Hamstringing local government

May. 12, 2014 @ 04:42 PM

We are growing weary, as many of you no doubt are, of the whack-a-mole nature of responding to proposals at the state legislature to impede the flexibility of local governments, and their ability to best respond to their citizens’ needs and desires.

Yet another threat -- we’re losing count -- emerged last week when the Joint Legislative Energy Policy Commission tucked a tax-cap provision deep in a Center on Budget and Policy Priorities bill on oil and gas drilling.

The provision would ban city and county governments from growing property-tax revenues by more than 8 percent a year.  Once again, law drafters in Raleigh are taking a “Raleigh knows best” attitude to hamper local governments.

The cap in recent years might seem to have had little impact. The Great Recession and its lingering effects slowed the increase in development and land values, both of which – along with rate increases -- drive an increase in property taxes. But it would have curtailed city and county revenues at least twice in recent years and would be all but certain to do so again.

In North Carolina, as in many states, property taxes are the principal source of local revenue. Thus, for cities and other local governments “this is a really important issue,” Erin Wynia, a lobbyist of the N. C. League of Municipalities, said last week.

While commission leaders and legislative tax-policy writers were saying little if anything last week about the proposed cap, it seemed to reflect the legislative majority’s conviction that government at every level is spending too much.

That point is debatable, but the majority of legislators adhere to that view and they are in control. Elections have consequences.

Still, if the concern is profligate spending at the local level, tax-revenue caps may be a blunt and imperfect instrument to address it – and have proven so in other states.

”While such caps may hold down property taxes, they are likely to impair local governments’ ability to provide education, public safety, and other services residents demand and need,” the Center on Budget and Policy Priorities in Washington wrote in a 2007 report. “They also are likely to make the local revenue system more regressive.

“Property tax caps do nothing to change the main drivers behind higher property taxes.  They cannot slow the increase in the cost of health care or fuel, for example, which reflects forces outside of the control of local officials.  Nor do they change the demand for local public services, such as quality K-12 education, public safety, and good roads.”

Debating the balance between citizen demands for services – and their innate desire for lower taxes – is a key task of representative government. That debate should be robust at the local level – but not preempted in Raleigh.

If the citizens of Durham – or Manteo or Murphy, Asheville or Ahoskie – think their elected representatives are taxing them too heavily, there is a simple remedy, much more targeted than a statewide cap on property tax revenue.

Local voters can go to the ballot box and throw the rascals out.