Tyrrell County Manager David Clegg watched closely last week as lawmakers debated the merit of a constitutional amendment to limit the rate at which local governments’ can increase property taxes. Clegg says voter approval of a levy limit will rob the tiny, rural county of 3,000 residents of desperately needed tax revenue.
With a budget of approximately $10 million a year, the county runs on one of the smallest county budgets in North Carolina. It’s a fraction of the billion dollar-plus budgets taxpayers help fund in large, urban counties.
David Clegg (Photo: Courtesy of the Miss North Carolina Organization)“Tyrrell County is providing the baseline human services and quality of life services that just keep us going,” Clegg said. “If you start cutting at that all of a sudden, you’re cutting social services, law enforcement, health, emergency medicine because there’s nothing else to cut.”
Clegg said the county doesn’t have an airport, convention center or recreation center, so when you take a scalpel to Tyrrell County’s budget, “You’re cutting flesh, you’re not trimming hair.”
The N.C. Housing Coalition, a Durham-based housing advocacy group, estimates that a strict levy limit could cost Tyrrell County about 11% of its annual budget while only saving the average taxpayer about $120 a year.
The lost tax revenue would amount to a little more than $1 million, which Clegg says would be devastating for a county that’s already struggling to make ends meet and one that must share the cost of some essential services with neighboring counties.
“I’m trying to run a paramedic level EMS service with Washington County and because there’s no hospital anywhere close, you have to take people to Greenville or take them to Washington [NC] or Edenton, (and) that costs nearly a million dollars,” Clegg said.
If you start cutting at that all of a sudden, you're cutting social services, law enforcement, health, emergency medicine because there’s nothing else to cut.
– Tyrell County Manager David Clegg
Clegg says he spends lots of work hours chasing grant dollars to help pay for county capital projects. In the 13 years that he’s served as county manager and county attorney, Clegg said he’s managed to land more than $100 million in grants.
“It’s a struggle every day,” he said. “The county basically lives on a very active grant search to fund projects. There is no way the county could possibly issue bonds for anything. There’s simply no tax base there to do it with.”
Clegg explained that nearly half of the land in the environmentally sensitive county defined by pocosin wetlands is owned by federal and state governments and therefore exempt from property taxes. And predominant land uses — agriculture and forestry — are taxed at lower rates than residential or other commercial properties.
“It’s the only place in the world where red wolves run free and it’s an important environmental jewel and so it presents a unique set of challenges to our government when you have a state government that views Tyrrell in the same lens as Wake and expects me to do the same thing as Wake County does,” Clegg said.
Hudson Vaughan (Photo: Greg Childress/NC Newsline)Hudson Vaughan, director of the Community Justice Collaborative at the housing coalition, said a $120 in property tax savings for homeowners would be a “pretty substantial tradeoff” if Tyrrell County lost nearly 11% of its property tax revenue under a levy limit.
“I think that’s where [rural counties] would see the most devastating impact because they have the least ability to make up for that loss,” Vaughan said. “Bigger counties, a lot of them would be forced into adopting fees and other things but they can make up for that in some form or fashion.”
In Winston Salem, a strict levy limit would have saved a homeowner paying $3,000 in property taxes just over $200, according to the coalition’s analysis. Meanwhile, it would have cost Winston Salem and Forsyth County more than $45 million in property tax revenue, it said.
And in downtown Raleigh, an apartment complex would have seen its tax bill reduced by $125,000 under a levy limit, while a property owner with a $2,000 bill would have only seen it drop by $175, the housing coalition said.
“What we’re seeing is that actually, the huge landowners and luxury apartments will be the ones who will get the biggest benefit from this,” Vaughan said.
Alternative solutions
The housing coalition’s leaders say the property tax dilemma is best solved by expanding the state’s property tax relief programs — particularly the Homestead Exclusion and Circuit Breaker programs for elderly and permanently disabled homeowners. The age-and income-based programs reduce or delay property taxes for homeowners on fixed incomes.
Improving the two programs would help more North Carolinians facing property tax burdens without undermining property tax revenue, especially in low-wealth counties, the coalition said. The coalition shared its concerns and recommended solutions in a paper titled “Meaningful Property Tax Reform & Relief in NC.”
Political motivations or much needed relief?
Clegg and Vaughan both said the amendment was politically motivated.
“It’s a way to get people to the polls, I think,” Clegg said, noting that state law already prohibits counties from setting a tax rate of more than $1.50 per $100 of property valuation.
But Republican lawmakers in the House and Senate, who voted overwhelmingly to put the amendment before voters, contend it is a response to taxpayers’ complaints about rising county and municipal property taxes, which they say can push taxpayers, seniors in particular, out of their homes.
“For years we’ve seen some municipal and county governments impose exorbitant tax rates on their residents with little to no regard for fiscal restraint,” Sen. Tim Moffitt (R-Henderson), said in a statement.
Moffitt’s remarks parrot those of House Speaker Destin Hall (R-Caldwell) and Senate leader Phil Berger (R-Rockingham). Both GOP leaders formed committees to examine rising property taxes. Hall and Berger contend the state’s rising property taxes are due to overspending by local governments.
“Families are getting ripped off as some, but by no means all, local governments rake in billions more than inflation and population growth warrant,” Hall said in a recent press release.
Sen. Dan Blue (D-Wake) was the lone Democrat to vote in favor of placing the amendment on the ballot, citing concerns about gentrification in downtown Raleigh. Blue told reporters that rising property values and tax increases are putting financial pressure on longtime residents who are now paying high taxes on homes they’ve lived in for decades.
“This doesn’t give us any power we don’t already have,” Blue told NC Newsline. “It doesn’t do anything specifically, except to say, ‘We’ll do our job.’ And our job ought to be how to figure out how to solve these problems on affordability, because that’s really what it’s all about.”
Blue’s Democratic colleagues have argued that the current property tax crisis is due to the General Assembly’s chronic underfunding of local governments.
Sen. Dan Blue (Photo: ncleg.gov)“They’ve [GOP lawmakers] underfunded our schools, our emergency management divisions, our court systems and our district attorneys,” said Rep. Eric Ager (D-Buncombe). “Additionally, we’ve continued to pass unfunded mandates, costs that our local governments are forced to fund. They don’t have a choice.”
Lawmakers and advocates on both sides on the issue agree that it won’t be hard to sell North Carolina taxpayers on the idea of lowering property taxes.
Rep. Julia Howard (R-Davie), who co-chairs Hall’s property tax committee, told colleagues in March that she is certain that a constitutional amendment would pass if placed on the ballot because North Carolinians are “very concerned about their property tax.”
Vaughan said Howard is probably right but believes taxpayers might vote differently if given all of the facts.
“I think that if people were aware of what it really does, then I think that the average voter would vote against it,” Vaughan said. “If we look at bond years where people are voting to increase their taxes a little bit to get a big return collectively for services that they want … those bonds almost always pass in North Carolina.”
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