Local Politics

Beating transfer tax doesn't stop property tax increase

Posted September 19, 2008 5:00 p.m. EDT
Updated September 19, 2008 6:52 p.m. EDT

— Six of the 19 counties where a real estate transfer tax has been defeated at the polls have resorted to higher property taxes to meet their revenue needs.

State lawmakers last year approved a 0.4 percent tax on real estate sales as one of two local options for counties to generate additional revenue for growth-related infrastructure like new schools, roads or water and sewer lines. A quarter-cent local sales tax was the other option.

Since then, voters have rejected transfer tax proposals 20 straight times – the idea was defeated twice in one county – and lawmakers considered repealing the option altogether.

"Clearly, the voters are saying we don't want this type of tax," said Tim Minton, executive director of the Homebuilders Association of Raleigh-Wake County.

Developers and the North Carolina Association of Realtors have lobbied extensively to defeat the transfer tax, with the Realtors group committing $10 million to the effort.

In the face of such opposition, commissioners in Chatham County and five other counties simply raised property taxes.

"If we'd passed (the transfer tax), our property taxes would've stayed the same," said George Lucier, chairman of the Chatham County Board of Commissioners.

The transfer tax would have been $800 on the sale of a $200,000 home. Now, the owner of that $200,000 home is paying almost $1,300 a year in property taxes, compared with about $1,200 last year.

"What I think happened was that the real estate community and home builders ran a remarkably effective campaign against it – calling it a home tax," Lucier said.

Opponents spent $77,000 advertising against the tax in Chatham County.

While the failed referendum frustrates some, it is a relief to others.

"I just didn't like the idea of people being taxed and having to pay for selling their home," resident Claire Wilson said. "I just personally believe they would've raised taxes anyway."

Local restaurant owner Vance Remick said the transfer tax was needed. It taxes the seller, but he said the cost could be passed onto the buyer to help pay for growth.

"(It would) make sure the people coming in are paying their fair share for schools and the things we need to be doing," Remick said.

Minton said he believes the tax will continue to fail at the polls. Polk County is the only county in North Carolina to have it on the ballot in November.

"I think, clearly right now, with the housing market and real estate in flux, it's not a good time to hold a referendum," he said.

But Lucier and others in Chatham County said they believe the tax will eventually pass somewhere.

"Anything that's new takes awhile to understand," Remick said.