Moore County’s growing residential sector does not “pay its own way” when it comes to local governments’ cost of providing public services, according to a new study the county commissioned.
Conversely, commercial and industrial development more than carries its own impact, according to the study, titled “The Cost of Community Services in Moore County,” done by Mitch Renkow with the Department of Agriculture and Resource Economics at N.C. State University.
The study shows that the residential sector contributes 75 cents to the county’s coffers for each $1 worth of services that it receives. Commercial and industrial land uses “are the largest net contributors to the public purse,” contributing $2.45 in revenues for each $1 of publicly provided services they receive.
“This finding contrasts with claims that are sometimes made that residential development is a boon to county finances due to its expansion of the property tax base,” Renkow said.
The study will be part of a much larger discussion around economic development and future land use patterns at a county commissioners’ daylong work session Oct. 9.
“In counties near rapidly growing urban areas, there is considerable debate over the desirable mix of land uses and the role that local government can and should play in affecting the rate at which new land uses supplant traditional ones,” the introduction says. “Moore County is typical of such counties. The county’s economic growth, as well as that of nearby counties, have created unprecedented demands for residential and commercial development, particularly in the county’s rural areas.
“On the one hand, this situation has been welcomed by many because it has created significant economic development opportunities for the county’s citizens, as well as a significant increase in the county’s revenue base.
“On the other hand, there is concern that the increased local government expenditures on community services needed to accommodate accelerated residential and commercial development may exceed the contribution of that development to the county’s revenue base.”
The study notes that “one important element” of public debate over appropriate land use policies is whether or not the increased costs to provide services exceed the contribution of that development to the county’s coffers. The study represents a ‘“snapshot” of current revenues and expenditures, and assesses the costs and benefits of different land uses from the perspective of local government finances.
This type of study, which used a methodology established by the American Farmland Trust, attempts to answer two main questions:
* “Do the property taxes and other revenues generated by residential land uses exceed the amount of publicly provided services supplied to them?”
* “Does the fact that farm and forest lands are taxed on the basis of their Present Use Value — instead of their potential value in residential or commercial uses — mean that they are contributing less in tax revenues than the value of publicly provided services they receive?”
“As has been found in other (studies) the answer to each of these questions is ‘no’ for Moore County,” the study concludes.
The study says that despite being taxed on the basis of current land uses, property being used for agricultural purposes is also “a net contributor” to the local budget, generating $1.37 in revenues for every dollar of public services that it receives.
Renkow cautions that the study only looks at current conditions, and that “one should be cautious” in using its findings to gauge future growth and its impact.
“Nonetheless, the results of studies such as this are useful in informing debates over such issues as whether or not alternative types of land uses are likely to contribute more in tax dollars than they demand in the way of services.”
Renkow also says the study “in no way deals with the social value of each of these forms of development” such as their contribution (positive or negative) to the well-being of the county’s citizens.
In other words, the study takes no position on whether home building is good or bad, or whether shopping centers are good or bad.
“Rather, it focuses on the more narrow issue of whether or not these land uses “pay their own way” with regard to county revenues and expenditures,” the report says. “It is important to bear in mind that there is nothing sacred about an exact balance between revenues and expenditures associated with a particular land use, even when balancing the local budget is an overriding priority.”
Studies like these, Renkow says, help municipal and county leaders by “shedding light on the relative costs and benefits of the specific distribution of financial resources given the existing pattern of development.”
The study used the most recent available county financial data and looked at how revenues and expenditures were allocated among three specific land-use categories: residential, commercial and agricultural. It also included a series of telephone interviews and email exchanges with a number of local officials “knowledgeable about the workings of specific departments.”
It noted that often existing records were “not amenable to being broken out into various land-use categories” so in those cases it “relied on a local official’s best guess of how their department’s efforts were allocated.”
If that was not possible, one of two “allocation schemes” were used:
* For services that exclusively serve households — for example, public schools and libraries — 100 percent of expenditures were allocated to the residential sector, the study says.
* For departments whose services benefit both residences and businesses, expenditures were allocated based on the proportion of total property value accounted for by each land use category. This “default” breakdown of assessed property valuation for 2017-2018 was 58.9 percent residential, 38.8 percent commercial and 2.3 percent agricultural.
It says revenues were handled in a manner similar to expenditures.
Property tax revenues were allocated to specific land use categories based on the 2017-2018 property assessments, while taxes and other revenue sources that are “linked directly to commercial activities,” such as local option sales taxes, were allocated exclusively to the commercial sector.
Revenues from sources associated “exclusively” with households, such as recreation fees, were allocated to the residential sector.
A detailed breakdown of revenue sources shows that about 60 percent of the county’s general fund revenue came from property taxes, while another 17.8 percent came from sales taxes.
It says current spending on human services and education accounted for 56.6 percent of the total budget, and expenditures related to repaying the county’s public education debt account for an additional 3.6 percent of the budget.
“All school expenditures, and nearly all of the activities of the health and human services departments are exclusive to the residential sector,” the study says. “Hence, the large ‘footprint’ of these two departments in county government — amounting to more than 60 percent of all expenditures — has a dominant impact on the results of this study.”
The report includes results from 103 similar studies that have been conducted throughout the country, as well as 15 that were conducted in Wake, Alamance, Orange, Chatham, Gaston, Henderson, Franklin, Durham, Guilford, Yadkin, Pitt, Catawba, Davie, Iredell, and Forsyth counties in North Carolina over the past 18 years. It says the findings of the Moore County study “are consistent” with all the previous ones that have been conducted.
Contact David Sinclair at (910) 693-2462 or email@example.com.