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

Wednesday, April 20th, 2011

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

and

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:

(more…)

Orange County Dems: Thanks for the Consideration…

Saturday, April 9th, 2011

Among the many other activities going on today was the Orange County Democratic Party all-precinct convention. Quite a turnout with many familiar faces.

Local heavyweights US Rep. David Price, former State House Speaker Joe Hackney and House colleague Verla Insko along with State Senator Ellie Kinnaird (who changed a tire on the way to the meeting) attended.

Price, just returned from the budget breakdown nonsense in Washington, gave a rousing call to arms pointing out that the Tea Party express was bearing down on the nation – and last night’s buffoonery was just the first in many salvos aimed squarely at middle America. Verla and Joe sketched out the dire legislative morass they face in the State house and related how the turnover in control of the House has actually brought the Democratic caucus closer.

There were 44 prepared petitions put before the convention – a long list to dispense with in less than the budgeted 4 hours. Mayor Mark Kleinschmidt, who was running the proceedings, was able to work through a good chunk by getting collective assent upfront.

Though it has been a long time since I participated in a convention, I came prepared to offer an amendment to the petition calling for support of the Board of Commissioner’s [BOCC] recent plan to hold a Nov. 2011 referendum increasing our local sales tax 0.25%.

The BOCC has proposed splitting the anticipated $2.5M per year evenly between economic development and education. I asked the gathered folks to support a change in that allocation from 50/50 to 33% for economic development, which would adequately support the economic initiatives the BOCC has already laid out, and 66% to restore and support the many human service programs curtailed by the County these last 5 years.

My neighbor Tom Henkel seconded the call and an interesting discussion followed. Unfortunately, my suggested changes were completely shot down. It was great to get a strong dose of participatory democracy even if my effort was for naught. I appreciate the kind and thoughtful consideration the convention offered.

Afterwards, BOCC member Steve Yuhasz came over and graciously encouraged me to keep on pressing the BOCC to find money for human service programs. I told him I wasn’t going to give up.

Election 2010: Sales Tax Referendum

Tuesday, November 2nd, 2010

[UPDATE 2]

The referendum is shelved with a margin of over 1,000 votes. Next up, the transit tax referendum.

[UPDATE 3]

Just listened to a really inept analysis of the sales tax referendum problems on WCHL. WCHL is usually ridiculously deferential to Aaron Nelson of the local Chamber of Commerce – rarely calls him out on his BS – and tonight was no exception. They left unchallenged his contention that many local folks are too stupid to understand the consequences of voting against the tax or that it was a knee-jerk reaction (disregarding the likelihood that people knew that the BOCC DID NOT promise to keep property taxes down if the referendum passed).

Further, no one, including OrangePolitic’s Ruby S. questioned the difficulty of selling the necessity of increasing the local tax bite when the BOCC was able to find $610,000 to buy a new Library site in Carrboro last week or the BOCC’s lack of political will to redirect a one-time $4.6M windfall to projects outside those outlined in the referendum.

I like the crew at WCHL but tonight’s review of the referendum – their inability to probe the supporters contentions, not entertaining any contrary viewpoints – was a FAIL.

[UPDATE 4]

10:15pm and the crew at WCHL continues to suggest that the failure of the referendum was a knee-jerk reaction “my daddy voted against taxes and so will I”. OUCH!

Elizabeth Friend, thankfully, did make a great point about needs vs. wants – we want more technology in the schools, we need to improve EMS. That the next round of discussions should center on what absolutely needs to be addressed vs. what is a nice to have that can be postponed for better times.

Finally, Fred Black made the point that the school boards haven’t set aside sufficient funds for maintenance, that the lottery contributions can’t cover the expected costs and that money will have to be found. Unfortunately, he still suggests that we need to raise additional monies instead of finding it within the current budget.

[ORIGINAL]

As of 8:25pm, 36 of 44 Orange County precincts reporting, the sales tax referendum looks to be in trouble.

Of 38,980 votes, 48.18% (18,780) are for the incremental increase and 51.82% (20,200) are against it.

I’ve been discussing the issue with folks the last few weeks and had a sense that in spite of a concerted effort by the Chamber sponsored PAC (which was running interference for the NC Realtor association), the referendum could be defeated.

I thought this version of the referendum was flawed for a variety of reasons: not using the revenue in a focused manner for economic development, not dedicating the lions share of the allocation to human services (which includes EMS), sugar-coating the measure by sending a chunk to the schools, etc. (read more here, here [ChapelHillWatch], here [CHW] and here [CHW]).

What happens if it goes down?

If the County plans to reintroduce the measure it should reassess the purposes it will be put towards – folks are looking for maximum impact not a diffuse flow of new monies.

The Board of Commissioners (BOCC) should also calibrate their rhetoric more carefully – avoiding claims like those by Barry Jacobs this evening that passing the tax would keep property taxes down – an unsupported contention.

