In the November 2010 election, 45,790 registered Orange County voters cast ballots. That’s about 45% of the 102,462 registered voters. Almost half of those votes were along straight party lines.

Despite the abundant prevalence of automaton voters, the Progressive ¼% increase in the local county sales tax was voted down, in a replay of the failed attempt to impose an increase in the tax on the sale of real property in the county in 2008. In a close vote, about 51% (21,810) were against the vote and about 49% (20,755) were for it.

Inexplicably, about 3225 voters cast ballots, but didn’t vote on the tax issue. That number was more than enough to have implemented the tax.

Query, did the automaton voting play a major role in the defeat? Straight party line voters may have forgotten to flip the ballot and see page 2 where the referendum issues (not only the sales tax issue, but the felon sheriff issue which was voted in by an 80% majority) were located.

Here’s a map showing the vote by location.

The darker green color is for precincts voting more than 60% for the tax, with the lighter green being voting by more than 50%, but less than 60%. The red color is for precincts voting more than 70% against the tax. The orange color is for precincts voting more than 60% against the tax, but less than 70% against the tax. The yellow color is for precincts voting more than 50% against the tax, but less than 60% against the tax.

See a pattern?

In most of North Carolina, the relentless upward spiral of local municipal taxation is recognized as being a looming problem for an aging home-owning population. However, Orange County is not like the rest of North Carolina. Here, taxes are the price to support what Commish Mike Nelson calls “the high level of services expected”.

How crippling are local property taxes really? The local media has no local government press releases to regurgitate, so the general itinerant population of southern Orange has no idea. Once again, the Pulp will take on this taxing situation.

Let’s look at what the median household in Orange County faces in an average priced single family house. The household income (2007, U.S. Census) is about $55,028. The average price house sold (at least in the southern half of the county) is about $300,000.

What you pay in ad valorem property taxes depends upon where you live in southern Orange. Here’s a table showing the tax rates for houses within the city school district and the South Orange Fire District if outside a town. The table also shows the annual tax bill.

(To calculate taxes, simply multiply the home value by the tax rate number in the above table.)

Let’s assume that the household is unusual. They plan for the future. They save for retirement costs. How much money does this median Orange household have to save in order to have investment income pay for the property taxes?

To answer that question requires assuming an average rate of return on a nest egg saved just to pay taxes. If one assumes an average rate of about 3% per year, then one can use a simple multiple of 33x. In other words, if you need to pay $1.00 in taxes, then you must save $33.00.

The following table shows how much be saved.

How long will it take for that median Orange household to save this nest egg? That depends. Let’s assume that they save 10% of their pre-tax income every year and hold the dollars at constant CY 2009 dollars. The table below shows how many tithing years it takes to collect the nest egg without compounding interest. So the a few years can be shaved off if compounding is considered.

(Note that tax rates/burdens are halved for low income retirees.)

In essence, our hard working, and guillible median income family must save about 10% of its pre-tax income for most of its entire working career just in order to feed the municipal tax beast.

Orange County redefines the term “sustainable” yet again.

As the Orange County government budget crunch times nears (June 30th), the December 2008 property value reassessment pronouncement by the Orange County Tax Assessor looks more and more surreal. Pulpsters remember the numbers. As of December 2008, taxable property in Orange County is worth over 22% more than in 2004.

That’s what you are supposed to believe. About $11.5 billion of taxable real property has increased in value to about $14.0 billion, despite a housing market meltdown. After all, a progressive government has pronounced. You must not denounce. Just accept what you are told.

With the local media simply lapping up government press releases, it falls again upon the Pulp to look deeper into the story.

Let’s look at the Case Schiller (CS) Index (Standard & Poors). It’s an industry accepted standard for determining national and regional housing values. (The closest relevant regional values model the Charlotte regional area.)

According to the CS Index, housing values rose nationally about 17.6% between June 2004 to June 2008 . That’s less than the Tax Assessor’s 22%, but sounds in the ballpark. However, let's look closer. Charlotte regional housing values rose only 5.8% during the same time frame. (Please note that the housing market peaked nationally and regionally (Charlotte) according to the CS Index in June 2006 and August 2007, respectively.)

Maybe the Tax Assessor thinks your real property booty is bigger than it really is.

How about if we move from December 2004 to December 2008? The numbers shift, and not in the Tax Assessor’s favor. According to the CS Index, housing values rose nationally between December 2004 to December 2008 by only about 7.2%. That’s way less than the Tax Assessor’s alleged 22% value increase. Moreover, the Charlotte regional housing values didn't rise at all. They fell 9.6% during that time frame.

The Tax Assessor is not just in left field, but is out of the ballpark.

Here are the raw numbers:

Do you wonder what has happened since the first quarter of 2009? Oh, it just gets better.

If we move look at from December 2004 to March 2009, then the Tax Assessor is in J-Lo heaven. According to the CS Index, housing values rose nationally between December 2004 to March 2009 by only about 5.1 %. Moreover, the Charlotte regional housing values fell not just about 9.6%, but by about 16.0% during the same time frame.

No word on when the local media will challenge the Commishes blind acceptance of an alleged “22% increase”.

The local steno pool has rallied behind the Commishes, extolling them in Republican iconographic terms as being “tough on taxes”. Four of five Orange County commissioners ”unequivocally oppose” increasing the tax rate beyond the $1 per $100 valuation threshold, as opposed to the staff recommendation of $1.038. Thus, the Commishes will accept a 5% tax increase (of the recommended 8.8 cent increase).

