I wonder if Bill Bell's read this

Mayor David N. Cicilline said today he has not made a decision yet about whether to seek legislation that would allow Providence and other municipalities to levy an annual tax on every out-of-state student who attends a private college or university in Rhode Island.

In an interview with Providence Business News, Cicilline said he is still discussing the proposal with lawmakers, in addition to administrators and students at the city’s four private schools: Brown University, Johnson & Wales University, Providence College and the Rhode Island School of Design.

“This is really about everyone working together, doing more than they’ve done in the past to support the health and prosperity of the city,” he said.

I have absolutely no idea whether this is workable, desirable, or even Constitutional.

But i know that if it were to ever get on the table in Durham, you'd see some heads exploding. And that alone might be worth the price of admission.

Continue reading I wonder if Bill Bell's read this

Budget cuts

County Commissioner Michael Page comes up with the understatement of the year in this morning's N&O, noting "I have a feeling we're going to be bombarded" after County Manager Mike Ruffin announced some pretty draconian cuts across the board in county operations and services.

See, here's what i think needs to happen.

Mike and i need to sit down over lunch and figure out what services i need provided by the county. Then, we'll make sure that those get fully funded. Any other county services that i never use? Cut those to the bone. Hell, why should my taxes pay for things like schools or a Life and Science Museum when my kids are already grown?

Continue reading Budget cuts

Paging Americans for Prosperity

Maybe you can explain to me how raising vehicle registration fees by a flat amount for everyone is less regressive than a tax on restaurant meals?

Other revenue-raisers the study panel favors including raising the state's vehicle-registration fees in $10 increments in each of the next three years. The move, it said, could raise about $190 million a year.

Members also want the General Assembly to look into charging higher registration fees for the use of heavier vehicles, a practice officials in Florida already use.

Yet another possibility, one urged by state Sen. Richard Stevens, R-Wake, is charging a higher per-gallon fuel tax for diesel than for the use of gasoline. The move would target the trucking industry.

Members favor giving local governments power to levy 1 percent local-option sales-tax surcharges for road or transit work, with voter approval.

The group's most esoteric proposal calls for further study of a "vehicle miles traveled" fee that would collect a penny from motorists for every two or four miles they drive. Officials would collect mileage reports when vehicles come due for inspection.

Members are interested because they expect high fuel prices, federal fuel-efficiency mandates and the growing popularity of alternate fuels and hybrid-drive vehicles to erode collections of the existing gas tax over time.

Actually, i expect everyone and her brother to oppose these new "revenue enhancements." For myself, let's see more of that money going to finance transportation options that don't involve more and bigger roads, and i'll get right n that bandwagon.

Continue reading Paging Americans for Prosperity

Calling bullshit

From an N&O article reporting today on a press conference held by opponents of Durham's proposed prepared meals tax:

Restaurant owner Gene Devine also spoke in opposition, along with N.C. Central University law student Norlan Graves, N.C. Restaurant and Lodging Association president Paul M. Stone, and Dallas Woodhouse, treasurer of the Durham Citizens group.

"Everything is in a crisis now," said Devine, referring to the national economic situation. "If there's the worst time to do anything, it's now."

The presentation included a display of grocery-store merchandise the opponents said would be subject to the tax, such as a bucket of fried chicken, a sandwich and cupcakes.

"Durham will survive without the tax," said Woodhouse, who organized the Durham opposition as state director of Americans for Prosperity, a national limited-government lobbying organization.

Woodhouse and several other opponents attended the pro-tax kickoff in September. Several proponents were on hand at today's press conference.

Julie Ketner-Rigby of the Museum of Life and Science said census data demonstrate that prepared-food taxes are actually progressive, affecting affluent consumers more than those of lower incomes.

Woodhouse said that claim is "a fundamental mistake. ... Nothing can be more regressive than taxing food."

This of course explains why Mr. Dallas Woodhouse is leading the fight to remove the 2% tax that Durham currently collects when you buy that uncooked chicken at the grocery store to take home and cook it yourself, right?

Except that, you know, he isn't.

What a load of bullshit from opponents to the tax. There's lots of legitimate reasons to oppose the tax. Its regressivity isn't one of them.

