News & Observer | newsobserver.com | Transfer tax fight shifts to counties

Published: Sep 20, 2007 12:00 AM
Modified: Sep 20, 2007 05:08 AM

Transfer tax fight shifts to counties

Growth and Medicaid expenses lead 16 counties to put a land transfer tax on their ballots this fall

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TAX OPTIONS

The state legislature gave counties the authority to ask voters for permission to levy a 0.4 percent land transfer tax or a quarter-cent sales tax. Counties may put both on the ballot, but if both pass may levy only one.

Commissioners have the option to levy either tax that passes, but they're not bound to.

If the measure fails, counties can ask voters again as often as they want.

If another board is elected, it can repeal the land transfer tax without voter permission. A special election would be required to get rid of the sales tax.

TRIANGLE COUNTIES

Chatham and Johnston counties have put the land transfer tax on their November ballots. Johnston also is asking voters to approve a sales tax.

Wake and Durham counties chose not to put the measures on their ballots.

Orange County voted Wednesday night to have one or both new tax options on the May ballot.

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RALEIGH - Sixteen counties -- from Graham in the west to Pender in the southeast -- will ask voters this fall to approve land transfer taxes. But the state's real estate agents and home builders, who lost the tax battle at the state level, are taking their fight to each and every one.

"Citizen groups are being formed in all of those counties," said Tim Kent, executive vice president of the N.C. Realtors Association. Paul Wilms, a lobbyist for the Home Builders Association, said his group is partnering with local groups against the tax. Neither group would say how much money it plans to spend.

Counties can't spend taxpayer money to ask residents to vote for ballot measures, so Wednesday about 120 officials from 45 counties learned what they could do to increase the odds that their measures will pass. The N.C. Association of County Commissioners hosted the day-long seminar.

Several issues are motivating counties to ask for more taxes. They include fast-paced growth that is straining schools and water systems, and paying for residents' Medicaid.

"The Medicaid burden is keeping counties from paying for infrastructure," said Paul Meyer, the commissioners association's lawyer and lobbyist, who addressed the county officials.

Meyer lobbied the legislature to give counties authority to levy the land transfer tax. Seven counties in the northeastern part of the state already have the authority.

Meyer explained that county staff cannot campaign for the taxes, but individual commissioners can as long as they don't use public money. Officials also learned about putting together a public information campaign and forming citizen political action groups.

'It would help'

This summer the N.C. Realtors Association spent $600,000 to fight the land transfer tax at the General Assembly. Kent thinks a "home tax," as his group calls it, will hurt home buyers, making homes less affordable.

The association lost the battle but had some effect. Originally, counties had asked the state for a 1 percent land transfer tax, but legislators agreed to let counties levy only a 0.4 percent tax, for sellers to pay upon the sale of property.

Counties instead may pass a quarter-cent sales tax. Eleven counties other than the 16 seeking the land transfer tax will have the sales-tax option on the ballot this fall, while five of the 16 seeking the land transfer tax also seek the sales tax. Counties may actually impose only one.

Ryan Whitson, manager of Polk County in Western North Carolina, attended Wednesday's seminar with two county commissioners and the county schools superintendent. The Polk commissioners put the land transfer tax on their November ballot.

"It's estimated it would give us about $1 million," Whitson said. "It would help, but it won't cover all our needs."

Kenneth Windley, Robeson County manager, said his county ranks 97th in the state for per-capita income. The county pays $10 million to $12 million annually for Medicaid, leaving little money to fix Robeson County Community College's leaky roof, which will cost $3 million, he said.

Chatham Commissioner Tom Vanderbeck said his county, which has approved more than 15,000 new homes, had no choice but to put the measure on the ballot. "Our schools will soon be severely overcrowded, and projections show we will need one to three schools a year to catch up," he said.

If it passes, the land transfer tax would give Chatham $3.5 million in 2009, according to county officials. That's more than three times the amount a quarter-cent sales tax would raise. Chatham commissioners have pledged that a majority of the money will go toward the county schools.


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