If the Chamber or some other local entity sponsors a new PAC to sell the measure, I hope that the local media will probe the reasons why a group like the NC Realtor association threw so much money behind this year’s PAC – was it a cheap way to keep the land transfer tax off the table?

Finally, the BOCC should understand that if you plan to ask folks for more money to address critical needs because the budget cupboard is bare, they can’t turn around and plunk down $610,000 on a new piece of property or funnel $4.6M in debt savings to other purposes.

[UPDATE]

As of 8:43pm, 40 of 44 precincts reporting, 48.27% (19,576) FOR and 51.73% (20,977) AGAINST – 40,553 votes total.

2010 Final Spring Meeting Chapel Hill Council

Monday, June 21st, 2010

Over the year’s I’ve seen some rather jam packed final spring term Council meetings. This one was about average in length, light on content but big in setting the stage for two broad initiatives – siting an emergency shelter and legally mandating affordable housing – to move forward.

I left prior to Council’s revisiting Laurin Easthom’s reasonable request for further fiscal analysis of Library funding, I’ll report back on that soon…

The first big bang of the evening, Council approved the %15 affordable housing inclusionary zoning ordinance.

Before voting for the zone, Jim Ward brought up the same fiscal equity issue I raised about this ordinance months ago. Downtown developments are only required to provide %10 affordable housing under the logic that it is more expensive to develop Downtown and that development will be driven into other parts of Town to avoid a %15 requirement.

Sally Greene reiterated that the existing density and height bonuses were not sufficient to overcome developers reluctance in meeting a standard %15 requirement. Of course, while property Downtown is more expensive to develop it also demands far greater premiums – something the analysis downplays. Her argument also doesn’t account for the radically increased density/height allowances in TC-3 – the self-serving zone Council created for their Lot $5 disaster.

Mark Kleinschmidt acknowledged that the inclusionary zone wasn’t fully baked and suggested that it be reviewed one year out. The zone, whose goals are laudable, could’ve used a bit more polish before setting in motion. We’ll see if the gaps are filled in 2012 (if the Council is entangled in litigation over the provisions by then).

While I semi-live ‘blogged the discussion of creating guidelines, standards or zones for human service facilities there are a few more observations to add.

First, there was a strange juxtaposition between the discussion of siting human service facilities, including “white flag” emergency shelters, and the approval of the inclusionary zone.

In initial discussions of the inclusionary zone, several of us argued that space should be allocated not just for affordable housing but community-oriented uses like human services facilities. Using a zoning process would be one way the Town could find needed space for these type facilities. We got the same response as when we asked Council to include space for feeding/housing the homeless at East54 or Lot #5 – not interested.

Council continues to reject calls to make this part of our development approval process (if Roger Perry’s Obeys Creek proceeds I’ll be asking Council to set aside some of that mandated square footage or in lieu monies for community-oriented services outside of affordable housing).

Second, the IFC has tried very hard to work within the rules informally suggested for siting the new Community House facility.

One primary requirement was that the property didn’t need rezoning.

I’ve watched Council twist zones, like the RSSC zone meant to encourage %100 affordable housing into a spot zone for hundreds of luxury condos for their business partner RAM Development, to meet their political agenda. Ed Harrison observed the current SUP process is a “crap shoot”. I’ve seen similar Council machinations use the SUP process to meet various goals (many I agree with) so why can’t we roll the dice favorably?

The point being that while the IFC struggled to find a site that doesn’t need rezoning, there are many examples of where a particular zone was little or no impediment to Council approval of a project (look at the creation of TC-3 for Greenbridge, West140 and which will apply to Short Bridge development and University Square redevelopment, look at how East54’s developer Roger Perry got a range of allowances to maximize his profit, etc.).

Of course, this is a main concern of Homestead’s neighborhood activists.

Without binding zoning requirements (well, as binding as Chapel Hill makes them) or standards mandated by ordinance, the Council can twist the current rules to meet their own agenda and reject public concerns.

The IFC continues to jump through what must seem like an endless series of hoops in an effort to provide two services, one – an emergency shelter – of which is squarely the County’s responsibility, the other – a transitional program to move folks from homelessness to established residents – which is commendable on every measurable axes.

After years of marching through the desert, th group submitted their special-use permit (SUP) request this morning – moving the project forward to an eventual yea or nay vote early Fall.

Neighborhood activists have already helped IFC sharpen their proposal. The move to address some of their concerns is what is fueling the drive to create a transparent, somewhat objective, process for evaluating siting services.

As the Community House discussion lurches into the next phase, I anticipate arguments over what guidelines or standards should apply and what decision-making framework – the Planning Board’s findings, SUP process or some kind of intermediate hybrid – will dictate the eventual result.

The residents of Chapel Hill deserve an open discussion on not just siting human services but providing future space for anticipated human service requirements. Not only should the current process yield a set of somewhat binding standards for evaluating particular sites but also provide a framework for measuring the cumulative impact and operational advantages of siting services compactly within the community.

