Near the bottom of the ballot, next to the Soil and Water Conservation District Supervisor race, is a $35 million question for Mecklenburg voters this fall.
This is all it says: “Local sales and use tax at the rate of one-quarter percent (0.25%) in addition to all other State and local sales and use taxes. __ For __ Against”
Well. That’s subdued and explosive all at once.
Mecklenburg County commissioners, under public pressure to do something about teacher pay, put the quarter-cent sales tax on the ballot this summer with virtually no analysis or warning. The narrow 5-4 vote presaged the ambivalence the community would feel. Many voters support higher teacher pay, for which most of the tax is intended. But they also don’t like the way the proposal was thrown together, and they know teacher pay in North Carolina is mostly the state’s responsibility.
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Some Mecklenburg voters will vote for the tax without hesitation, grateful for the extra money for teachers and other needs. Others will vote against any tax hike, period.
To get beyond the typical political battle lines, I spoke with three public finance experts outside of North Carolina who have no dog in the fight. My question for them: Put aside the politics and tell me how you would determine if this tax hike is smart public policy.
The experts were Katherine Willoughby, an authority on state and local finance at Georgia State University; Paul Courant, a public policy professor and former chair of the economics department at the University of Michigan; and Norton Francis, a senior research associate at the Urban Institute in Washington who specializes in state and local finance.
Willoughby’s two biggest concerns: It appears little or no long-term planning was done before the tax was put on the ballot; and there’s no guarantee the money will be spent on what supporters promise over the long term.
I told her how commissioners quickly concocted the proposal with little discussion. “That’s not surprising at all and that’s why governments find themselves in bad positions five years down the road,” Willoughby said. “To make a decision quickly and emotionally is very common and the reason many are in bad shape.
“There’s no long-range planning and that would make any public finance expert very nervous. You have other things that probably need money, if you’re thinking logically with a multi-year perspective.”
I told her there’s no legal requirement the money be spent as promised, but that supporters say the public can hold elected officials accountable if they try to change how the money is used.
“You just respond no. You don’t hold public officials’ feet to the fire. Please don’t say that. There’s going to be another election. There’s going to be something hideous that happens, or they’re going to need a bridge, or more police or they’ll say they have to make up for lost federal or state revenues.”
The sales tax is regressive, Courant said, but a property tax hike could hit homeowners whose property values have risen but have limited income. A quarter-cent is not enough of a hike to drive much retail business outside of the county, or to cause taxpayers much pain, he said.
A sales tax hike and a property tax hike are equally good choices, he said, so he’d go with the one that is politically easiest.
Courant agreed that the whole debate did not get off to a good start.
“Taxes have a bad name already. People ought to talk about them honestly and in the open. That can lead to an otherwise-OK idea going down,” he said. “There’s no deep public finance principle here, but we live in a democracy and you’d like democracy to be transparent.”
Francis was sympathetic to raising money for schools and teacher pay, but worried about setting a precedent on something that has traditionally been the state’s responsibility.
“If most of the money comes from the state departing from that can create real complications,” Francis said. An example: More affluent areas could let the state off the hook while poorer counties couldn’t keep up.
Still, Francis thinks Mecklenburg’s response to this legislature is reasonable.
“The state is embarking on a less-revenue policy,” he said. “So if you want your teachers to get paid and not leave the state, that is maybe the only option available.”