Not raising county

taxes is a state trend
By Scott Nicholson
nicholson@wataugademocrat.com

The Watauga County Board of Commissioners joined the statewide trend of dodging local tax increases for the 2008-09 fiscal year, as most counties held the line on property taxes.

Only one-fourth of counties adopted budgets that included property tax increases for the current fiscal year, the smallest number of increases in one year since 1998-99, when fewer than 20 counties raised property taxes.

Six counties reduced their property tax rate for the new fiscal year.

The Watauga County tax rate remained at 31.3 cents per $100 of property valuation despite a 4.6 percent increase in overall expenditures and revenues.

Last month, the commissioners adopted a balanced $60.1 million total budget, with a $44.6 million general-fund budget for county operations.

Todd McGee, communications director for the North Carolina Association of County Commissioners, said varying factors led to the freezing of many county tax rates, and commissioners sought different ways to meet growing demands.

“With the economy being what it is, a lot of commissioners were very aware of what it was doing to their citizens,” McGee said. “And this being an election year might have been part of it, too. Commissioners don't tend to enact increases when they are running for office.”

The N.C. General Assembly last year removed the county's local burden for Medicaid expenses and approved options to increase local revenues. However, the options have to be approved through a local referendum. The quarter-cent sales tax increase has achieved some popularity, though the land-transfer tax has failed to win over a majority of voters.

“The Medicaid swap might have eased off some stress on county budgets,” McGee said. “It was one of those years where we couldn't really pinpoint any one trend.”

McGee said the new revenue options might affect property tax rates in the long run, but not enough data was in place to spot effects. “It's probably too early tell,” McGee said, noting the eight counties that had approved the quarter-cent local sales tax increase were mixed on enacting higher property taxes. “Two of the eight raised property taxes, one reduced property taxes, and the rest held it steady. Sales tax revenue is considered to be lower in the year ahead (due to the economy).”

McGee said if the economy continues its recessive trends, counties will have to be creative to meet demands with limited revenues. “A lot of counties were looking for ways to reduce costs and some were deciding to use fund balances to make up the difference,” McGee said. “There were different approaches across the board.

The growth-related demands are still there, even though the economy is slowing down.”

Watauga County has the third-lowest property tax rate in the state, behind Carteret (23 cents per $100) and Currituck (32 cents per $100). Scotland County has the highest property tax rate at $1.06 per $100 of value.