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Transfer tax irresponsible

Posted on April 24, 2008 by Staff

By Brian Voyce

To present a balance in the editorials and letters on the upcoming vote on the local transfer tax, I present the following guest editorial.

Voting for the home equity/local land transfer tax rewards the financial incompetence of our politicians.

You say, “No, no, there’s been no incompetence.” Explain how Chapelboro schools need over TWO HUNDRED MILLION DOLLARS in capital spending over the next five years without you receiving strong warnings, years in advance. Did you hear about this debt deluge two years ago? How about five years ago? No? Why not?

Did you know that imbalanced residential growth in Orange County results in negative income for municipalities? Yes, every time a new front door opens, you go deeper into taxpayer-supported municipal debt.

Don’t think so? Read the NC State report advising your county politicians of the net negative cost of imbalanced growth. Haven’t heard about that report? Take that up with your local media. A few brave souls have spoken out publicly, your elected officials haven’t.

Moreover, ask yourself these questions. How’d we come up short by TWO HUNDRED MILLION DOLLARS for school building costs in the first place? Don’t we have an impact fee? You might be surprised to find out that no one in county government is keeping a future capital cost balance sheet. Not one Orange County municipality requires a financial impact statement (municipal capital and operating costs) when making residential housing approvals.

Think that the county impact fee covers the cost of school building? Wrong. Ask yourself this question. If another tax on your home equity will solve what the North Carolina Association of County Commissioners calls “a growing crisis” to fund building schools, then why has Currituck County (with a local home equity tax since 1985) recently asked for a TWELVE THOUSAND DOLLAR PER HOUSE impact fee, almost three times the Orange County impact fee?

As you dig, you find more questions. How do county commissioners know the anticipated capital debt at any given time? Have they been reporting it to you? Why not? Why has that debate been missing from elections? Why are so many Orange County political luminaries for this tax on your home equity to pay for “schools and parks” (NOT TRUE, it’s a discretionary slush fund) for which you didn’t create the need, a tax that the county has done nothing to earn?

Local municipal financial controls are sad at best (hence the admitted “growing crisis”), but to be expected, considering our politicians’ nonprofit, tax-exempt backgrounds. Most Orange County politicians and board members have no practical experience in for-profit business accounting. Need more money? Write a grant. Just raise tax rates. Problem solved.

Who’s getting the best deal out of this push to tax you? Why, renters and residential land developers.
Renters aren’t subject to the home equity tax. Neither are their smart landlords. Carrboro is about two-thirds renters, who’ll pay nothing. Landlords can sell the business owning title to their rental units, thereby avoiding any transfer tax.

Developers take their profits to the bank (the American way) while not paying for the capital municipal burden created by their profits (the North Carolina way).

That’s why you’re here. You’re going to bail out Orange County leaders’ financial incompetence. If they advocate enough propaganda along with their friends, you’ll approve this local transfer tax. You’ll bail them out with a Pavlovian response. If they just whisper in your ear, “schools” … “parks”…  You’ll do it even though it’s NOT dedicated to schools and parks.

One last thing. Your politicians haven’t told you that the local home equity tax is highly cyclical. When the economy turns down, so do transfer tax revenues. Don’t think so? Check out Dare County (another model county cited by your leaders). Its transfer tax revenues have more than halved in the recent economic downturn.

I don’t have a stake in the real estate industry. I do have one in responsible municipal government. If you ran your household like Orange County, you’d be bankrupt. They’d come and take your home away.

Don’t reward financial incompetence. Make your leaders learn finance and impose full impact fees. Even with this tax, they’ll dig the debt hole deeper again with more imbalanced growth.

Vote against the bailout local land transfer tax on your home equity.

Brian Voyce is a resident of The Highlands and was a candidate for Mayor Carrboro in 2007.

1 thought on “Transfer tax irresponsible”

  1. John Kramer says:
    April 24, 2008 at 5:21 pm

    Mr. Voyce is correct.

    I hope the voters and taxpayers of Orange County have the wisdom to look beyond the hype and vote this down. It is long past the time where our elected representatives need to show fiscal responsibility. No more quick fixes for them.

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