Commish Mike Nelson who doubled Carrboro taxes in ten years, is showing newfound fiscal trepidation, saying he's ”not comfortable going to a dollar. My inclination is to not support adding any new positions, because I don't see how we get the tax rate down if we add new positions.”

Rabid local transfer tax and former earnest, on-and-off again, schools and parks supporter Commish Moses Carey (who has overseen a rise in county taxes that is many multiples of the inflation rate over the past two decades )says ”If we're going to take some tough hits, then everybody's going to take some tough hits. I'm not exempting anybody – that includes the educational system. This is a tough year.”

The Commishes discussed saving money by the following dramatic cuts. First eliminate the Gospel Festival - $2000. Second discontinue local artist grants - $23,000.

The Commishes studiously avoided any discussion of increasing impact fees to recover the true capital costs of residential growth that have put the county into the fiscal mess it currently enjoys.

See Herald Sun County Budget Story.

No word on when the stenographers will explain to locals how the current financial mess came to be under the leadership of the sitting Commishes, some of whom have been in power for decades.

No word from any Commishes as to why this tough year wasn’t on the budgetary radar until days after the May 6th local transfer tax vote with every Commish in “strong“ support of schools and parks.

No word on why there was more discussion of the Gospel Festival than approving the brand spanking new $25,000,000 county office complex.

Voters in Orange County handily defeated the idea of a 0.4% local land transfer tax in a May 2008 referendum by a supermajority.

But what do they know? So the County Commishes are trying for a tax reach-around on the voting public. They have asked local state legislators indirectly for the authority for the Commishes to impose local transfer taxes without a voter referendum.

Local progressivism doesn't like voter referenda. That dogma is based on a governing principle that the majority of voters doesn’t know what’s best for them. That knowledge is reserved for the anointed true believers rallied under the banner of “Progressive”. True believers are those who support the incumbent, self-described “progressive politicians”. (Circular argument is a hallmark of local progressivism.)

In early April 2009, the Orange Commishes passed a resolution noting county [better known as Commish] ”support for the ability of all local governments to apply impact fees and/or taxes and to implement real estate transfer fees and/or taxes.” Directly, this statement doesn’t ask for a change in state law allowing Commishes to vote to implement a local transfer tax. But progressivism isn’t about openness and transparency in government. Doing what's right is too important to require democratic consensus building.

Consider the past. In the mid-1980s, the General Assembly (GA) allowed four counties (Dare, Currituck, Chowan and Camden) to implement a 1% local transfer tax by consensus of the local county commishes. No voter referendum was required. In 1989, the GA added three more counties (Pasquotank, Perquimans and Washington), but added the requirement of a voter referendum.

Now return to the Commish statement. It asks for support from local Orange state legislators for the authority of local county government to implement a transfer tax. Commish voting implemented a local transfer tax in the four counties in the mid-1980s without a voter referendum. Indirectly, they've asked for a local transfer tax reach-around on county voters.

All but one of the local commishes want to be able to override the will of the supermajority that voted barely a year ago. It’s simply a matter of keeping “all funding options open”. The predominant will of the people is of secondary importance.

Fortunately, the change to district-based commishes in the last election has added a new voice, one not slavishly committed to local progessivism. Commish Steve Yuhasz understands that the May 2008 vote was a clear vote, one that didn’t even occur in the context of a severe economic recession and high unemployment. ”I have a problem asking our local legislators [for] permission to do what our voters unequivocally told us not to do.” (See Chapel Hill Herald Transfer Tax Story.)

Illustrating the great divide between the “unwashed” Orange County in the north and the “anointed” southern Orange County, Rep. Bill Faison (D-Caswell, Orange) backed Mr. Yuhasz's opposition. (Both live in northern Orange, and thus, are “unwashed”.) According to Mr. Faison, “I would love to be able to vote on a bill that says we take transfer taxes off the table.”

No word on when the school merger/equity reach-around will grope its way to the surface.

At the risk of being branded a “right wing” ezine or blog, the Pulp is willing to report on a recently released regional study by the John Locke Foundation. In keeping with Pulp principles, the source of credible information is irrelevant to the meaning and context of that information. Accurate information regarding local government is hard enough to come by without imposing ideological sourcing tests, which, of course, puts the Pulp squarely at odds with local Orange Progressive principles.

The report entitled ”City and County Budget Crises: When in a hole, first stop digging” analyzed North Carolina state government published data and found that 96 out of 98 counties (two not reporting) and 24 of the 30 largest North Carolina towns or cities collected more revenue than needed to keep pace with increases in inflation and population.

The claims that population growth is the source of increased spending in Chapelboro and Orange Conuty is not supported by the facts, a charge the Pulp has made for years. For example, town of Chapel Hill government revenues (read mostly taxes) increased by 23% from FY2002-2003 to FY2007-2008. Per capita revenues increased by $158 in that five year period alone. Yet the population increased only 1.9%. Hiring a $60,000 plus per year public arts administrator for about 100 pieces of public art does cost in the end.

The Orange County Commishes are no slouches either. Not to be outdone by Chapel Hill Councilors, the Commishes increased spending by an additional 4% to reach a 27% per capita increase in county government revenues (read mostly taxes). That’s an additional $266 per person above the estimated $973 per capita that would have been needed to pay for pro rata population growth.

