountyCommissioners.
2
 
These promises are not legally binding,however, and taxpayers would have no legalrecourse if the commissioners chose to spendthe new sales-tax revenue on other items. Additionally, county commissioners havestipulated that the sales-tax funds would gointo a separate account, but that also wouldnot provide taxpayers any legal protectionbecause the account would still be part of thegeneral fund and could still be spent on anylegal purpose.Furthermore, even if this particular com-mission were to allocate the money as prom-ised above, future county commissions wouldnot be bound by the promises in this resolu-tion.
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evelopMenT
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 While spending to attract businesses toOrange County may sound attractive to localbusinesses, unemployed workers, and sym-pathetic voters, this spending is unlikely toimprove the business climate in the county.In fact, it is unlikely that $1.25 million or anyamount of spending on so-called economicdevelopment activities would improve OrangeCounty’s economy.Orange County and its cities, Chapel Hilland Carrboro in particular, have a long recordof policies that are anti-business. Land-usepolicies have driven up the cost of develop-able land. The anti-growth, anti-business,anti-development message has been receivedloud and clear by the business community,nationally and internationally. For this rea-son, the new Tanger Outlets Mall was built just over the county line in Alamance County,and the New Hope Commons was built inDurham County. High land prices driven bycounty and city ordinances and lengthy reviewprocesses that force developers to bow to thewhim of every special-interest group during the reviews cost developers thousands, making building in Orange County prohibitive.
 
3
oRanGe cRuSh ReViSitedReGional bRief
For example, Chapel Hill and Carrboroestablished a rural buffer that “denes theurban services boundary and the limit of Cha-pel Hill and Carrboro growth.” This bufferdrives up the price of land by making devel-opable land scarce. Chapel Hill uses zoning and ordinances to require solar power, historicdistricts, tree protection, affordable housing,a carbon reduction program, and renewableenergy.Orange County has followed suit withfarmland preservation, historic preservation,a comprehensive land-use plan that includespreservation of natural and cultural resources,a lands legacy program, and protection of natural areas. While these policies are questionable froma property-rights perspective, they seem to bewhat many citizens of Orange County want. As such, they cannot escape the inevitableeconomic consequences of those choices.Businesses (such as the Tanger Outlet Malland the New Hope Commons) nd such poli-cies prohibitive and therefore locate in neigh-boring counties. When new businesses go toneighboring counties, the property tax burdenfalls disproportionately on residential propertyowners, making homeowners pay 85 percentof all property taxes in the county. Anti-business and anti-development poli-cies result in Orange County residents being more dependent on property taxes for funding the county than are neighboring counties. Asof 2010, property taxes account for 76 percentof Orange County’s general fund revenue, upfrom 74 percent a year ago.Meanwhile, neighboring Durham Coun-ty’s is at 58 percent, and Alamance County’sis 49 percent.In addition, Orange County residents paythe 15th highest property tax burden of the100 counties as a percentage of income.
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In order to attract teachers, administra-tors, and some parents, the commission-ers promise to spend 50 percent of the newsales-tax revenue or $1.25 million per year onschools. While the county would use the new taxrevenue to fund capital projects, it is impor-tant to note that Orange County taxpayerscontinue to provide ample resources to thepublic schools in the county.Orange County Schools has one of thehighest local per-student expenditure inNorth Carolina. Between 2004 and 2010,the district has had the fourth or fth high-est local public-education contribution in thestate, averaging nearly $1,400 per studenthigher than the state average. While the dis-trict’s rank falls once state and federal funding is added, Orange County Schools still spendsnearly $1,200 more per student than the stateaverage.
3
Since 2001, Orange County Schools andChapel Hill–Carrboro City Schools have bothspent millions to addresses various capitalneeds (see Table 1.).
4
Chapel Hill–Carrborospent more per-pupil dollars on capital expen-ditures than nearly every other school district
Table 1. Per-Pupil Expenditures, 2004–10
Year 
Local Per-Pupil ExpendituresTotal State, Local, and Federal Per-Pupil Expenditures
Orange Co.SchoolsStateAverageDifferenceOrangeCo. RankOrange Co.SchoolsStateAverageDifferenceOrangeCo. Rank
20103,182.08$1,930.62+$1,251.464 of 1159,348.05$8,451.43+$896.6243 of 11520093,534.82$2,123.31+$1,411.515 of 1159,861.69$8,662.88+$1,198.8134 of 11520083,679.18$2,075.15+$1,604.034 of 1159,796.90$8,521.66+$1,275.2428 of 11520073,602.28$1,934.05+$1,668.234 of 1159,556.35$8,017.42+$1,538.9320 of 11520063,264.05$1,873.14+$1,390.914 of 1158,795.64$7,596.15+$1,199.4925 of 11520053,089.85$1,811.66+$1,278.194 of 1158,347.21$7,327.60+$1,019.6130 of 11520042,841.35$1,716.94+$1,124.414 of 1158,125.28$7,006.13+$1,119.1521 of 115

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