Whereas What’s The Best Use Of The Sales Tax Increase?

I’ve had several folks ask me about my suggested and rejected changes to the recent Democratic Party resolution supporting the 1/4 cent sales tax increase (Orange County Dems: Thanks for the Consideration…).

This is a terrible year to raise any tax yet the Orange County Board of Commissioners (BOCC) decided 4/5/2011 (VIDEO [my comments at 48 minutes and 103 minutes]) to hold another referendum, at a cost of $105K to $125K ($85K election +$20-40K “education”), trying to succeed where they failed just 6 months ago.

I and others appeared before the BOCC arguing that 1) scheduling the vote this year amounted to “vote shopping” and didn’t serve their professed commitment to “small-d” democracy:

“I do understand that there’s a need for the revenues sooner rather than later,” said Chapel Hill resident Will Raymond. “The turnout is not representative of what the impact is for this tax. You’re looking at dis[en]franchising the rural voters. In terms of integrity of the process and confidence in the process, it feels a little bit like you’re doc[k ]shopping, you’re vote shopping. The reality is that the referendum did very well down in the municipal areas.”

Not only did the referendum pass overwhelmingly in the cities last time, but turnout in the rural districts will likely be low, Raymond said. And, according to Orange County Board of Elections Director Tracy Reams, off-year general elections typically boast a lower turnout than presidential primaries—something to the tune of 25 percent compared to 40 percent, respectively.

“Doing it in November just doesn’t feel very democratic,” said James Barrett, Chapel Hill resident and member of Orange County Justice United, adding he supports the increase. “I think, as we see changes around the world, it’s important to make sure that everyone’s engaged in voting. We have a much greater opportunity to do that in May than we do in November.”

News of Orange, April 19, 2011

“Putting this on the municipal elections is a bad idea … the reality is [that] this did very well in municipal areas,” said Will Raymond, a Chapel Hill resident. “You’re vote shopping.”

N&O, 4/6/2011


2) that the County would be better served by altering the proposed allocation from 50% economic development/50% to education to 33% economic development/66% human services:

Will Raymond said that two-thirds of the tax should go for human services, where the real need is since Orange County is creeping toward an 18 percent poverty rate and the county has cut back on some of the services it provides to citizens who need the most help.

“The only way I’m going to support this is if I see a significant portion going to the human services deficit,” Raymond said.

Burlington Time News, April 19, 2011

By the way, that was doc, as in doctor, shopping and not “dock shopping” as reported.

If the County used 2/3rds of the anticipated revenue, $1.6+ million, for human services the impact on existing programs would be significant. Further, the County would finally have funding to address the emergency housing problem they long offloaded to the Interfaith Council (IFC).

Allocating $1.2+ million to bolster the multi-million dollar school budgets ,though, will not go as far. When you review last year’s proposed educational expenditures the contrast between priorities is stark – repaving running tracks versus bolstering our burdened community health service.

As of tonight (Tues. 4/19/2011), not only will the sales tax appear on the ballot (with a non-binding commitment to the proposed 50/50 split) but the BOCC has floated the idea of adding an additional 1/2 cent sales tax bump to fund regional transit initiatives (including light rail).

That’s an 3/4 cent increase from the current 7.75% to 8.50%.

That could drop to 8.25% if the requested extension of a “temporary” State sales tax hike, currently 1 cent, passes the Republican controlled legislature at Gov. Perdue’s suggest 3/4 cent rate . If that extension fails and both referendums succeed, the new Orange County rate would be lower than today – 7.5% – a possibility the BOCC might leverage to sell the bump to voters.

Last year the BOCC responded positively to a critique of the vagueness of their proposed economic development spending priorities by providing specific projects with fairly well established cost structures. One example – extending sewer and water service into 2 of the economic development zones. I expect them to develop a similar list of very targeted expenditures to fix creaking critical physical infrastructure at the schools.