County population, on the other hand, increased only 4.6% in that same time frame.

The Commishes should be proud that Orange County grew its government revenues faster than any other county government in the Triangle. Moreover, that growth didn’t come from growing non-property tax revenues. It came from increasing proprety tax levies. While other governments improved their per capita sales tax revenues, Orange County languished in the doldrums of retail snobbery.

As reported in the Chapel Hill Herald, Chapel Hill Councilor Mark Kleinschmidt immediately went to work attacking the messenger and not the message. ”Is a few thousand dollars we provide to the Y for after-school programs low priority? Is the fact that the citizens of the community who voted for a new aquatic center – the will of the people – low priority?” Claiming that revealing the true pace of government spending is designed to pit citizens against their government, Mr. Kleinschmidt says that, ”The Town Council is a vehicle through which citizens voice their wants. The sole purpose is to manifest the interest of the citizens.”

No word from Mr. Kleinschmidt on the last time that the town of Chapel Hill informed its citizens as to the relative pace of per capita spending to population growth.

In most of North Carolina, if the county commissioners said they are not increasing the real property tax rate from the previous year, then that means that the assessed value ad valorem rate is not changing. But Orange County is not like most of North Carolina. In Orange County property tax rates can be set to rise by 12% and yet still be declared by the Commishes as “revenue neutral”.

How is that possible? Welcome to the world of linguistic nuance. As long as you are not bringing in more “Total Budgeted Revenues” in FY2009-2010 than you did in FY2008-2009, you are being “revenue neutral”. Adjusting the real property tax rate higher to be “revenue neutral” to the county, is not actually “increasing taxes”. Got it?

Let’s look at the sketchy facts that have been revealed to date. The Pulp will not try to confuse you by citing tax rates based on real property reevaluations. The “86 cent” rate being tossed around by the county manager is comparing apples (raised future real property evaluations rates) to oranges (current evaluation rates).

In FY 2008-2009, the OC Total Budgeted Revenues (TBR) amounted to $205,924,141. That amount includes the General Fund, Special Revenue Funds, Proprietary Funds, and Fiduciary Funds. Of the TBR, $128,359,609 came from real property taxes. That’s about 62% of the TBR.

In order to calculate the real property tax rate for FY2008-2009, the county Budget Office looked at the assessed value for real, personal, and corporate excess property in OC. That amount is $11,940,513,287. In order to yield $128,259,741 in a General Fund Levy (close to the budgeted amount above but not exact), the ad valorem tax rate per $100 of assessed valuation has to be set to 0.998. That’s the OC real property tax rate for FY 2008-2009.

However, the Commishes have reported two important shortfalls looming over the FY2009-2010 budget. First, there will be a shortfall of $6,300,000 in motor vehicle, public utilities and personal property taxes in the coming fiscal year. Second, there will be an additional $8,700,000 shortfall in other funding sources such as state grants and sales tax revenues. That’s a total estimated shortfall of $15,000,000, out of a “revenue neutral” TBR of $205,924,141. Commish Mike Nelson declined to comment on why the public is learning about a $15,000,000 shortfall barely three months before a budget has to be passed.

In order to raise that $15,000,000 shortfall, how much will the real property tax rate have to rise?

According to the commish approved county budget, for each one cent rise in the ad valorem tax rate, the county raises an additional $1,272,224. Thus, in order to raise $15,000,000, the number of cents that need to be raised equals $15,000,000 divided by $1,272,224 or 11.79 cents.

The FY2008-2009 ad valorem tax rate is 0.998, or otherwise referred to as 99.8 cents. If you add 11.79 cents to 99.8 cents, then the county must increase its ad valorem tax rate by 12%. That tax increase will the percentage of real property taxes up from 62% of TBR to over 70%.

For county budget numbers see FY2008-2009 Budget.

So a 12% ad valorem tax rate increase isn't really an increase, but just keeping revenues unchanged. In the words of Commish Barry Jacobs, ”It's revenue-neutral for the county, but it doesn't mean it's going to be revenue-neutral for the citizens, I actually thought I was accomplishing something for people. Even by being revenue-neutral, the majority of people are going to have a tax increase, even though we said we didn't want a tax increase. That doesn't really address their concern adequately.”

Taxpayers are admonished by Commish Jacobs to take solace in their aging, depreciating assets. He pointed out that taxpayers they will pay lesser taxes. So the personal economic development program advocated by Commish Jacobs is to own delapidated property! Either that or be the caretaker of the property and let someone else pay for the taxes.

Commish Bernadette Pelissier appears to be in disagreement with Commish Jacobs. She says, ”We are going to spend less, no matter what the tax rate is going to be.”

(See N&O Budget Story.)

Early Warnings Of Unsustainable Taxation
For years the Pulp has had postings beating the drum on how unsustainable it is to expand your local taxes faster than the income of your citizenry. It’s simple economics really. If you double the taxes while citizens increase their median income by half, then you are reaching ever deeper into their pockets. At some point there’s little disposable income left. Their homes are mortgaged to the hilt. However, in a “facts optional” political atmosphere, it’s what you want and how you feel about getting what you want that matters.

None other than Mr. Mike Nelson proclaimed while running for commish in 2006 that people in Orange County “want a high level of services and that requires taxes”. That was back when he had to explain how Carrboro taxes (not tax rates) more than doubled under his mayoral leadership.