Finally, my hope is that the current process opens up a real discussion on this Town’s obligation to support IFC and other incredible human service groups within this community.

That discussion should be frank and honest.

Council must explain why human services aren’t sited at developments like East54 as part of the SUP process, why it is so easy to twist a zone like RSSC or create a TC-3 zone for their own agenda while making the IFC jump through hoops to find an existing zone and why the newly minted inclusionary zone doesn’t include a mandate to set aside square footage for both affordable housing and human services.

Brother, can you spare a quarter percent?

Tuesday, June 1st, 2010

The Orange County Board of Commissioners (BOCC) opened up discussion this evening of putting a %0.25 increase in local sales tax before voters in November (Levy of a One-Quarter Cent (1/4¢) County Sales and Use Tax [PDF]).

The tax, if approved, will bump our local sales tax to %8 with all the additional proceeds going directly to the county (it seems like it was mentioned several hundred times that the municipalities would get NADA from the increase). Best estimates, and only if a pending state bill is passed, has the county reaping in $500K in 2011 rising to $2.4M in 2012.

I spoke before the BOCC on the issue – raising a few concerns, suggesting a possible course of action.

I acknowledged the Commishes quandary in filling the current $9.4M hole in the County’s budget and the near certainty of dealing with an even deeper one in 2011. I recognized the appeal in making a seemingly small increase in a tax that is spread across a wider arc than property taxpayers. I understood it probably seemed an easier sell especially given the recent turmoil over our hefty property revaluations and the failed attempt to create a land transfer tax.

I also pointed out even though it doesn’t apply to food or medicines that the increase represented an additional burden on those folks living here who can least afford it (the characterization in the press that “what the heck, it’s only a few more bucks week!” really bothers me).

By its nature, it is a regressive tax.

Given that increased burden, I asked the BOCC to commit in as legally a binding way as possible, to dedicating the new revenue to funding the rapidly growing demand on social services. That revenue should bolster the existing commitment and go well beyond this year’s baseline (not to rely on it, as many counties have with the NC lottery and education).

Steve Yuhaz and a few other commissioners suggested throwing this modest amount of money – $2.5M at best – at the schools or pouring it down the current economic development rat-hole.

Spending $2.5M on needed social services would have a much more profound effect than adding to the considerable school system overhead or to funding economic incentives during this downturn. And it’s the right thing to do given the rather dire outlook for next year.

Other than clearly dedicating the use of the funds, I also asked for two additional provisions:

  • that the tax increase be time limited – maybe 3-4 years at most – in order to emphasize that this wasn’t a case of avoiding fiscal discipline but a response to some very difficult circumstances
  • that the public be given plenty of opportunity to weigh in.

At the conclusion of the topic it was clear that public input beforehand will have to come quick – June 15th to be exact.

Some quick observations/comments.

Several counties, like New Hanover, were used as success stories for the referendum. New Hanover, of course, has much lower property taxes and with its tourist draws has much greater outside revenue flows. Orange County’s increase will be borne mostly by Orange County residents.

Comments by several commissioners that this broad 1/4 percent sales tax would bring revenues in from residents not currently “paying their fair share” made very little sense given that a pretty good chunk of the existing %7.75 sales tax paid by all residents ends up in the county coffers.

It was also strange how quickly the discussion settled on two options – raise sales taxes or property taxes. The obvious third option – raise no taxes – didn’t make it onto the table.

My suggestion to time limit the measure didn’t get traction. Long time NC residents probably recall that a fair portion of the existing %7.75 sales tax was supposed to be “temporary”. Like many of the current “usage fees” and other tax burdens, government claims on our income tend to take on a life of their own and rarely get rolled-back (at least on middle and lower income folks). The rates might get adjusted but the real outlays stay the same or increase.

It’s hard to dodge the appearance that raising the sales tax rate has more to do with an inability to prioritize spending than fiscal discipline when the increase has an open-ended expiration date.

Sales tax revenue is sensitive to prevailing economic conditions. Without a dramatic upturn in the economy or a steep expansion in the County’s commercial tax base – both unlikely in the near future – the dependability of this revenue stream is not sufficient to fund core services.

Finally, the oddest arguments of the evening circulated around the reason for raising and the commitment to restrict the expenditure of the funds. Many commissioners argued (and then voted for) a course of action that essentially boiled down to this: put the referendum on the ballot with little public discussion and then invite the community to speculate on what the funds are to be used for and how firm the obligation to spend them accordingly will be.

Strange inversion.

I pushed for public participation first, a clear statement on the use of the new revenues (I lobbied for human services first, debt reduction – as County Manager Clifton pointed out – a good second) and a legally binding obligation to use the funds for that specified reason.

That way the community would have a clear idea early on as to what they would be asked to vote into being.

Feels like, at least at this point (with June 15th weeks away), public participation is an afterthought.

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