Local Politics

After 0-for-20 on land tax, counties eye local sales tax

Posted May 7, 2008 5:42 p.m. EDT
Updated May 7, 2008 8:28 p.m. EDT

— As a controversial proposed tax on real estate sales continues to get pounded at the polls across the state, officials in some counties are looking at asking voters to OK a local sales tax add-on to generate extra revenue.

The land-transfer tax would add 0.4 percent to the sales price of every home or piece of land. State lawmakers approved the tax and a quarter-cent local sales tax as two options for counties to raise money to deal with growth-related needs, such as new schools, more roads or expanded water and sewer lines.

They made implementation subject to voter approval, however, and that is clearly not happening with the transfer tax.

Many observers looked at historically tax-friendly Orange County as the best chance to pass the transfer tax. Voters there defeated the proposal Tuesday by almost a 2-1 margin, however.

Voters in three other counties also rejected the transfer tax Tuesday, stretching the idea's losing streak to 20 out of 20. The tax also lost in all 16 counties that put it on the ballot last November.

"I think they got the message," said Ben Lloyd, an Orange County farmer who opposed the transfer tax. "It is not fair to have a small segment of people have to pay the bills."

Orange County Board of Commissioners Chairman Barry Jacobs blamed the powerful real estate lobby for killing the transfer tax.

"Nobody likes to lose, and nobody likes to lose to a bully," Jacobs said.

County officials saw the transfer tax as the best way to protect one of the county's top assets: its public schools. The county has built nine schools in the county school district and the Chapel Hill Carrboro City Schools district in the past decade, relying on property taxes and bonds to pay for them.

"(The property tax rate) goes up faster and higher than any of us as elected officials or taxpayers would like," Jacobs said.

Commissioners must now consider alternatives like a local sales tax to fund schools and parks, he said.

"I'm a firm believer in sharing both the wealth and the burden. The fairest tax there is today is a sales tax." Lloyd said.

Twenty counties had sales-tax referenda on the ballot Tuesday. Voters in 18 counties defeated their measures, while those in Cumberland and Haywood counties approved the tax.

Orange County officials spent $100,000 on an educational program to inform voters about the transfer tax and the need for revenue to help pay for growth.

"They were going to educate us. So, I guess they did educate us. (Tuesday) night, they got educated," Lloyd said.