Isn’t It Time for the State to Step Up to the Plate?
By Stan Norwalk

The passage of the $970 million school bond was an important first step in addressing the $5 billion needed for Wake’s public school construction over the next ten years. But its passage did not eliminate divisive issues such as mandatory year round school assignments.

Wake has serious financial problems in dealing with the 7,000 – 8,000 additional students expected year-after-year. But Wake is a wealthy county. It has close to the largest base of taxable property in NC. None-the-less over a decade of low taxes and minimal financial support for public schools is responsible for the $5 billion financial hole facing voters over the next ten years. Additionally, that low level of support is at the root of parents mistrust and flat educational performance of our nationally acclaimed school system.

With real incomes flat for over five years for most, voters have been reluctant to accept higher property taxes.

Over the last few months, our new grassroots group, WakeUP Wake County, has been discussing with members of the NC General Assembly (NCGA) the need for an alternative funding source for Wake’s public schools, i.e. an impact fee or a transfer tax. Our message is that growth doesn’t pay for itself and that the entire burden of paying for growth shouldn’t be borne by the property tax.

One common theme we hear is: “Wake hasn’t stepped up to the plate”, meaning that Wake has the lowest effective tax rate of any county in the Triangle and other urbanized counties. “Effective rate” refers to an adjustment made for varying dates of revaluation. (See http://www.ncacc.org/taxrates07.html). It is not the actual rate but allows for comparison among counties.

Effective rates elsewhere in the region range from 60 cents to 81 cents per hundred dollars of valuation (Orange), compared to the effective rate in 2006 of 53 cents for Wake. Wake has been consistently below the state average, currently 58 cents. Put it another way, property owners elsewhere in the Triangle are paying 13% to 50% more property tax on a comparably priced house tax than those in Wake.

The attitude among some in the NCGA has been: if Wake government isn’t willing to raise taxes and if voters are apathetic and don’t care about over-crowded schools, then why should we give it more money? (Please don’t shoot the messenger.)

Wake’s historically low tax rate results in penalties in its share of state revenues. Mecklenburg, where the tax rate is 50% higher than Wake, gets double the lottery proceeds when Wake sells the most lottery tickets. And when a bipartisan group of Wake legislators propose using the lottery revenues for financing school bonds…and then can’t agree with others in the General Assembly on the allocation formula for the counties…figure it out for yourself. And when WakeUP advocates for impact fees or transfer taxes to ease the burden of future increases in property taxes….figure it out for yourself.

Whatever the mechanism, e.g. a school impact fee, transfer tax...or an increase in property tax, Wake’s public schools needs more revenues. Admittedly, money alone is not the answer. But consider that Wake’s schools produce nationally lauded results for $130 million per year less than the average U.S. public school system. (Data from S&P, 2004 on a per student basis.)

With fast-rising school construction costs straining county resources across the state, the need for generating additional local revenues is increasing. Several bills are expected to be introduced in the NCGA calling for a menu of local options or elements thereof, e.g. a transfer tax, an impact fee and a sales tax. Leaders of the Republican majority of the County Commissioners have recently come around to support a menu of options approach for generating additional revenues.

Six of the seven county commissioners supported the $970 million school bond. Six of the seven supported the associated tax increase. In the face of highly organized and vocal opposition, on Nov. 7th Wake’s voters stepped up to the plate and voted for $970 million in bonds. This included an increase in the property tax rate of 4.7 cents. They were told it was only a down payment and that more bonds and tax increases were likely within two or three years.

Now the question is: “Isn’t it time for the state to step up to the plate?”

Stan Norwalk is Vice-Chairman of WakeUP Wake County Inc., a nonpartisan, grassroots group focused on quality growth and fair taxation to pay for growth. He can be reached at stann@nc.rr.com.