Higher property taxes were a touchy issue in the coastal county. The rich didn't want them, and the poor couldn't afford them. Taxes on hotel rooms and other purchases wouldn't raise enough.

Their solution? A tax on real- estate sales.

With the legislature's permission in 1985, Dare began levying a 1 percent tax on every real- estate transaction. In two decades, the tax has raised more than $90 million.

The money has helped pay for a gleaming high school with a view of the Wright Brothers memorial, two middle schools, three elementary schools and a $14 million justice center.

Some think it could work in Wake County, too.

Several former Wake leaders say such a tax, called a transfer tax, could help pay for the county's massive school enrollment growth. Michael Weeks, a Wake commissioner from 1998 to 2002, said the county can raise only so much property tax to build schools.

"There are better ways to do it," he said.

These days, Wake is facing its own housing boom.

Public schools grew by a record 6,436 students this year, and officials expect tens of thousands in years to come. The county is considering asking voters this fall to approve a $1 billion bond issue for schools, probably tied to a hefty property tax increase.

A transfer tax could help keep property taxes from rising as quickly. And because of the high volume of real-estate sales in Wake, the tax would raise even more money than in Dare.

A 1 percent transfer tax in Wake would generate about $90 million each year, according to a News & Observer analysis of home sales. That's the equivalent of a 13-cent increase in the property tax rate.

For a $170,000 home -- the median sale price in Wake County -- the seller would pay $1,700 in transfer tax at closing.

Still, there are serious obstacles to imposing the tax here.

First, local leaders are not pushing for it. Though commissioners considered it in 1999, the current board has pursued other options, asking the school system to postpone some renovations and lobbying the legislature to allow a half-cent increase in the sales tax.

Commissioner Herb Council, who has been on the board since 1998, blamed state lawmakers.

"That's part of the frustration that we're feeling right now," he said. "We keep going to the state legislature for different ways to raise revenue, and they won't allow it. We need another source of revenue than the property tax and the sales tax."

Only six counties in North Carolina can levy a transfer tax, and the legislature has not allowed any others to do so since 1989, despite repeated attempts.

That's largely because of opposition from developers, home builders and real-estate agents. They argue that the tax makes housing less affordable and unfairly targets the real-estate industry.

How Dare got help

In Dare County, people say one man is responsible for the transfer tax: Walter Davis.

After making millions in the Texas oil industry, Davis became a prominent North Carolina philanthropist, a trustee at UNC-Chapel Hill and, incidentally, then-owner of the Kitty Hawk Pier.

Despite his wealth, he never forgot the struggles of his father, a Pasquotank County potato farmer.

"Walter and I used to talk about local problems," recalls his friend, Outer Banks historian David Stick. "One big one was the fella who bought his farmstead for $2,500. It hasn't changed a darn bit, but now it's worth $250,000, and he has to pay taxes on it."

Davis asked his staff to research ways to pay for schools that wouldn't put the burden on his hypothetical farmer. They suggested the transfer tax, which is used by Pennsylvania, among other states.

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