That said, I don’t plan to support the tax because it further burdens folks during a worsening economic downturn, because scheduling it during an off-year election appears to be “gaming” the electoral process and because the allocation doesn’t address escalating demand for critical core services.

Of course, I remain open to the possibility that my mind could be changed by the BOCC’s new advocacy program.

Below is my revised resolution merged with the original:


Whereas county commissioners are considering a ¼ cent sales tax to be put to referendum on November 8, 2011.

Whereas it is projected the one-quarter cent county sales and use tax would generate approximately $2,500,000 for Orange County on an annual basis.

Whereas in the previous referendum seeking this sales tax, 42.5% of funding generated was to be allocated for economic development purposes.

Whereas economic development of the kind that is based in locally owned businesses produce significantly more positive effects then economic development that is focused on recruitment of businesses in economic zones that are far from where people live. For example:

1. Significantly more money re-circulates in your community when you buy from locally owned, rather than nationally owned, business: More money stays in the community because locally owned businesses purchase from other local businesses, service providers, and farms. Purchasing locally helps grow other businesses as well as your community’s tax base.

2. Small local businesses are the largest employer nationally, and in most communities provide the most new jobs to residents.

3. One-of-a-kind businesses are an integral part of a community’s distinctive character: The unique character of any town or region is what people love about it, and what tourists come to visit. Richard Moe, president of the National Historic Preservation Trust, says, “When people go on vacation they generally seek out destinations that offer them the sense of being someplace, not just anyplace.”

4. People who own local businesses often live in the community, are less likely to leave, and are more invested in the community‟s future.

5. Local businesses often hire people with more specific product expertise for better customer service.

6. A marketplace of tens of thousands of small businesses is the best way to ensure innovation and low prices over the long term. A multitude of small businesses, each selecting products based not on a national sales plan but on their own interests and the needs of their local customers, guarantees a much broader range of product choices.

7. Locally owned businesses can make more local purchases, requiring less transportation, and generally set up shop in town or city centers as opposed to developing on the fringe. This generally means contributing less to sprawl, congestion, habitat loss, and pollution.

8. A growing body of economic research shows that in an increasingly homogenized world, entrepreneurs and skilled workers are more likely to invest in and settle in communities that preserve their one-of-a-kind businesses and distinctive character.

9. Nonprofit organizations receive an average 350 percent greater support from local business owners than they do from non-locally owned businesses.

10. Businesses in town centers or within municipalities require comparatively little infrastructure investment and make more efficient use of public services as compared to stores locating in peripheries.

Whereas the county is pursuing an economic development that focuses resources around highway corridors, specifically I-85 and HWY 70;

Whereas the county in May 2010 estimated a need to invest roughly 11 million over six years, with about 80% supporting water/wastewater build-out, approximately 20% supporting economic development tool kit, and less than 5% for data acquisition and analysis.

Whereas a portion 2/3rds of the anticipated revenue of the ¼ of 1 cent sales tax will be put towards education human services;

Whereas the state of North Carolina has a budget shortfall and education is human services is a likely place where cuts will occur;

Therefore be it resolved that the NC Orange County Democratic Party supports an increase of ¼ cent sales tax and an allocation of a part of that increase towards education human services;

Be it further resolved that the OCDP supports allocation of money 1/3rd of the anticipated revenue towards economic development that is based on support for locally owned businesses.

Be it further resolved that development of retail, commercial and industrial infrastructure should be located near town centers where access to services is most readily and affordably available to these businesses and where these businesses will be most sustainably accessible to where most people live.

Be it further resolved that along with retail, commercial and industrial, further establishing a locally based food economy should also be a goal of county economic development and the use of these funds.

Be it further resolved that a county-wide process for engaging the community to assess community needs should be implemented to identify types of businesses that are most needed by our community. Thereafter, economic development money can be prioritized towards the development and support for businesses that may provide or best address these identified needs.


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