Back in the open forum days of the Pulp, the usual crowd of political apologists (Mr. Fred Black, Ms. Terri Buckner, Mr. Joseph Capowski (as “Weaverguy”), Mr. George Entenmann, Mr. Marc Marcoplos, and Ms. Ruby Sinreich) all sung the praises of Mr. Nelson and howled about how Orange County was different. Here people wanted the “high level of services” and knew they must pay more for them. The fact that other counties and towns offer equal or better services at lower tax burdens was assiduously ignored.

Cracks Show As Even UNC Professors Feel Your Pain
The cracks in the Orange tax-and-spend foundation are finally showing. In a recent Chapel Hill News editorial, Mr. John J. Pringle, (C. Knox Massey Professor of Finance (Emeritus) at the Kenan-Flagler Business School at UNC) laid out the case supporting the Pulp’s proposition. Orange County had practiced, and is practicing, unsustainable taxation. Mr. Pringle pointed out that median house prices in the US averaged 2.1 times median income for two decades prior to 2001. Housing prices almost doubled to 4.1 times median family income post 2001. When the housing bubble burst by late 2008, prices had fallen by 25% for the bubble peak, according to a widely used national home price index used by Mr. Pringle.

Mr. Pringle cites his personal experience, “since 1993 when we moved into our house, our property tax has increased 249 percent, while during this same period the consumer inflation index increased 46 percent. Over the 15 years, inflation has averaged 2.5 percent per year, while our property taxes have increased by an average of 8.7 percent per year. In a single year, 2005, our property tax increased 42 percent, and from 2000 to 2008 more than doubled.”

Did income keep pace with this taxflation? No. “During the peak years of the housing bubble, from 2000 to 2006, house prices nationally rose 88 percent, while personal income rose only 30 percent. Social Security income is tied to the Consumer Price Index, which rose 17 percent.”

Orange Tea Party?
Will an “Orange tea party” tax revolt happen, much like what happened in Boston, Massachusetts in 1773? No. Unlike King George III, our local politicians are much more skilled in straddling fences and speaking out of both sides of their mouths.

Most importantly, the local media and political apologists will be sure not to place any responsibility for the present tax mess on incumbent local officials. Without someone connecting the dots, “It just happened”.

Mike Nelson – Archtypical Politician Without Responsibility
Sociopathic behavior is acceptable if exhibited by a politician. Deception, dishonesty, feigned interest may still be repulsive for many in personal interactions, but as a society, we accept such behavior in our politicians. It’s considered “part of the game”. It’s okay to say one thing and do the opposite. It’s okay to pretend to be what you aren’t. It’s okay to say you’re against tax rises while promoting a new tax.

After a decade of doubling the tax burden in Carrboro, in 2006 Mr. Nelson ran for the commish spot as the next rung in his climb for political glory. When questioned about his taxation record, he confidently responded that here people want a “high level of services” and know “they must pay more for them”. In part, his confidence exuded from a reliance that no one in the local media or political establishments would question his statement. The fact that other counties and towns offer equal or better services at lower tax burdens would not be mentioned.

After being elected in the Democratic primary, Orange County having one party rule, in 2007 during his first commish retreat, Mr. Nelson opined ”We need to dig down and find out really why we've had 18 years of tax increases. Eighteen years in a row is a long time.”

Then one year after speaking aloud about 18 years of tax increases, in 2008, Mr. Nelson was advocating for another tax. Mr. Nelson, like his successor as Carrboro mayor, Mr. Chilton, advocated vociferously for the ill-fated and highly rejected local option transfer tax. He even used the case of his retired elderly mother to support taxing home sales even more, claiming he would raise property taxes less, even though the proposed tax wasn't requried to be revenue neutral. Eluding Mr. Nelson’s steel trap financial mind is the fact he has raised the county tax burden more than the funds the transfer tax would've yielded. (See Carrboro Citizen Nelson Transfer Tax editorial.) Quite an accomplishment Mr. Nelson has achieved in less than one term in office as commish.

Retreats must be especially insightful times for Mr. Nelson. For in 2009, one year after asking for the transfer tax increase, Mr. Nelson again felt bad about county taxes. He noticed that the county is spending faster that county property taxes are rising. (Mr. Nelson ignored the fact that property taxes are rising faster than median income.) He was concerned that county spending would rise 5.8% annually over the next five years while property values were projected to rise just 3.9%.

In Mr. Nelson’s immortal words, ”I have a fundamental, philosophical, ideological problem with the way this organization had done budgeting. It's brought about tax increases.” This revelation comes from the person who oversaw a doubling of the Carrboro tax burden, far outpacing both median incomes AND property values in Carrboro. (See N & O Nelson Philosophy Story.)

A Hope For Change - Coming Campaign Converting The Image of Tax-and-Spenders Into Fiscal Conservatives
With 2009 bringing about a confluence of a local municipal election and a severe recession sliding into a depression, Pulpsters should be alert in looking for the coming campaign to remake the image of local incumbents. Local media and political apologists will create a wave of disinformation portraying incumbents as “holding the line”, “showing a tight fist”, and the ever popular “making the painful cuts” with regards to local budgets, and thus, local taxes. That these incumbents used the good times to build a bureaucratic infrastructure unsustainable even in the good times, much less the bad times, is irrelevant. That they raised your taxes way beyond increases in your income even in the good times is, likewise, irrelevant.

