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Saturday, April 26, 2008 3:00 AM County disputes think tank's study on sales tax By Eddie Fitzgerald | Times Staff Writer A recent study that says Wilson County does not need a quarter-cent sales tax increase is being sharply disputed by the county manager. The John Locke Foundation of Raleigh says that Wilson County commissioners could avoid a proposed sales tax increase by diverting $23.2 million in revenue to high-priority county government functions. But Wilson County Manager Ellis Williford says that without a sales tax increase, the only other option to meet current spending needs in the future would be a property tax increase, and that the study is using flawed logic. Michael Sanera, JLF research director and local government analyst, criticized Wilson County for putting the quarter-cent sales tax proposal on the ballot before it had set its new property tax rate stemming from this year's revaluation. "The commissioners are not expected to set the new property tax rate until after the May 6 sales-tax vote," Sanera said. "The uncertainty has some Wilson County residents worrying that they may soon face a property tax rate increase and, if passed, a sales-tax increase. Our report shows that Wilson County government could address its needs by setting better priorities with its existing resources." The report breaks its suggestions down into three main categories: School funding, county revenues and economic incentives. SCHOOL FUNDING The report credits Wilson County commissioners with a 4 percent inflation-adjusted decrease in local school spending during the past five years, while school enrollment has increased by 3 percent. But, Sanera said, county commissioners should not ignore the fact that inflation-adjusted state spending has increased by 8 percent and federal spending has increased by 6 percent. But Williford said the county has not appropriated local funds to the school system in amounts high enough to keep up with inflation. "As pointed out by the schools in their budget presentation, if the county had kept up with inflation, their per-capita funding would be closer to state average instead of much below," Williford said. Williford said the suggestion by the report that state and federal funding can make up for local funding is incorrect. "These funds are categorical and may not be used for local needs," he said. "In all areas where there is increased state and federal funding, it creates a need for increased local funding." Sanera also said in the report that if the school district has facility needs, county commissioners and the school board need to show taxpayers how they would spend the $23.9 million the state has promised for capital improvements over the next 10 years. Williford said he would love to know where the $23.9 million figure came from. Sanera said the funding would come the N.C. Education Lottery and other state sources. But Williford said the only funding for school capital improvements that counties have received are Average Daily Membership funds, to repair roofs, parking lots, HVAC systems and for routine maintenance. Wilson County is scheduled to receive $450,000 for those repairs. The ADM appropriation this year was cut in half to help fund the Medicaid relief program, Williford said. "The county will have to make up the other half from its Medicaid savings," he said. Wilson County Schools is building John Jones Elementary at a cost of $18 million, and Williford said to build the schools needed for the next 10 years would cost between $35 million and $50 million. "There is no statewide bond issue being proposed for school construction," he said. "The General Assembly gave counties the option to levy a sales tax, upon voter approval, to help fund new schools. The state will probably not provide future funding for school construction, which will require counties to either fund new construction with sales tax or increases in property taxes." COUNTY REVENUE Wilson County revenues have grown 31 percent faster than the combined rate of inflation and population growth since the 2001 budget year, Sanera said. "Wilson raised $16.7 million more from its taxpayers in the 2006 budget year than in 2001," he said. "The average family of four paid $872 more in taxes in 2006 than in 2001. A family's income would have been forced to jump by 48 percent to meet the increase in county government revenues during the past five years." But Williford said that math is flawed. "To suggest that these increases in income from property taxes and sales taxes are paid by Wilson County families on a per capita basis is incorrect," he said. The taxes are collected in a variety of ways and the actual tax increase on an average family has been less than that, he said. Additionally, the report says that the county has approximately $12 million in undesignated reserves. Of these reserves, $6.7 million must be retained as a permanent 8 percent reserve for unexpected emergencies. The remaining $4 million may be used for lawful purposes, Williford said. "The increases in property taxes, sales taxes, and other revenues over the period from 2001 to 2006 have been spent for schools, law enforcement, EMS, public health, public welfare, emergency communications, disaster preparedness, and a whole host of other worthwhile public services," he said. "There is not, as the report suggests, a pot of accumulated funds which are waiting to be spent. Obviously the writers of the report have no idea what the county's needs actually are or what resources the county actually has at its disposal." ECONOMIC INCENTIVES The Locke Foundation report also draws attention to Wilson County government's spending practices in economic incentives, saying they use that money for other programs, Sanera said. Williford disputes that, saying Wilson County has experienced a better-than-average growth in tax base and has retained and created more jobs during this period than virtually all other counties in the region. "The Heritage Crossing project is a good example of forward thinking by the county and city," Williford said. "Heritage Crossing receives an incentive of the increase in taxes paid on the property being developed. The incentive is paid after it is collected by the county and city and may only be returned for eligible public infrastructure expenditures. "Heritage Crossing, as well as the other retail establishments in the county, will help generate more sales tax that will be returned to benefit county residents." TO READ THE REPORT "DOES WILSON NEED A SALES-TAX INCREASE," GO TO WWW.JOHNLOCKE.ORG, CLICK ON "PRESS RELEASES" IN THE LEFT COLUMN AND THEN CLICK ON THE WILSON COUNTY LINK. eddie@wilsontimes.com | 265-7820 |
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