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Does Anson Need A Sales Tax Increase?
Does Anson Need A Sales Tax Increase?
66
for Truth
Executive Summary
• The Anson County commissioners are asking county residents to
approve a sale-tax increase on November 4. County officials indi-
cate that the revenue from the tax increase, if passed, would be used
for school construction and other facilities needs.
• Statements by county officials regarding the use of possible sales-tax
revenue are not legally binding. Once passed, all new revenues, by
law, may be used for any legal purpose.
• This Regional Brief finds that Anson County’s problems are not cre-
200 W. Morgan, #200 ated by a lack of funding. The more than $5.8 million in savings
Raleigh, NC 27601 and revenues identified in this report is more than 17 times the
phone: 919-828-3876 amount that the proposed sales-tax increase is estimated to produce
fax: 919-821-5117 (see Figure 1). If the county used this money instead, it could delay
www.johnlocke.org a sales-tax increase for over 17 years.
The John Locke Foundation is a
• County revenues have grown 17 percent faster than population
501(c)(3) nonprofit, nonpartisan research
institute dedicated to improving public
and inflation since Fiscal Year (FY) 2002 (see Figure 2). The total
policy debate in North Carolina. Viewpoints amount of revenue for FY 2007 was over $3.4 million more than in
expressed by authors do not necessarily
reflect those of the staff or board of FY 2002. By FY 2007, the average family of four paid $544 more
the Locke Foundation.
in taxes than in FY 2002. It would take a 33 percent increase in
family 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.
d o e s A n s o n c o u n t y n e e d a s a l e s - ta x i n c r e a s e ?
that the county has received over those five • From FY 2004 to FY 2006, Anson County
years. gave nearly $253,000 per year in incen-
• Anson County’s cash reserves are only 7.2 tives to a few selected private businesses.
percent of its annual budget. The state This practice is unfair to the hundreds of
requires all counties to have eight percent businesses in the county who are, at times,
of their budgets held in cash for emergen- forced to compete with tax-subsidized busi-
cies, but Anson County is in violation of nesses.
the state minimum.
• If Anson County were to restrict its reve- Background
nue increases to the increases in population In its 2007 session, the North Carolina Gen-
and inflation, the county’s revenues would eral Assembly relieved all counties of paying
increase 23 percent over the next ten years. the portion of Medicaid expenses that had
been forced on counties, in exchange for the
• Over the next ten years, the number of half-cent sales tax that the counties levied
students in Anson County public schools to help pay those expenses.1 In addition, the
will decrease by 595 students, or by about legislature voted to give counties the option
14.6 percent. to ask voters to approve new tax increases.
• If the school district has facility needs, Options include increasing the sales tax by
the county commission and school board one-quarter cent, tripling the land-transfer
need to show taxpayers how they would tax rate from 0.2 to 0.6 percent, or not hiking
spend the almost $6 million in state money taxes at all.
provided for capital improvements over the The legislature also required counties to
next ten years. put those tax increases to an advisory vote of
• Anson County benefited from the Medic- the people. If voters approved, county com-
aid swap above the state’s promised “hold missioners were allowed but not required
harmless” amount of $500,000 a year for to increase taxes. If both tax increases were
ten years. Anson County receives over on the same ballot and both were approved,
$1.4 million the first full year and a total commissioners could impose only one tax
of almost $25.2 million over ten years (see increase, not both.
Figure 1). Since November 2007, county voters
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
regional brief
d o e s A n s o n c o u n t y n e e d a s a l e s - ta x i n c r e a s e ?
across North Carolina have voted 58 times as well as hire public school personnel, in
on such tax increases, rejecting nearly all of proportion to changes in their school popula-
them. Voters have approved only eight of tion. In Anson County, from 2002 to 2007,
those 58 proposed tax increases. Undeterred there was a seven percent decrease in student
by voter opposition, some county commis- population. At the same time, there was a 13
sions have put the tax increases on the ballot percent increase in local, inflation-adjusted
more than once. per-pupil expenditures.
There is no limit to the number of times Over the last five years, the state in-
that county commissioners can place a creased per-pupil expenditures in Anson
proposed tax increase on the ballot, or how County by 16 percent, adjusted for inflation.
much tax money commissions can spend on Federal per-pupil expenditures increased by
public “education” campaigns requesting 29 percent during the same period. Thus,
that voters approve the tax increase. local, state, and federal spending on the
Anson County Schools significantly outpaced
Public School Spending2 changes in enrollment.
By far, counties spend more money on public The North Carolina Department of
education than any other area. Total local Public Instruction (DPI) projects that Anson
government spending on public education County Schools will lose 595 students over
was $2.68 billion or $1,934 per pupil for the the next ten years, a 14.6 percent increase.
2006-07 school year. Nearly 25 percent of all The state’s Public School Building Capi-
expenditures on public schools come from tal Fund, which includes lottery funds, will
local tax revenue. Given the amount of tax- provide Anson County with an estimated $6
payer money involved, sympathetic appeals million over the next ten years.
for school funding should not come at the If school facilities are needed, the school
expense of sound fiscal policy system should redirect funds away from low
County governments and school boards priority projects, reduce the size of the school
should spend local tax dollars for education, bureaucracy, pursue ways to reduce construc-
(2006 $)
$1,000
$942
$950 Amount actually collected
$900
17%
$850
$800
$806
Growth pays for itself
$750
$700
2002 2003 2004 2005 2006 2007
Fiscal Year
Source: State Treasurer's Office
J o h n l o c k e f o u n d at i o n
d o e s A n s o n c o u n t y n e e d a s a l e s - ta x i n c r e a s e ?
regional brief
d o e s A n s o n c o u n t y n e e d a s a l e s - ta x i n c r e a s e ?
2007-323 (House Bill 1473, Sections 31.16 and 31.17). adjustments used the GDP Deflator published by
the Federal Reserve Bank of St. Louis. Public School
2. N.C. Department of Public Instruction (NC
Building Capital Fund projections are based on 10
DPI), School Planning Division, “ADM Growth
years of corporate income tax and lottery funding at
Analysis, 2007–2017,” September 2007; NC DPI,
the 2008-2009 level (estimated), adjusted for projected
School Planning Division, “Public School Building
enrollment growth over ten years.
Capital Fund: 10 Year Planning Projections, 2007–
2016,” June 27, 2007; NC DPI, Division of School 3. County Annual Financial Information Report
Business Services, “FY 2007-08 Estimated Lottery (AFIR) from the N.C. Department of the State
Distribution,” August 2007; NC DPI, “Statistical Treasurer, www.nctreasurer.com/lgc/units/unitlistjs.
Profiles,” 2003–2007, accessed September 2008; htm.
NC DPI, Division of School Business, “2006–2007 4. North Carolina General Assembly, Fiscal
Selected Financial Data,” accessed September Research Division, “Medicaid 3 Year 500K”
2008; NC DPI, Education Statistics Access System, projections, 2007.
“Final ADM,” accessed September 2008 Inflation
regional brief