8/14/2019 Does Person need a sales tax increase? http://slidepdf.com/reader/full/does-person-need-a-sales-tax-increase 1/5 or Truth The John Locke Foundation is a 501(c)(3) nonprot, nonpartisan research institute dedicated to improving public policy debate in North Carolina. Viewpoints expressed by authors do not necessarily refect those o the sta or board o the Locke Foundation. 200 W. Morgan, #200 Raleigh, NC 27601 phone: 919-828-3876 fax: 919-821-5117 www.johnlocke.org regional brief Does Person Need a Sales-Tax Increase? County already has almost $14 million in available funds Dr. Michael S anera , JoSeph coletti, terry StoopS OctOber 2008 No. 69 executive SuMMary The Person County commissioners are asking county residents to approve a sale-tax increase on November 4. Some county ofcials indicate that the revenue from the tax increase, if passed, would go to help fund schools. Statements by county ofcials regarding the use of possible sales-tax revenue are not legally binding. Once passed, all new revenues, by law, may be used for any legal purpose. This Regional Brief nds that Person County’s problems are not cre- ated by a lack of funding. The almost $14 million in savings and revenues identied in this report is more than 18 times the amount that the proposed sales-tax increase is estimated to produce (see Figure 1). If the county used this money instead, it could delay a sales-tax increase for over 18 years. County revenues have grown 16 percent faster than population and ination since Fiscal Year (FY) 2002 (see Figure 2). The total amount of revenue for FY 2007 was over $5.5 million more than in FY 2002. By FY 2007, the average family of four paid $588 more in taxes than in FY 2002. It would take a 32 percent increase in family income (current dollars) to match the increase in revenues • • • • The authors thank John Locke Foundation research intern Clint Atkins for his assistance with this report.
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Figure 1. Person County Projected Revenue and Savings
that the county has received over those ve
years.
Person County’s cash reserves are 22
percent of its annual budget. The state
requires all counties to have eight percent
of their budgets held in cash for emergen-
cies, but Person County has 14 percentmore than that minimum. This means
that the county has over $6.5 million in
cash that it can spend on pressing needs.
This gure represents almost 8.6 times the
amount that the proposed sales tax would
raise. In other words, the county could use
this available cash for the next eight years
instead of new sales-tax revenue, which is
estimated to be worth only about $762,000
per year. Based on this item alone, the
county does not need to increase the sales
tax.
If Person County were to restrict its reve-
nue increases to the increases in population
and ination, the county’s revenues would
increase 38 percent over the next ten years.
Over the next ten years, the number of
students in Person County public schools
will decrease by 203 students, or by about 3.6
percent.
•
•
•
If the school district has facility needs, the
county commission and school board need
to show taxpayers how they would spend
the almost $9.6 million in state money
provided for capital improvements over the
next ten years.
Person County beneted from the Medic-aid swap above the state’s promised “hold
harmless” amount of $500,000 a year for
ten years. Person County receives over
$824,000 the rst full year and a total of
over $8 million over ten years (see Figure
1).
From FY 2004 to FY 2006, Person County
gave nearly $96,000 per year in incen-
tives to a few selected private businesses.
This practice is unfair to the hundreds of businesses in the county who are, at times,
forced to compete with tax-subsidized busi-
nesses.
B ackgrounD
In its 2007 session, the North Carolina Gen-
eral Assembly relieved all counties of paying
the portion of Medicaid expenses that had
been forced on counties, in exchange for the
half-cent sales tax that the counties levied
•
•
•
Revenue Gains 1 year 10 yearsGain from Medicaid swap (FY 2008-09) $824,525 $8,081,760Estimated school capital (Avg based on projections) $993,360 $9,572,017