With the exhaustion of the trillions in Great Recession stimulus moneys being printed in Washington, DC, state governments can no longer behave as if they don’t have to face the financial realities of cutting back from the free-for-all spending of the last two decades.

Orange County is about to start to feel the implications of the inflationary money spigot being closed. It receives moneys from the state to support the two local schools systems. Now that money flow is being reduced in response to the federal tap being closed.

Under the legislature’s proposed 8.8% cut for K-12 public education, Orange County Schools would lose about $2,400,000 and the Chapel Hill-Carrboro district would see a $7,700,000 drop in state funds. That means a possible total shortfall of $10,100,000.

In order to make up for the shortfall, the County has no option but to increase property taxes. How much? Using the FY 2010-2011 budget numbers, the ad valorem prerty tax rate would be increased from 0.8580 to 0.9230. That’s a 7.5% increase in your local property taxes.

Oh, that doesn’t include more taxes needed to build and operate the $20,000,000 Elementary School No. 11 in Chapel Hill's Northside neighborhood. It doesn’t include the tax increases to pay for the $6,000,000 Carrboro library.

No wonder Dr. Neil Pedersen is retiring. Better to lock in those lavish taxpayer supported retirement benefits now.

Affordable housing is a favorite social engineering tool of Progressives. It combines income redistribution (taxing to pay for the housing) with contrived socioeconomic mixing (placing affordable housing in higher value residential areas). The image often used in Orange County to justify affordable housing is the proverbial African-American UNC housekeeper. A woman of modest education works hard to clean up the detritus of North Carolina’s privileged youth. She is said to be owed a decent place to live in Chapelboro, one she can afford with modest income but while working to her economic potential. Heaven (and Progressive social justice) forbid that she drive ten miles to an affordable neighborhood.

Contrast that image with the reality featured in the local real estate advertiser. A couple in their mid-thirties with one child is able to move into a home in the Claremont subdivision where twin townhomes start at $350,000. They do so with the assistance of the Community Home Trust (CHT), formerly known as the Orange County Housing and Land Trust, the fiefdom of local affodable housing czarMr. Robert Dowling. CHT is NOT a private bank or a credit union. CHT is the publicly funded affordable housing arm of Orange County, Chapel Hill, and Carrboro. (Don't look for the local media to point this fact out.) CHT receives public moneys (through your property taxes) from Orange County, Chapel Hill, and Carrboro to purchase homes and land. It then resells the residential buildings while holding onto the land.

The couple has moved into a 1550 square foot townhome on a 2000 square foot postage stamp lot in Claremont. However, their new home is curiously valued by Orange County. The building has a value of about $180,000, and the land is valued at about $69,000, for a total value of about $249,000. However, for taxes owed the County, the value is listed at about $121,000. So not only has the County provided moneys to CHT to purchase the housing, it then devalues the housing so that less than market rate real estate property taxes are owed on the housing. Who makes up the difference? Everyone else who doesn’t live in subsidized affordable housing, including working class people living in modest homes. That's why the Pulp calls it “affordable hosing”.

Surely the couple must be people of modest income gathering abilities, right? Not exactly. They are college educated and not starting out in their careers. The husband is a credit analyst at Credit Suisse. The wife is a program manager at Pathfinders International, a non-profit organization that works to improve sexual and reproductive health around the world. Curiously, Pathfinders is based nowhere near Chapelboro. It’s based in Watertown, Massachusetts.

That’s right, the couple moved from Massachusetts to Carrboro to take advantage of the lower housing cost from the Boston area. Apparently, they telecommute. Homes were too expensive for them in Boston. They would have had to buy an older home and fix it up. Here they can buy just the house and it’s new, courtesy of your tax dollars.

How this couple can be considered to be in need of a public subsidy is known only to local Progressives and the CHT. Perhaps they simply enjoyed their income and went into debt, saving little for the future and buying a home. Perhaps they choose to take less income than they can make to pursue their passion. For them, government is there to bail them out with affordable housing.

So what happened to the African-American UNC housekeeper? No one seems to know. Perhaps she's too busy working trying to pay her local taxes to subsidize the Boston couple moving to Carrboro.

The signs were everywhere. Orange County sales tax revenues, down. County building permits, down. County economic development, down, but then when in the past decade has it been really up? Yet the Commishes kept spending every penny of the FY 2009-2010 budget.

The progressive mantra in Orange County has been not to worry about living within one’s means, but to live within one’s feelings. If a county program promotes social justice, then fund it. Don’t worry about how household county tax burdens have more than doubled compared to the rate of inflation. Don’t worry about how a high tax burden dissuades private businesses from settling in Orange County. Don’t worry about spiraling pension funding costs and how the average county employee makes over 50% more than the average county privately paid employee, if one includes all benefits.

Only now the fowl price tag for the spending spree by progressive Commishes for the past decade has come home to roost. Anyone who hasn’t visited Hillsborough lately hasn’t seen where their tax dollars have been poured into the ground. There’s a new government center costing $25,000,000. Too bad it wasn’t competitively bid. Too bad commish pals walked away with substantial profits from this deal. There’s a new library costing $8,000,000. Too bad the Commishes didn’t resolve a countywide library system with all county towns BEFORE building a book palace in Hillsborough. There’s a new justice center costing… well, you get the picture.

Maybe Commish Mike Nelson knew what he was doing when he abandoned his beloved, but tax overburdened Carrboro for Hillsborough right before the big county spending spree in Hillsborough.

