Looking at Chatham's sales tax referendum

Posted 2/26/20

We’re days away from the 2020 primary day, the final opportunity for Chatham County residents to vote on the local option sales tax referendum on this ballot. As part of our coverage, we’ve got …

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Looking at Chatham's sales tax referendum

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Posted

We’re days away from the 2020 primary day, the final opportunity for Chatham County residents to vote on the local option sales tax referendum on this ballot. As part of our coverage, we’ve got “for” and “questioning” columns on the 0.25 percent increase — Chatham County Commission Chair Karen Howard for, and John Locke Foundation Fiscal Policy Analyst Joe Coletti against. We’ll also have full coverage of the results.

‘FOR’ the sales tax: A quarter of a penny for Chatham County

Karen Howard, chairman of the Chatham County Board of Commissioners.

How we choose to live in our community and what we believe about ourselves and our neighbors is a matter of the stories we tell. In 2020 we get to decide what story we will tell ourselves and our children about what we value.

This year’s ballot in Chatham County includes a referendum to add a quarter of a penny to the sales and use tax. When passed, it will bring Chatham’s tax rate into closer alignment with that of virtually every county around us.

The tax would amount to 25 cents for every $100 spent, and does not apply to unprepared food or gasoline. It is estimated that it would provide an additional $1,600,000 to the county.

Here is the story that quarter of a penny can tell about us.

In 2020 the people of Chatham County decided that caring for each other was worth a quarter of a penny. We collectively said that addressing housing affordability for our teachers, police and sheriff’s officers, firemen and women, shopkeepers, librarians, bus drivers, custodial and cafeteria workers, wait staff, gardeners and so many others who cannot find affordable housing in our communities was worth a quarter of a penny. We decided that increasing our investment in education for children across the county from pre-K through community college was worth a quarter of a penny.

In 2020 we proved that as a community we were serious about our commitment to local farmers and that the preservation of agricultural land which could ease some of their financial burden was certainly worth a quarter of a penny. And in 2020, because we believe in the value of our natural environment and that it is an essential element of our quality of life, Chatham County chose to enhance amenities and infrastructure at parks across the county so that residents could enjoy walking trails, play areas for children of all ability levels, sports and activities, community events and more in our beautiful natural environment.

That is the story I would choose, and I hope you will choose to let that be the story we can all tell.

Questioning the sales tax: Too much too soon?

Joseph Coletti, senior fellow with the John Locke Foundation.

Every promise from a politician has an expiration date, especially when it comes to new taxes, like the proposed quarter-cent sales tax hike on the ballot in Chatham County. Voters across the state have caught on, however, and have rejected 59 of the 79 sales tax hikes proposed since 2012.

County commissioners have had a hard time taking “no” as an answer, and voters in some counties have rejected sales tax increases up to six times in the past decade. Chatham County is the only one of six counties with a quarter-cent sales tax on the ballot this election that has not tried before.

Unlike most counties that have put a tax hike on the ballot, Chatham County commissioners have not promised to dedicate the bulk of the new tax to education. In fact, they have not made many promises about where much of the money would go at all. “I think the affordable housing is a clearly demonstrated need and would expect get the lion’s share,” Commissioner Jim Crawford said in October, “but I also like the idea of also finding out what else could be there.” When commissioners passed a resolution for the sales tax the following month, they offered to use the $1.6 million in new revenue for “Affordable Housing, Education, Parks & Recreation, and Agricultural Preservation & Enhancement.”

This scattershot approach echoes Mecklenburg County’s campaign for a sales tax increase last fall. The proposal there began with a task force recommendation to pour more county money into Charlotte’s struggling Arts and Science Council, but a quarter-cent sales tax would have generated 38 times more revenue each year than the task force sought. In the end, county commissioners proposed dedicating half of the tax hike to the arts council, a third to parks and greenways around the county and in specific towns, and the remainder to teachers. Voters rejected the tax by a 14-point margin.

In contrast, Forsyth County commissioners, in their effort 16 months ago, promised to use sales tax revenue for a new Hall of Justice. Voters said no by an even wider 36-point margin, so county commissioners added three cents to the property tax — even though they only needed a fraction of that to cover construction costs over the next decade. The extra penny appears now to have been intended as leverage for another attempt to pass the sales tax. Commissioners in Forsyth say they will use the sales tax revenue, equivalent to 3.8 cents on the property tax, to give teachers a raise and repeal the excess property tax increase. County commissioners are not willing to raise the property tax further or find savings to raise teacher pay without the sales tax. If voters don’t approve the sales tax hike, teachers may not get a raise, but will county commissioners hope to keep collecting and spending $3.7 million in what they acknowledge to be excess property taxes?

Forsyth commissioners are not the worst when it comes to questionable claims about sales tax revenues. Back in November 2011, Asheville-Buncombe Technical Community College President Hank Dunn proclaimed, “The truth is the quarter-penny will go to A-B Tech, and anyone who says differently is just wrong.” Within 18 months, county commissioners began using the money promised to the community college for general expenditures. Not until 2018, after the former county manager went to trial for corruption and an interim manager examined the county’s books, did it become clear that commissioners had diverted $15 million to general fund expenditures.

Counties across North Carolina have seen the sales tax as a less controversial way to raise money than the property tax. Higher sales tax rates allow the counties to mask the cost of government by keeping the property tax rate low. Chatham County just increased the property tax rate 4.2 cents in June, and the sales tax would be the equivalent of another 1.5-cent increase on top of that. Chatham county voters have a choice to make: either give a thumbs-up to higher taxes, or tell the commissioners this is too much too soon.

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