Pulpsters should not expect to hear cogent explanations as to why taxes have risen so in the last decade, except, of course, here at the fiercely non-partisan Pulp.

In the midst of a local real estate meltdown where many homes aren’t even being offered for sale because hardly anything is moving, Orange County announces its reassessment. On average, each housing unit has increased in value 22% over the last four years, bringing Orange County's total assessed valuation from $11.5 billion to $14 billion.

According to OC Tax Assessor John Smith, ”This is great news compared to the significant downturn that many property owners are enduring in other, less-fortunate areas of our nation. People have gotten the idea that values have really declined, but that's not what we're seeing in this area. We're going to be keeping a watch on the market, so if the market does take a drastic change, then we're going to be reporting that to the commissioners.” (See N&O Tax Assessor Story.)

No word on to whom Mr. Smith is talking about current market conditions.

It’s reassessment time again. Tax assessor John Smith is warning homeowners, expect to see increases of 15% to 35% since 2004. Anticipating a spate of objections, Mr. Smith will give you a sneek peek at your reassessment in November and December.

In the real world, homes sales in Orange County have slowed from 874 properties in January to July 2008 versus 1,152 properties sold in the same time in 2007. Time on market has increased from 59 days in 2007 to 78 days in 2008. The average July price of a property in Orange County was $302,635, down 9% from $332,842 in 2007. The mean price July price was $243,500, the midpoint between high and low, down 5% from $257,000 in 2007.

With tax rates in Orange County municipalities heading higher faster than elsewhere in the state, the local media has had problems containing the bad news for their political pals. (See N&O Tax Rate Story.) Orange County now has the second-highest property tax rate in the state. OC tops the Triangle at 99.8 cents per $100 of assessed property value, (not including municipal taxes, fire district taxes or special school district taxes).

However, what did most counties handle their budgets for FY 2008-2009? Here is where fiscal management perspective can be gained. Out of 100 counties, 69 held the line with no tax increase. Six counties actually lowered taxes. Only 25 counties raised taxes. Of those counties, OC was in the top five county tax increases. For more information, see the County tax rate table.

More important than tax rates is the actual tax burden felt by individuals and households. A comparison of those tax burdens between OC residents and Durham County residents reveal that the tax burden in OC is significantly more than in Durham.

As can be seen in the table above, the per capita tax burden of $900 in OC versus $733 in Durham means that you pay 23% in county taxes just to live in Orange where Retail Leakage is public policy. Household tax burdens compare similarly. An OC household pays on average $2188 in county taxes versus $1751 in Durham, or about 25% more in OC.

Finally, one can look at what the present commisioners have done over the past five years in spending taxes. While Durham has increase property tax revenues (to them, but expenses to you) by about 21% in the past five years (or about 4% per year), Commishes have raised their tax haul by about 42% (or about 8% per year). Put another way, if Commishes had been as prudent as leaders in Durham, you would have received a tax break from present rates. Pulpsters should note that back in 2003, the per capita property tax burden was the same in OC and Durham (at $641).

For those apologists looking to contrast Durham as an “unfair” comparison, Pulpsters should keep in mind that the median household incomes of the two counties are similar ($55,861 for OC versus $54,157 for Durham, or a 3% difference). Also, the assessed value of taxable property per household are also similar – $239,328 in OC versus $209,938 in Durham, a 10% difference.

On 11 June 2008 the NC Senate Finance Committee approved a repeal of the land transfer tax option that lawmakers gave to counties last year. Nineteen counties have held referendums to increase the tax. All failed, including the May 6th Orange County referendum on which Commishes spent over $100,000.

Local Orange Progressive Senator Ellie Kinnaird spoke out against the bill, apparently not believing that a 2 to 1 supermajority against such a tax is worth accepting. (See Pulp Local Transfer Tax Defeat Story.)

The legislation is expected to face stiff opposition in the NC House from none other than local Orange Progressive Speaker Joe Hackney.

In the true historic spirit of USA progressivism (such as prohibition), “good” decisions should be forced down your throat whether you want to live with them or not.

The Orange County Commishes spent Wednesday May 7th toweling egg off their face as a record voter turnout defeated the land transfer tax option in a referendum vote of 2 to 1 against the tax. Pulp readers remember that the Commishes spent $10,000 to poll citizens. See ( Pulp Commish Poll Story).

That pricey poll revealed that 53% of the people polled opposed the local transfer tax. But the Commishes went forward with a $100,000 “educational” campaign to push the tax. They recruited every city school support organization (school board, PTA boards, et cetera) with the “promise” (a non-binding board resolution) to use the estimated $3,000,000 in local transfer tax funds for schools and parks. The implied threat was that without the tax, you can forget about full funding. The Commishes recruited political allies such as Carrboro Mayor Mark Chilton to organize Orange Citizens for Schools and Parks to spread propaganda and not to tell the full story about the tax, how renters didn’t pay the tax and how developers such as Mayor Chilton took profits while leaving a $300,000,000 capital burden for you to pay.

Despite every major Orange Progressive openly supporting the tax, it was turned down. The two thirds opposition was higher after the educational campaign than before. The $10,000 poll revealed 53% opposition with many undecided. The undecided apparently decided to oppose the tax after being educated. Even after rigging the vote to be during what many believed would be a poorly attended May 2008 primary election, as opposed to the better attended November 2008 general election, the Commishes couldn’t get their tax.

