Public offers thoughts on taxes

The Durham County Board of Commissioners samples residents' opinions on two tax options

Staff WriterAugust 14, 2007 

— Bahama resident Richard Howell, 68, had simple words for county commissioners late Monday on the possibility of one of two new state-granted tax options -- increases in local sales or land transfer taxes.

"I'm retired," Howell said. "... You're going to pass my income if you keep this up."

Howell was one of more than 30 residents who signed up to speak to commissioners as the board considers holding a vote this fall on the taxes.

When state lawmakers approved the state budget late last month, they gave counties the right to increase the land transfer tax that home sellers pay from 0.2 percent to 0.6 percent, or levy an additional quarter-penny sales tax on nonfood items.

Several counties, including Durham, have sprung into action, working on a one-month deadline to decide whether to hold a referendum this Election Day. Other counties, including Wake, have decided to hold off.

The county can put one tax option, or both, on the ballot. A majority vote is required to enact a new tax. If voters approve both by majority, commissioners could choose to enact only one. If neither tax is approved, commissioners could hold another referendum after 30 days, County Manager Mike Ruffin said Monday.

If approved, a quarter-penny addition to Durham's sales tax would go into effect in April 2008 and would bring in about $9.8 million the first year, Ruffin said. If a 0.4 percent land transfer tax was enacted, it would go into effect Jan. 1 and would bring in about $11.6 million in its first year, he said.

Some speakers at the hearing asked the Durham board to slow its pace and take more time to educate voters on their options.

"The general public doesn't know as much about the transfer tax as we'd like," said Chris Kukla, president of the Durham People's Alliance, a community group that opposes the sales tax increase.

But Durham officials are pushing ahead with their research, polling voters on whether they would support one or both taxes and whether adding the tax questions would adversely impact a $207 million bond referendum -- mostly for schools -- already slated for November's ballot.

Most of Monday's hearing focused on the impact of an increased tax on real estate sales.

Several members of the National Association of Realtors, which campaigned in the legislature against the transfer tax, told commissioners they oppose the notion.

Real estate agent and resident Ellen Dagenhart said the land-transfer tax would inhibit the "urban pioneers" who rehabilitate historic properties, and also said she was concerned about the impact of the taxes on first-time home buyers.

Resident Randal Haithcock said he supported the land transfer tax because those who wouldn't be able to afford to sell their homes because of any tax increase could simply avoid the issue by staying put.

Others were opposed to any new taxes at all, asking county officials to reconsider their budgeting practices.

"If we can live within our means as people, the county can live within its means ... through normal growth and addition of property value," said resident Jack Steer.

Among the ideas offered were exemptions to a possible land transfer tax, lessening the blow to first-time home buyers and those over 65.

State law already lists some exceptions. For instance, the tax can't be levied if a home is granted in a will or given as a gift. But the county can't create new exemptions, County Attorney Chuck Kitchen said.

The board has until Aug. 31 to pass a resolution to place one or both taxes on the ballot for the Nov. 6 election and is expected to make its decision at its next meeting Aug. 27.

Staff writer Samiha Khanna can be reached at 956-2468 or samiha.khanna@newsobserver.com.

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