Smithfield: Opinion

Taxing developers would be bad policy

County commissioner candidate Wendy Ella May wants developers to pay a greater share of Johnston’s school-building burden.

That’s a familiar sentiment, one likely shared by many Johnstonians. But a development fee for school buildings would be bad policy, and here’s why: Developers wouldn’t pay the fee, their buyers would.

Any developer with sound business sense would simply add the fee to the price of every house, which would drive up the cost of home ownership in Johnston County.

Ms. May is a Democrat, and Democrats, historically, have been the party of lower-income North Carolinians. And frankly, we don’t think Ms. May wants to make it harder for Johnston County families to buy a home. But that’s what her policy proposal would accomplish.

Look at Raleigh. The Capital City levies a thoroughfare fee on all new construction, including the smallest of homes, the ones most likely to appeal to lower-income buyers. That fee adds $1,324 to the cost of every home under 1,000 square feet, and while developers might pay that fee up front, Ms. May can bet they add that $1,324 to the price of every small home they sell.

The result? Raleigh gets it money for roads, developers are out no money, and buyers of Raleigh’s smallest new homes pay $1,324 more for their house.

Johnston County could certainly levy a similar fee for schools, though it wouldn’t generate that much money. In the last 12 months, Johnston has issued building permits for 1,262 homes. At Raleigh’s lowest fee of $1,324, Johnston would have taken in just $1.67 million. Developers, meanwhile, might find it harder to sell more expensive homes, but when a house did sell, they would get their money back. In the end, the only folks out more money would be the families buying homes.

Now maybe Ms. May would be OK with that. Maybe if she couldn’t make developers pay, she’d be fine with demanding more money for new-arriving families that are creating the need for school buildings.

But here’s the thing: Newly arriving families are already helping to pay for new schools, and they’re doing so without having to pay more for their homes. Because Johnston borrows money long term to build schools, families arriving 10 and 15 years from now will help pay for schools built today. That’s the beauty of the bond issues that Johnston has used to build new schools.

In calling for developers to pay more for school buildings, Ms. May is trying to protect the county’s taxpayers, and we appreciate that. But Johnston commissioners are already doing that by spreading the cost of new schools over many years.

The last school bond issue in Johnston County was for $57 million. If Johnston had had to pay that amount out of pocket, it would have needed a one-year jump in the property-tax rate of roughly 41 cents. That would have been bad policy, because families moving here 10 years later would not have shared in the cost of new schools built with that $57 million, even though their children might have enrolled in those schools.

We suppose it’s possible to find fault with any approach to building schools or roads or parks. But Johnston’s long-used approach ensures that multiple generations pay for new schools, and it does so without making home ownership more costly.