Here's some irony for you. I usually partake of the Friday afternoon oyster special at Fishmonger's. When i left for my California vacation, oysters were 5 bucks a dozen on Friday afternoons. When i got back, not only was Fishmonger's sporting a couple of "No To The Meals Tax" placards around the restaurant, but they had managed to raise the price of oysters 40%, to 7 bucks a dozen. Think that will reduce sales as much as taxing me a nickel for each dozen i used to eat, money which will pay for improvements to my community? Look, Gary can charge whatever he wants to for the food he sells in his restaurant. He doesn't even have to use his revenues to "renovate" the bar upstairs, or make the bathrooms a little more sanitary. But damn if i'm going to spend my money on that hypocrite.

UPDATE: And shame on the Durham Committee on the Affairs of Black People for getting into bed with the reactionary "Americans for Prosperity." Dr. LaVonia Allison's reputation has dropped to a new low in my book. Americans for Prosperity is actively campaigning against Democrats, including Kay Hagan, whom the Committee has endorsed in her Senate run against do-nothing incumbent Liddy Dole. Dr. Allison, as a member of the state executive committee of the Democratic Party, should know better than to give credence to an extreme right-wing group that exalts Ronald Reagan on their website.

Continue reading Calling bullshit

Surcharges

Expect a lot of noise over the next 6 weeks in local media and blogs over the 1% prepared meals tax. Think of it as a surcharge when you go out to dinner. An extra 85 cents on top of that bill at Piedmont, or an extra nickel for a value meal at Mickey D's. Some people think this puts an unfair burden on the lower income folks in our town. I disagree. I believe that the 2% the county collects on items at the grocery store is a much more onerous tax, and i'm not hearing anyone talk about repealing that any time soon. But i'll concede that it's a worthwhile discussion to have, as is the related conversation about what the money should be spent on, assuming the tax is approved.

Here's another surcharge that i just encountered that's not getting anywhere near the attention that the 1% meals tax is. The folks at St Joseph's just dropped an email bomb alerting Blues Festival fans that B.B. King tickets for the opening night event at the Durham Performing Arts Center are available in a special presale. Tickets are priced at $38 for nosebleed seats, to $68 for orchestra and "Grand Tier" seats. No problem there. those prices are a bit high for my pocket, but YMMV. I assume that the prices will be the same when the general public is allowed to buy tickets. But the only way you can buy tickets is through Ticket Master. And Ticket Master is tacking on a whopping $7.75 per ticket, plus an additional "convenience" fee of $2.50 per order, just to be able to print your tickets at home. (You can also have them sent UPS 2 day delivery for about $16 per order, or USPS regular mail for free.) That's an 11% surcharge if you're buying top price tickets, and 20% if you're buying the cheap seats. These are tickets being sold to an event at a taxpayer funded venue. And there don't appear to be any alternatives than TM for buying a ticket. Clicking the link for tickets at the DPAC site take you to the Ticket Master site. If the house sells out, that's a cool $20K in "convenience" charges alone for TM, and as much as a half million per year, depending on how many shows get put on. I can't imagine that TM isn't getting a contract fee to manage ticket sales over and above the "convenience" charge.

That should be raising a few more eyebrows than whether or not Durhamites want to tax ourselves (and our visitors) a penny for each dollar we spend eating out, no?

Continue reading Surcharges

McDonalds endorses meals tax

Well, not really. But that's one way to interpret this:

The world's largest restaurant chain posted second-quarter profit that beat expectations on strong international sales, but said to offset mounting commodity pressures it was looking at changes to the popular Dollar Menu, which lures value diners.

"I don't think customers care that much if the price moves slightly away from a dollar," Chief Executive Jim Skinner told Reuters in an interview on the sidelines of an event to mark its sponsorship of the Olympics.

"It will always be the best value around," he said.

If you think about the city as a business that's owned by all of its residents, well, then occasionally that business, like McDonalds, needs to raise its prices in order to keep providing services to its customers and returns to its owners. I know most people don't like to think about their government that way. It's easier to bitch and moan about taxes. But McDonalds' higher prices generally go to making people like Jim Skinner wealthier, and not to keeping our streets clean or our teachers and police officers paid well enough to want to keep their jobs.

Continue reading McDonalds endorses meals tax

Restaurant tax on the ballot

So sez Matt.

Here's where it gets interesting. By all accounts, Sen. Floyd McKissick did the heavy lifting getting this bill through the Senate. What happens next when the Durham Committee on the Affairs of Black People opposes it in the fall?