Orange County has a $5,700,000 budget shortfall heading into FY 2010-11. That amount represents 3.77 cents per $100 of assessed value on the county property tax rate, or about $113.10 on a $300,000 house.

County Manager Frank Clifton delivered the chicken roosting report last week. The property tax base (75% of county revenue) is flat (obvious to anyone viewing the property sales reports). County sales taxes (another 10% of revenues) remain flat with little growth expected. What a surprise, except to those following the monthly sales tax reports from the state.

No wonder former County Manager Laura Blackmon flew the coop.

The county has about 915 authorized positions, 145 of which are currently vacant, and therefore unpaid. According to Mr. Clifton, ”We will probably be recommending the elimination of a lot of positions. I don't know how many. It's a key element of our strategy for next year's budget.” However, eliminating unfilled and unpaid positions doesn’t solve a budget shortfall problem. You have to make cuts. (Pulpster know the Pulp refrain about the growth in local municipal FTE positions far outpacing the rate of population growth.)

So Mr. Clifton says he will look at cutting programs beyond the county's core mission of providing education, emergency services, solid waste disposal and other basic services. When was the last time Pulpsters heard that expression, “core mission”? The Commishes like talking about everything but the core mission. Witness the trash transfer station siting debacle over the past four years.

Unbelievably, Mr. Clifton is considering cuts in the arts, tourism or land conservation. ”Each one has a core constituency. We're sure not everybody's going to be happy.” (See CHN OC Budget Story.)

As predicted by the Pulp in October 2009, Mr. Nelson is leaving office ahead of a budget disaster, just like he did Carrboro before that.

No word on the next political venue to be blessed to receive Mr. Nelson’s Midas touch.

The trend has been clear for months. Over 1,800,000 private employment jobs have been lost from December 2008 to February 2009 in the USA. Yet the Orange County cruise ship of government continues to tour as if it’s 1999. County government is THE growth industry of Orange County.

The Orange County Commishes want no job cutbacks for the county workforce, a full time employee equivalents (FTE) workforce that has grown from 673.6 FTE in FY 2001-2002 to 900.45 FTE in FY 2008-2009. That employee growth is 226.85 FTE in 7 years, or about 34% in total, about 5% per year. In response, the county manager has resigned.

(Average county employee compensation in terms of salaries and benefits for FY 2007-2008 was $44,164 ($38,643,672 in salary and benefits for 875 FTEs).)

Unspoken in the directive to the resigning county manager is the fact that the Commishes will continue to enjoy their usual salary and their free medical benefits.

The Commishes cruise on despite clear evidence months ago that county revenues are falling rapidly. Year over year December taxable sales for Orange County fell from $63,296,902 to $52,413,079 from CY 2007 to CY 2008. That’s over a 17% decrease in the base from which sales taxes are redistributed to the county during the month typically having the greatest sales tax revenues. Yet almost three months later, no county employee pay cuts have been announced. No layoffs or furloughs have occurred.

Contrast the Commishes’ response to that of their loveable apologists, the staff of the News & Observer. McClatchey, the N&O’s parent company and the third largest newspaper company in the USA, announced on 9 March 2009 that it would slash 1,600 jobs and cut salaries across the corporate empire, about 15 percent of its work force.

Moreover, the McClatchey executives understand that leadership involves doing by example. In the words of Mr. Gary Pruitt, McClatchy's chairman and chief executive officer, “We previously discussed a plan to reach a targeted level of cost savings, but given the worsening economy, we must do more. I'm sorry we have to take these actions, but we believe they are necessary.” So he is taking a 15% pay cut and no bonuses. All other executives are taking a 10% reduction. (See WRAL N&O Story.)

No word on when, if ever, the Commishes will take a pay cut.

No word on how much such a pay cut would be.

No word on when, if ever, the Commishes will give up their free medical benefits for a part-time effort at “public service”.

Four days after the local tax transfer vote fails in the primary election (see Pulp Local Transfer Tax Vote Story), the local media announces that home sales in the first quarter of Orange County for 2008 are 38% less than that of one year ago. That decline is triple that of one quarter ago (13.4%).

Conveniently, the local steno pool doesn’t report numbers that bear out the fact that revenues from transfer taxes are variable and depend upon the economy until after the primary election. Transfer tax variability was not reported to voters during the primary election by either Carrboro Mayor Chilton’s ad hoc developer shilling machine ,“Orange Citizens for Schools and Parks”, the city board of education members, the Chapel Hill town council members, the Carrboro Boa, or any of the County Commishes. Yet, over $100,000 in taxpayer money was spent on voter education.

See Herald Sun Home Sales Story.

Orange County bureaucrats have discovered that the local economy has been slowing and isn’t recession proof, just like the national economy. Waiting until two days after the local tax transfer vote (see Pulp Local Transfer Tax Vote Story), county staff told the County Commishes that the county has received $12,500,000 in sales taxes through February.

Unfortunately, that figure is $1,000,000 shy of the projected amount. In the words of County Manager Laura Blackmon ”As the economy continues to slow, a lot more [money is spent] on gas and food. So spending that would generate sales tax for us would not be as great as we thought it would be.” By September, Ms. Blackmon estimates a $1,500,000 deficit on county sales tax revenues.

No word on why this shortfall wasn’t discovered and announced before the election for county commissioner positions two days earlier.

See Herald Sun Deficit Story.