Orange commissioners hear views on tax options

HILLSBOROUGH -- The Orange County Commissioners on Tuesday met to hear presentations to help them decide whether to put a local revenue option before voters.

The board has until Feb. 29, the deadline for the May primary ballot, to decide whether to ask voters to approve a quarter-cent sales tax increase or a 0.4 percent land transfer tax.

Commissioners and members of the advisory committee they formed to educate voters, heard from experts at UNC-Chapel Hill and the Institute for Emerging Issues at N.C. State University about the future of the state's economy and population.

Karl Smith, an economist from UNC-CH's School of Government, said the first question is, "Which tax raises more money today?"

He said the land transfer tax is growing faster than the sales tax but is heavily dependent on local real estate markets. It's not certain that housing prices won't drop in the Triangle, though Smith said that hasn't happened in 70 years.

According to county estimates, a land transfer tax would generate roughly $4 million a year. A sales tax increase would bring in about $3 million.

The commissioners gave no indication what option they're leaning toward. They could put both taxes on the ballot, but state law allows for only one to be implemented if voters approve both.

Even before the meeting began Tuesday, the small audience gave a preview of the likely debate before a land transfer tax comes to a vote.

"I see it as another narrowly focused way to tax a small percentage of the population," said Frank Thomas, director of government relations for the Homebuilders Association of Durham, Orange and Chatham.

"I don't see it as terribly unfair," said Kathie Young, a member of the education advisory committee, adding that she feels the county needs the land transfer tax in part to help pay for schools for a growing school-age population.

"So you and I just have a different definition of fair," Thomas said.

Afterward, County Manager Laura Blackmon said the county's economic landscape might soon be changing, referring to news that developers want to put a 1.1 million-square-foot retail development near Mebane. "It will be such a huge addition to the sales tax," Blackmon said. "It might change the dynamic."

Blackmon said counties that put a revenue option on the ballot last November might have been hurt by not having enough time to educate voters.

"Maybe we don't do it in May. Maybe we do it next November," Blackmon said. "You can't just ask people to vote for a tax if they don't understand what you're going to use it for."