We constantly hear this notion pushed forth by local officials that they have done us a favor by maintaining the Property Tax Rate. Within Catawba County that tax rate will be 53 cents per $100 of property value for the upcoming 2011-12 fiscal year, which is down from the 53.5 cents/$100 this fiscal year. In Hickory, the property tax rate will remain at 50 cents/$100 for the 17th straight year. In Conover, the property tax rate will remain at 40 cents/$100. In Newton, the property tax rate for the upcoming year will remain at 48 cents/$100 valuation.
What I have spoken of before and what my colleagues push forth in trying to bring the public to understanding is that the property tax rate doesn't tell the whole story. Yet, we have local officials that look at that rate as the local third rail of politics, just as we see with discussions about Social Security on the National Level. Local elected officials seem to believe that raising the property tax rate is a death sentence that will render them unelectable and City and County Managers seem to think that an increase in the rate will ultimately cost them their jobs. And on the other end, when they keep the rate at the same level, they seem to be pushing a notion that the maintenance of "The Rate" is the be all, end all of fiscal restraint and prosperity. Look at the City of Hickory where they may as well place it on a flag as a motto, "The City of Hickory has maintained the same Property rate for Umpteen Years."
I know what I am proposing is blasphemy to the Good Ole Boys who run the show around here and their Flock of Seagulls, but if you critically look at the numbers, then you will realize that "The Rate" really needs to be placed in a proper context. Let me ask, When one looks at the specific issue of property taxes and critically thinks about the issues that I have put forth above, then one realizes that the tax rate is the least of our problems. I doubt anyone who has owned a home could say that they aren't paying a lot more property tax now than they were 17 years ago. If "The Rate" is the Holy Sacrament of Taxes, then how could that be? Real Estate values escalated during the Real Estate bubble and the local governmental entities reassessed the value of your home over that time up and up and up and now they are reluctant to deflate those values to truly reflect the current resell level. They are reluctant to do this because so many people are basically financially illiterate and the local governments have fostered and taken advantage of that financial illiteracy through political hyperbole.
Once again let's get back to the bottom line. That's what local officials tell you they are all about. Mayor Wright, here in Hickory, constantly points to the fact that the John Locke Foundation rankings show that Hickory has tumbled to No. 15 in local tax burden ranking, which is seven spots below its No. 8 ranking in 2008, the largest drop of any city in North Carolina's largest population group. The list ranks 34 municipalities with at least 25,000 residents. At the beginning of the millennium, Hickory ranked 3rd in tax burden in 2000 and 2nd in 2001. So it appears that we are headed in the right direction when one looks at the taxes and fees. But, let's look at the cities who were ranked as one through five;; Charlotte, Chapel Hill, Asheville, Mooresville, and Wilmington topped the rankings of combined city and county costs per person. When one looks at the Economic Output and rankings of economic success, those five communities are frequently brought to attention by national studies and publications.
Can you see that those John Locke rankings show just one aspect of the economic dynamics of a community. They show the static cost of government per individual within specific municipalities in the State of North Carolina. This doesn't show the Standard of Living or the Cost of Living of those specific communities. And this definitely does not reflect an individual's Economic Opportunity within those communities either.
You see folks, it isn't all about cutting taxes. It is all about management. The money is not the Government's money. It is the people's money. It needs to be managed in the interests of the people of the community. We have so many local government officials that obsess about the unfunded balance in their communities that they aren't only cutting the fat, they have gotten to the point that they are basically cutting into the bone. Yes, there most definitely needs to be a rainy day fund, but when there is a surplus, then that means that the people of that community are being overtaxed. If there is a surplus, then in my opinion, it is OK to use it towards dynamic investment that can lay a foundation towards the creation of jobs or improving the community's quality of life. Letting that Unfunded Balance sit and rot at 2% interest, while the Nation is facing 10% inflation is not a savvy economic move. It means that that money is losing its value.
The final issue that I would like to summarize is the need to bring integrity back to the property tax system. Yes, local governments need monies to run governmental functions. Yes, we can argue all day long about what that entails,. But, the biggest issue is being square with the citizens. That is where the issue of Revenue Neutrality comes to the picture. We need to see a frank discussion with the public. The public needs to be told that the assessed value of their home is going to be reduced, but the Tax rate is going to rise so that the current level of governmental services can be maintained.
I don't necessarily agree with Catawba County Government's Real Estate Assessments and they are in charge of the assessments utilized by everyone in this County. I believe that they have seen such a drastic reduction in Commercial and Industrial Property viability and value, along with the loss of assessed equipment in those structures, that they have felt forced to maintain the burden on residential property owners. Residential Property values increased by 3%, while Commercial Property values fell by 3% and Industrial property values fell by 5%. The State mandates that revaluations are to be as close to 100% of market value as possible and Catawba County met this criteria. This is factored by a random sample of actual real estate sales that took place during the previous year at what is considered "Fair Market Value." But "Fair Market Value" does not take into account foreclosed properties sold by Banks at cut rate prices. We see a lot of this going on and in the end Residential Property Owners are having to compete with these properties when/if they attempt to sell their home. This honestly needs to be looked at and reevaluated by the NC General Assembly. Leaving the Banks in charge of the Hen House allows these home values to be overvalued.
I do appreciate that the County Manager and the County Commissioners have reduced the property rate to 53 cents to maintain Revenue Neutrality at the same time that they have aimed to make their budget more efficient . We have not seen the same from the local municipalities, who did not lower their tax rate to lower the burden. When we look at the City of Hickory, we also see that they are going to see a surplus in their budget, which will be used to increase the unfunded balance again and there is no stated purpose for what that excess capital is there for. If they aren't going to use the money, then they need to lower the rate.
I can appreciate local budgets being cautious. It is easy to see that the economy is not growing and local governments do not want to chase revenues that could lead to huge losses. But, we are going to have to spend money to make money. The Conover Station and the Eco-Complex are trend setting investments in these hard times that will pay huge dividends when the progression of those investments fall into place. These investments, in my opinion, will flourish under better economic circumstances. These tax revenues are the people's money. The people should be educated on this process and it should always be a transparent process. We should never hide the cost of government by increasing fees or overvaluing assets in an economic downturn. Level with the people and build trust. Don't underestimate their intelligence. In most cases it isn't that the people aren't intelligent enough to understand. It is that the government officials don't want to break the numbers down into terms that the public can understand. Maybe that is because they don't understand them themselves.