Taxing conditions

With North Carolina becoming a population magnet, local governments have begged the legislature for more ways to raise money to meet the demands of growth, especially infrastructure. A sensible option is a real estate transfer tax, which imposes a small levy on the sale of homes, buildings and land. Yet that option was blocked until last year by a well-financed homebuilder and real estate lobby that loves profits from the in-migration but is perfectly content with letting communities figure out on their own how to pay for needs.

When a bill finally did pass last year, allowing a transfer tax or a quarter-point increase in the local sales tax, it did so with the shackles that the taxes had to be be approved by local voters. Legislators don't give the public a vote when state taxes (or county property taxes) need to be raised. But such was the power of the opposition.

Orange County recently decided on a transfer tax and -- no surprise -- voters overwhelmingly defeated it. In all, 17 counties have put the matter on ballots since last fall, and all have failed. The sour economy may have played a role this week, but the same interests that arm-twisted the House and Senate also were active on the local level. The Orange commissioners, for instance, spent $100,000 to tell voters how the tax proceeds would be used for schools and parks. A group backed by real estate associations that opposed the tax spent double that, with $18,000 left over.

By passing the law last year, legislators acknowledged that communities need new sources of income. Raising property taxes, one of the few sources of revenue for counties, eventually becomes onerous, especially on elderly residents and those on the financial edge.

The legislature needs to finish the job, by giving county commissioners -- looking at their budget and infrastructure needs -- authority to levy the transfer tax without a referendum. As long as the tax is capped (it's currently at 0.4 percent), voters would have the time-honored ability at the next election to decide if their representatives had raised revenues rightly.