Tax calculator

goes on line
By Scott Nicholson
nicholson@wataugademocrat.com

For those who want to play county commissioner from the relative safety and anonymity of their armchairs, a new government tax calculator allows comparisons between various revenue options.

The tax calculator was developed by the Institute for Emerging Issues at North Carolina State University and the North Carolina Association of County Commissioners.

The online tool was developed to allow local governments, legislators and citizens see the various financial tradeoffs that occur from manipulating various tax sources and rates.

It’s designed as a long-range tool to help budget planning, since most budgets are planned for the coming fiscal year despite long-term capital plans and estimates of projected growth.

The tool becomes particularly useful with the General Assembly’s approval of new tax options for counties.
The primary ones are increases to local sales taxes or land transfer, or deed, taxes, in addition to other impact fees.

Such measures have proven unpopular with voters, though, as they are required to be enacted through a referendum.

Typically, land transfer taxes are seen as beneficial to resort or tourist counties with a high percentage of second-home sales.

The theory is that out-of-county landowners shoulder a larger percentage of the tax burden, lessening the property tax burden on year-round residents.

Real estate groups oppose the measure, calling it a tax on homeowners that will increase the sales price of houses.

The calculator allows users to increase and decrease various revenue streams, including an expansion of the sales tax base, a measure of economic growth.

The calculator also allows adjustments to the property tax rate and how the changes would affect overall revenues.

The calculator also allows people to plug in the local sales tax options, deed tax options, and other fees and see how those new sources of revenue might alter the property tax rate.

The commissioners discussed a potential land transfer tax in September but have taken no action to put the issue before voters. In Watauga County, a four-tenths of a percent deed tax would generate about $3 million per year.

The county commissioners enacted a 6-percent occupancy tax in 2006, though its revenues are earmarked for tourism promotion and capital projects designed to enhance visitor experience.

“The ability to provide revenue growth for the next two decades is a valuable tool as county officials plan to meet the needs of a rapidly increasing and diverse population, both now and in the future,” NCACC executive director David F. Thompson said.

The Watauga County commissioners agreed to keep a “revenue-neutral” rate after the 2006 property revaluation, setting the rate at 31.3 cents per $100 of property value.

Despite seeking to borrow $70 million for a new high school, the county’s projections show the loan can be repaid without future tax increases and absorbed by the anticipated growth alone.

The tax calculator is online at the NCACC Web site, www.ncacc.org/taxcalculator/default.htm.

The effort grew out of the 2006 Institute for Emerging Issues forum to modernize state and local finance. It uses projections and data gathered from the Department of State Treasurer for the 2005-2006 fiscal year.

Last year, 32 of the local-option referendums were put on ballots and voters only adopted two of them, both for the quarter-cent sales tax increase. No county has successfully passed the land transfer tax.

Twenty-five counties plan to place the revenue options on ballots this year, and Alexander County voters approved the sales tax hike in January.

Only four, including Ashe County on May 6, are seeking to adopt the land transfer tax.