Transfer Tax Issue Resurfaces
Fellow commissioners showed little enthusiasm Monday when Chairman Colin McKenzie raised the subject of another land transfer tax referendum.
McKenzie brought up the subject at the end of the regular agenda of the Moore County Board of Commissioners. If a referendum is called for November, then the decision must be made shortly, certainly by the board's next meeting on Aug. 18.
"Just think about it until the next meeting," McKenzie said to the other commissioners.
In November, Moore County voters defeated the land transfer tax issue by 78 percent. In May, the county asked voters for approval of an additional quarter-cent sales tax, and again voters defeated it, but by a smaller margin.
This time McKenzie suggested that the board reconsider the land transfer tax issue and see if the county can flush out community leaders willing to mount a campaign for the tax.
Commissioner Tim Lea said the county is in the midst of an apparent recession, and this is not a good time to push for an additional tax.
"We're fighting an uphill battle," Lea said.
McKenzie replied, "You may be right." He added that he is not fully committed to the concept of another referendum. However, he said that it makes sense to pay an extra one-time tax when property is transferred than to pay much higher property taxes on a yearly basis.
Vice Chairman Jimmy Melton said he was inclined to agree with Lea, and Commissioner Larry Caddell also expressed little enthusiasm.
Caddell said that the county's goal had been to offer the public options on taxation. Voters in November and in May turned down the transfer tax and sales tax as options.
"We'll talk about it one more time, but it doesn't look like we have much support," McKenzie said.
McKenzie said the board could check out the public and see if someone is interested in putting money into the proposal and supporting an effort to get the tax approved.
The commissioners are prohibited by state law from using tax funds to promote such referendums, and support must come from other quarters. The board can do little more than provide factual information about the tax and its uses.
In the November and May campaigns, proponents of the additional taxes argued that the money is needed to help pay for almost $70 million in education capital improvements. The alternative, they argued, would be much higher property tax rates.
Opponents, including organizations representing Realtors and building contractors, said the additional tax would have an adverse effect on their business and would have a negative effect on the economy. Statewide, these organizations poured more than a half million dollars into campaigns urging voters to vote against such taxes.
"We're competing with people with more money than we have," McKenzie said.
McKenzie read from an article in The Fayetteville Observer that told about an increase in membership fees for the N.C. Association of Realtors. The article quoted one association member who objected to the dues increase because it would be used to oppose such votes, constituting a political use of membership fees.
In addition to assertions that membership dues cannot be used for political purposes, the opponent said such usage would also mean that members could not use their fees as an income tax deduction for business expense.
As part of the Medicaid relief package, the 2007 session of the N.C. General Assembly offered counties two options for additional sources of revenue but required a referendum before either tax could be imposed.
Under that bill, a 0.4 percent land transfer tax could be levied only when property changes hands and several exemptions would be allowed, including land transferred through family inheritance. The other option was a quarter cent addition to the local option sales tax.
Under that bill, counties could vote on one issue or both issues on the same ballot, but they could impose only one of the new taxes. In the case of Moore County, the land transfer tax was preferred because it would garner more revenue yearly than the one-fourth-cent sales tax addition.
Although voters overwhelmingly rejected the transfer tax in November, they expressed similarly strong approval for the $69.5 million in bonds to pay for building improvements in the public schools and at Sandhills Community College.
The land transfer tax issue arose again in the 2008 "short" legislative session, but no changes were made. One bill would have increased the percentage that could be assessed. Another bill, introduced in the Senate, would have repealed the transfer tax option. The repeal bill was referred to the House Rules Committee and never emerged for debate on the House floor.
Support for the additional taxes was based in concern that debt service for the $69.5 million public school and college bonds would cause the property tax rate to soar. It was estimated that the increase might be as high as eight percent.
Such a high rate increase did not materialize with the 2008-2009 budget, which was enacted with a 2.9-cent increase in the tax rate. However, the rate may increase more substantially in future years depending on the bonded indebtedness schedule and economic factors.
Contact Florence Gilkeson at 947-4962 or by e-mail at firstname.lastname@example.org.
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