Now the big question is, will the Commishes provide $3,000,000 in funding for schools and parks through raising the county property tax. If the school and park need was so great that a new tax was mandated (as Commishes and their supporters represented), does that need remain so great that they will raise property taxes?

Local media-described ”newly elected” Democratic commissioner at-large and local transfer tax advocate Bernadette Pelissier (running against Kevin Wolff in Novmber) showed her complete lack of financial understanding by saying ”I think the land transfer tax was put on too late in the whole process. I wish that the General Assembly had actually made it a tax more on new homes because there's a misperception that it's only for the seller to pay it, when it really can be in the closing costs and paid by the buyer.” Amazingly, Ms. Pelissier was against a fully burdened impact fee during her election campaign and for the transfer tax. Pulpsters, unlike Ms. Pelissier, know that the transfer tax was put on the primary election at the behest of the Commishes. Pulpsters also know, unlike Ms. Pellisier, that the Commishes could have asked, but didn’t, for the option of a higher impact fee from the General Assembly. Clearly, lack of knowledge is not a barrier to being elected in Orange County, so long as the candidate makes you feel good.

Showing her non-profit, tax exempt financial acumen, Ms. Pelissier says ”I'd really like the commissioners to look at increasing the impact fees, though that wouldn't solve all of the problems.” Kenan business school professors are still pondering the meaning of this statement.

Developer Dream Team water carrier and Chief Commish Barry Jacobs, speaking through a yolky beard and albumen facial mask, said, “I'm appreciative to the people who tried to take up the ball for the notion that local government needs more funding options. And in this case we only got to arrange for this option, which had the deepest pockets available opposing it. The notion that local government should have local alternatives is still important and still needs to be pursued.”

No word on the next tax to be brought to you by the Commishes.

Tax-exempt expert, pollo asado eater, Carrboro developer & realtor, bourgeoisie rentier, black bag campaign poster expert, Carrboro mayor, and now water use guru Mr. Mark Chilton comes to the rescue once again of fellow developers/water profiteers (see Phictionary), with his bag of political magic tricks. Mayor Chilton uses his political office to hold a Boa vote on the local transfer/home equity tax.

On 22 April 2008, under the hypnotic gaze of Mayor Chilton, the Boa passed another in its famous string of non-binding and meaningless resolutions about issues not discussed in any Carrboro election.

Throughout the entire riveting discussion, not a single Boa member mentioned any of the following facts regarding the local transfer tax:
1) City schools need over TWO HUNDRED MILLION DOLLARS in unfunded capital spending over the next five years.
2) Orange County has an impact fee for new homes. Unfortunately, that fee is not high enough to offset the capital burdens of a new residence.
3) OC has been in a steady growth pattern for the past 20 years and will maintain that path for the next 20 years.
4) County government doesn’t keep a future capital cost balance sheet.
5) Not one Orange County municipality requires a financial impact statement (municipal capital and operating costs) when making residential housing approvals.
6) Currituck County (with a local transfer tax since 1985) recently asked for a TWELVE THOUSAND DOLLAR PER HOUSE impact fee, almost three times the Orange County impact fee.
7) Despite assurances from county commissioners and luminaries, the tax is NOT dedicated to “schools and parks”.
8) Renters aren’t subject to the tax. Carrboro is two thirds renters.
9) Smart landlords aren’t subject to the tax. Landlords can sell the business owning title to their rental units, thereby avoiding any transfer tax.
10) The tax is highly cyclical. When the economy turns down, so do transfer tax revenues. Such revenues in Dare County (another model county cited) halved in the recent economic downturn.
11) Even with this tax, more scheduled imbalanced growth will bring us full circle to more unfunded capital debt for schools.

“Dance with bricks” trespasser and chief issue teaser Alderman Randee Haven-O'Donnell captured the Boa’s mood, saying that real estate is Carrboro’s biggest business, so business (sic??) should support schools and parks. (Sorry Pulpsters, there's no Phicitonary translation for this Orangespeak statement available.)

In the 13 2008 Chapel Hill Herald, former Chapel Hill Councilperson , Orange Progressive propagandist, and Carrboro Mayor political attack surrogate (aka ”Weaver Guy” on local political blogs and forums) Joseph Capowski shills for the home equity tax/local land transfer tax vote on 6 May 2008. Mr. Capowski is a chair of Orange Citizens for Schools and Parks, the ad hoc pro transfer tax group started by Carrboro Mayor Mark Chilton and scheduled to evaporate after the vote. (See Hot Orange Chilton Story.)

In keeping with the objectives of fellow home equity tax shiller, tax-exempt expert, pollo asado eater, Carrboro developer & realtor, bourgeoisie rentier, black bag campaign poster expert, Carrboro mayor, and now water use guru Mr. Mark Chilton, Mr. Capowski is for the home equity tax. Not only is Mr. Capowski for the tax, he’s for southern Orange remaining a bedroom community that will keep on having to pay for developers’ profits. “Orange County's primary growth industry is residential housing with a great lifestyle, and this basic character should not be compromised by heedlessly seeking new industry that could lower our quality of life.”

Mr. Capowski fails to mention fully burdened impact fees, fees that would come out of the pocket of developers like his friend, developer Mayor Chilton.