Continue reading Restaurant tax on the ballot

Thinking about taxes

If only everyone who was worried about "taxing the poor" would work to get rid of the remaining 2% tax on grocery store food items.

A 1% tax on restaurant meals will add a nickel to the price of a Whopper value meal. Even if you have one for lunch every day, that's a quarter a week. Meanwhile, if you spend only a hundred bucks a week on food at the grocery store (real easy to do these days) that's an extra two dollars a week you're forking over in taxes. Eight times as much.

Let's face it. The tax on restaurant meals isn't aimed at "the poor." Those on the left and right who claim to oppose it for that reason need to stop being dishonest about their opposition.

Continue reading Thinking about taxes

Transfer tax revisited

You may recall that back in August, the General Assembly gave counties in North Carolina a bit of discretion in enacting new sources of revenue. Counties could add a quarter of a cent to the sales tax, or increase the tax on property transfers by .4 percent. In Durham the transfer fee is currently .2 percent, so that would have increased the tax to .6 percent (60 cents per hundred dollars, or $600 on a one hundred thousand dollar sale)

The catch was that voters in the county would have to approve the increase. Sixteen counties around the state put the transfer tax increase on the ballot, and it was defeated in every case. Chatham County was the nearest to Durham to ask voters to weigh in on this.

The conventional wisdom is that the real estate and development lobbies successfully argued to voters that taxing home sales unfairly put the burden of financing new schools and other infrastructure on current residents who are selling their homes, and not on newcomers. In one stunning moment, i heard the president of the Durham Association of Realtors actually speak in favor of impact fees, which would be assessed on new development, even the Realtors at the state and local levels have lobbied against these in the past. We'll see if that marked a change in actual policy or merely a convenient rhetorical device.

Regardless, most county commissioners in the state are now convinced that the transfer tax is dead in the water.

A recent poll done by Public Policy Polling for Wake County yields some interesting results.

The most important message to convey to the voters is that there are costs associated with growth and that they will have to be paid through some form of taxation. Foes of transfer tax measures this fall created the impression that not paying was an option. It isn’t, and the counties with referendums this fall failed to get that message across to their citizens.

In order to leap that hurdle we prefaced our poll with the statement that ‘Wake County is growing rapidly and must increase its revenue to pay for new schools, parks, roads, water and sewer.’ Given that background and before being asked about alternative ways of paying for growth, poll respondents supported a transfer tax by a margin of 49-40%.

Support for the transfer tax increased when folks were given the choice of a transfer tax or another form of taxation. For instance when pitted against the specter of property tax increases, a transfer tax was preferred by a spread of 59-20% among survey respondents. If counties effectively communicate that a transfer tax will help relieve the burden of property tax increases, their voters are much more likely to support a referendum.

Lots of folks out there want to live in the fantasy world that all the new people who move into the Triangle will increase municipal revenues enough to pay for all the new infrastructure to support them. Those folks no doubt are comfortable with their kids spending their entire scholastic careers in trailers.

Continue reading Transfer tax revisited

Property tax revaluation

The N&O is reporting today that Durham County is getting ready to mail out tax notices reflecting the new assessed values of property in the county.

We've talked about this in the past, mostly in the context of the transfer tax debate. NC law requires that property revaluations be "revenue neutral," so that the increase in value of property over time between assessments is compensated for by a lowering of the tax rate.

This, however, just strikes me as intuitively wrong:

The value of property in Durham County will rise an average of 30 percent next year under the county's recently concluded revaluation, officials said Monday.

Residential property values alone rose an average of 24 percent.

The 30 percent increase covers all property in the county including commercial and industrial.

It's been 7 years since the last assessment, during which time the real estate market in the rest of the country has gone absolutely nuts. Durham may have escaped some of the worst excesses of that, but residential properties are up only 24% over 7 years? That's a shade over 3% a year after compounding. Which simply doesn't jibe with anectdotal reports of home sales that i've been hearing.

I can only think of a couple of reasons for this. One is that there's a much greater number of new units in the tax base than i thought, and that most of these were already assessed at their current value. This would mean that new construction has been much higher in the last two years than in the previous 5. I don't know if that's the case. A second is that the assessment actually caught some of the recent housing market downturn. My real estate friends keep telling me, though, that Durham hasn't been affected by that so very much.

Other reasons i can think of are sheer speculation, and i don't feel like printing them, but feel free to explore your imaginations in the comments.

What i will say is, if you live in a neighborhood that's appreciated more than 30% over the past 7 years, be prepared for some sticker shock when the new tax bills come out.

UPDATE: Obviously, the simplest explanation is that, on average, property values in Durham have only increased by 24% over the past 7 years. But that would mean large chunks of town have seen property values fall in order to balance out the increases in other parts of town. I know there are major depressed neighborhoods, but is that enough to counterbalance the increases in value seen elsewhere?

Continue reading Property tax revaluation

Ooooh, scary

Most Durham residents get their "free" weekly delivery of the The Durham News on the driveway or front porch every Saturday morning. They generally do a decent job of portraying the Bull City, and highlighting the positives. (They've also quoted from this blog in the 'NetCrashers column, but not over the past 6 weeks or so. What, did an editor decide the name is too risky for their delicate readers? Or has my stuff gone downhill that quickly? Some questions just answer themselves, i guess.)

This weekend, they've got a front page story in the Real Estate section, which, alas, i'm unable to find online. (If you can locate it, send me the link, OK?) The story, by Nancy Oates, is titled "Durham property owners to see tax values updated." It's got a huge graphic that takes up virtually all of the front page above the fold, and in total the image and text takes up about 75% of the front page. Here's the first two grafs:

Brace yourself, Durham. The tax man cometh, and he's revaluing your property for the first time in seven years.

"It's just going to be a little painful for everybody, " said Leslie Page, owner of West Durham Realty and the president of the Durham Regional Assocation of Realtors.

The article goes on to note that the revaluation is required by NC state law, at least once every eight years, and explains the process by which the county will figure out how much your house has appreciated since the last time they did this in 2001, and how you can go about disputing this new figure, because, after all, everyone knows that their going to come up with some hugely inflated figure in order to increase tax revenues and do whatever bad things it is that governments do with all of your hard earned money.

So, be prepared for the worst, right?

Well, keep reading. Buried in the 17th paragraph, well after the jump to page three, is this little nugget.

Although values will surely rise in most cases, the trend is for the tax rate to drop during revaluation years, Denning (UNC assistant professor of public law) said. In its budget, a local government must state a revenue neutral rate, that is, the tax rate that would bring in the same amount of revenue as the previous year, taking into consideration the higher assessed values.

(emphasis added)

In other words, if the total value of all real property in Durham County is $100 billion (and i'm just pulling that number out of my ass for easy calculation; the actual number is irrelevant right now.) and the property tax rate is 79 cents per $100 of valuation (which it is), the county collects $790 million in property taxes. If the total value of real property rises in the County rises to, let's say, $160 billion (a 60% increase over the past 7 years would not be unthinkable) the amount of money the County has to budget to collect in real property taxes is still $790 million. In order to do that, the county has to present a new property tax rate of 49 cents per $100 of valuation.

Now, if your property value has risen more than the average value, you're going to see a property tax hike. But if you're property has risen less than the average (which we're assuming is 60% county wide. We'll know the actual number sometime next year), you'll see your property taxes go down.

The point, of course, is that key little word "must," highlighted above. You see, it's just as much a part of the law that the tax rate remain "revenue neutral" as it is that values be reassessed every eight years. But if you don't read the entire article very closely, you'd never know it.

So, to summarize, some folks, whose properties have appreciated more than others, are going to pay a bit more for the privilege of living in Durham next year, some, who weren't so fortunate, will pay a bit less. Tax rates will be lower for everyone, which in the long term gives the local governments more flexibility to deal with revenue issues in the future, and makes Durham look a little more attractive to potential newcomers who are comparing tax rates of other Triangle communities when deciding where to live if they're moving here. There will probably be a modest property tax increase next year to cover the cost of bonds already floated, and, depending on whether either of the two proposed new taxes is approved, the property tax might see a more significant rise, but this has nothing to do with the revaluation.

Would have been nice, not to say more accurate, had the N&O told the story in that fashion, rather than the scare mongering that they chose to highlight. Nobody wants to pay taxes, but reassessing property values regularly is one way to keep the tax burden fairly distributed.

Continue reading Ooooh, scary