Mr. Capowski fails to mention the cyclical nature of transfer taxes that tend to lag at the time most needed.

Mr. Capowski fails to mention that the tax is NOT dedicated for parks and schools.

Here’s Mr. Capowski’s shilling in all its glory:

“How should Orange County grow responsibly for its present and future citizens? In other words, how do we absorb more residents without destroying our great quality of life and becoming another casualty to too-fast growth that exceeds our infrastructure, with the result of crowded schools and highways, inadequate parks, and as we saw most recently, a water shortage?

Orange County is not like any other county in North Carolina. It ought not follow any abstract or state-provided growth formula. Where else do you have two employers, UNC and UNC Health Care, who pump in $2 billion a year in salaries and benefits, and another $1.1 billion in service and supply purchases? True, the university and Health Care don't pay property taxes, but they are responsible for the 30 percent higher median family income that Orange County enjoys compared to the state median income.

Our superior public schools and parks are the crown jewels that attract and retain our educated population, which in turn sustains our economy and the economies of surrounding counties. Generally, these are professors and scientists who are courted by universities around the country and often choose to live here to enjoy our quality of life. These amenities also contribute to our real estate stability, with steadily rising home costs without the boom-bust cycles that occur elsewhere.

Orange County's primary growth industry is residential housing with a great lifestyle, and this basic character should not be compromised by heedlessly seeking new industry that could lower our quality of life. That said, thoughtful commercial development is essential within the county's comprehensive land use plan. We are a renowned center of education and health care, and we should continue down this successful path.

Our growth demands that we build new schools and parks – and schools, by North Carolina law, are uniquely county functions. Historically, the one revenue source for school construction that county commissioners can control is the property tax, and it is already too high – high enough that many older citizens, who tend to be house-rich but income-poor, fear being taxed out of their homes. As a consequence, the county commissioners asked the legislature for another revenue stream, and after finally receiving permission, our commissioners have placed this question on the ballot for May 6: Real property transfer tax at the rate of up to four-tenths percent (0.4 percent) of value or consideration. Vote FOR or AGAINST.

This tax will apply to all real estate transactions in which money changes hands, including residential, commercial and unimproved properties. Gifts and inheritances are not affected. The county commissioners will apply the tax revenue to our county's schools and parks. Since the county is obligated to build schools, the question before us is not if we want additional taxes, but rather how do we want to be taxed?

Nobody, myself included, likes a new tax. So why do I advocate for it?

* The transfer tax allows property owners to enjoy increases in the value of their homes and businesses as long as they own them, without paying additional yearly property tax.

* The transfer tax payment is delayed until the property is sold, when the seller will receive revenue. Elderly people benefit here especially.

The NC Association of Realtors will spend a small fortune of statewide funds to fight this tax. You'll receive their handsome brochures and robo calls. Their fear is that if it passes here, it will spread to larger, fast-growth counties. This group is strongly opposed to increases in real estate taxes, even if these taxes are needed to pay for schools and other basic community services. It's nothing personal, high housing prices are bad for business. They argue, for example, that “this is not the time for a new tax.”

But what is their alternative? Don't build the next needed school? Keep raising the property tax to pay for it?

I chair a local grassroots group that believes that this tax is a necessity. We are funded entirely by local contributions. Please visit our Web site at 4schools4parks.com. We urgently need help to spread the truth about this measure. Can you help? Please send a check to Orange Citizens for Schools and Parks, P.O. Box 14, Chapel Hill, NC 27514. (Write your occupation and employer on the memo line.)

We urge Orange County voters to carefully examine the facts about the Land Transfer Tax and weigh the benefits and burdens of meeting part of our obligation to the future with this tax. Unfortunately, we cannot have it all without paying for it. Let's face it deliberately and fairly, together.”

In the 8 April 2008 Daily Tar Heel, State Senator Ellie Kinnaird states that you are being fed misinformation regarding the proposed “home equity” tax (aka the local option transfer tax) (See Hot Orange Transfer Tax Story.) According to Ms. Kinnaird five counties have “enjoyed” the local transfer tax for years. For her their success story reads as “growth in the counties has not slowed, their ad valorem taxes are the lowest in the state and they have more money for schools. In fact, after the transfer tax passed, their ad valorem property taxes went down while their school funding increased.”

No facts are given by Ms. Kinnaird, but fortunately, facts are available.

Dare and Currituck counties (along the coast) have had the local transfer tax the longest, since 1985.

Are homes more affordable there? No. Home prices in beachfront blessed Dare and Currituck Counties are among the highest in North Carolina and are more than double the state average. Higher home prices mean higher ad valorem revenues per houehold for the counties. In 2006, the average Currituck resale price was $581,878 with a median price of $380,000. The average resale price in Dare was $483,244 with a median price of $397,500. By comparison, the average 2006 resale price in North Carolina was $214,948, and the Triangle average was $233,763.

Are the tax levies per person less? No. Even with a “home equity” tax, ad valorem tax levies per person for Currituck and Dare counties are, respectively $1073 and $1293. That compares to $966 for Orange County without a “home equity” tax.

Are “home equity” taxes stable or growing? No. As reported in the Coastland Times of Manteo, Dare County Commissioners cut capital reserve fund expenditures to “adjust for a steep decline in land transfer tax revenue.” Dare’s collection of land transfer tax declined from a high of $15.13 million in FY 2005, to $10.74 million in FY 2006 to a projected $6.84 million for FY 2007.

Are impact fees to pay for capital infrastructure growth costs not needed there? No. Currituck County is seeking a proposed Adequate Public Facilities Ordinance (APFO) which would force developers to pay “voluntary mitigation payments” of more than $12,000 per home, or make another form of contribution toward the local school system. Orange County has a SAPFO ordinance that forces the commissioners to build schools and doesn’t ask developers for a dime!

Ms. Kinnaird reveals that she is on the cusp of discovering the source of the costs of residential growth when she further says “[t]he choice is forever increasing property taxes to pay for our growth and the need for more schools and parks to accommodate that growth or a one-time tax that affects a family maybe only one or two times in their lives.” However, she falls off the wagon by failing to state who picks up the tab and who picks up the profits.

Ms. Kinnaird misses the plain and simple fact that the local transfer tax simply shifts the burden of new infrastructure capital off those making the profits (the developers) onto those who sell their homes. She wants to tax the capital gain of residents while allowing developers to escape with their income gains untaxed by the county.

In a jingoistic rebuttal, Ms. Kinnaird ends by stating that “the ad valorem property tax is a “home tax” already, just one that is hard on those with a fixed income.” Too bad, Ms. Kinnaird can’t tell the difference between an operational home tax (ad valorem property taxes), where one pays for services available, and a capital home tax (home equity transfer tax), where one is taxed on maintaining or building the value of a property without receiving any services from the county for having done so.

No word from Ms. Kinnaird or the Commishes on why there is (in the words of the North Carolina Association of County Commissioners) “a growing crisis” on how counties pay for infrastructure needs aka schools.

See Ms. Kinnaird’s letter in the DTH.

Michael Griffin of Hillsborough filed a petition with the Orange County Board of Elections on 5 March 2008. Mr. Griffin is not happy with the Commishes using taxpayer moneys to have a poll conducted that he believes was more about advocacy (illegal) than education (legal). (Pulp readership is apparently on the rise.)

Recently, the commishes played footloose and fancy with a poll on the local option sales tax and local option transfer tax. (See Hot Orange Commish Poll Story #1 and Hot Orange Commish Poll Story #2|.) As reported in the N&O, the petition states “An examination of the poll and its questions reveals that it is calculated to be used as a tool for advocacy by the Orange County Board of Commissioners for the passage of the land transfer tax. … In particular, the poll seeks an identification of likely voters' objections to the land transfer tax, while it does not seek to identify any reasons why likely voters support the measure.”

Although Pulp observers have heard Commish Barry Jacobs asking for the local option transfer tax for years, apparently simultaneously he has remained undecided on his vote for a referendum for such a tax. Mr. Jacobs is quoted at saying ”Since we honestly hadn't decided what we were going to do, and that's why we had the poll, I don't see how someone could assume that it was an advocacy tool.”

No word on whether or not Commish Jacobs is scheduled for a pinocchio rhinoplasty procedure at UNC hospital.

No word on whether or not new furnishings will be arriving at the county attorney's beach abode due to petition.

In related business news, share of Kraft Foods, makers of the Kool-Aid brand, rose significantly in heavy trading.

See N&O Poll Petition Story.

In an amazing display of political legerdemain, the commishes (Orange County commissioners) revealed their compassionate and caring electorate listening skills. After paying $10,000 for telephone interviews of 400 people ($25 per person) in a scientific survey of voter attitudes on imposing a local county sales tax or a local transfer tax, the commishes decide to do what they wanted to do all along, put just a new local transfer tax on the ballot in May 2008. See County Commishes Issue Gangsta Warning - Pay Me Now or Pay Me Later.

The survey started by asking about a sales tax without identifying the option of a local sales transfer tax instead. The question also stated orally that the sales tax “COULD keep property taxes below what they would be otherwise”, offering confusing hope to some that property taxes would go down.

About half (50%) of the people polled were said to support or lean to a local sales tax with about one-third (32%) opposed or leaning to oppose and one-sixth (17%) undecided. Over 51% of those saying “No” said taxes were already too high.

About one-third (33%) of the people polled were said to support or lean to a local transfer tax with about half (53%) opposed or leaning to oppose and one sixth (14%) undecided. Only 28% of those saying “No” said taxes were already too high.

After asking the questions individually, then the survey asked the question of selecting only one of the two options. Sales tax edged out land transfer tax if those polled HAD to choose one, (47% to 42%).

See Survey Results. See N&O Taxing Story.

According to figures released by the Bureau of Labor Statistics, the average compensation of state and local government workers is far ahead of that for private workers.

The gap widens every year, rising by an average $1.02 an hour last year, $2.45 an hour over the past three years. State and local government workers now earn an average of $39.50 per hour in total compensation, over 50% more than private workers ($26.09 an hour). Private businesses are trimming pension benefits and asked employees to pay a greater share of medical costs.

When adjusted for inflation over the past seven years, 20,000,000 (excluding 2,700,000 federal) public employees received a 16% increase in compensation. State and local governments have more than $1 trillion in unfunded liabilities for pensions and retirement medical benefits for public employees.

No word from any managers of any of the Orange local governments as to why such comparisons aren't in their budget reports to elected officials.

FMI Bureau of Labor Statistics