Center for Local Innovation's City/County Issue guide focuses on freedom

RALEIGH – Local governments can help their communities prosper by holding the line on taxes and fees, minimizing regulation, and avoiding the use of force against private property owners. Those are some key recommendations in the Center for Local Innovation’s new City and County Issue Guide 2007.

The guide arrives as some N.C. counties consider raising sales taxes or imposing a new land-transfer tax. “The common thread in these recommendations is freedom,” said CLI Director Chad Adams. “By increasing individual freedom, local governments can foster prosperity for all North Carolinians.”

The pocket-sized Issue Guide addresses more than a dozen topics common to North Carolina local governments. It covers services governments provide, the way they raise money, and the attention they pay to private property rights. John Locke Foundation researchers analyze each topic and offer recommendations.

For example, counties and municipalities do not need new ways to raise taxes, said Joseph Coletti, JLF Fiscal Policy Analyst. “North Carolina’s local governments all have two ways to tax their citizens: property taxes and sales taxes,” Coletti said. “Some have additional taxes, and they often charge separate fees for services such as water and sewer and solid waste removal. Local government already costs an average of $1,432 per person in North Carolina.”

Now many local governments want more tax options, Coletti said. ”Local governments have misused the money they now have,” he said. “In Wilmington, the city council has set aside money for a convention center while the sewer system leaks. Charlotte built a convention center and a short section of light rail instead of expanding road capacity.”

The Issue Guide warns local government against chasing the goal of “economic development” through wasteful convention centers, stadiums, and other non-essential projects. “Recently many North Carolina cities and counties have ignored the distinction between the public and private sector by funding outright or subsidizing functions that are inherently private,” said Dr. Michael Sanera, JLF Research Director and Local Government Analyst. ”City officials have poured millions of taxpayer dollars into nonessential city activities while essential services such as police, fire, and roads suffer.”

Some Issue Guide recommendations are simple. For instance, municipalities should avoid all forced annexation, said Daren Bakst, JLF Legal and Regulatory Policy Analyst.

“Municipalities use forced annexation as a financial bailout,” Bakst said. “Money from unincorporated areas boosts the municipal tax base. If an individual knows that he can always steal money from his neighbor in case of financial trouble, he will take inappropriate risks and make poor decisions. He can steal his way out of mistakes. The same is true for municipalities that use forced annexation.”

The new guide serves as a companion piece to CLI’s annual By The Numbers report, which ranks cities and counties by local government spending levels. “This new guide places the numbers in context,” Adams said. “Citizens concerned about local government spending can find ideas for improvement in the Issue Guide. Local leaders can also use the guide to help them avoid taking ever-larger chunks of our paychecks each year.”

The Center for Local Innovation’s “City and County Issue Guide 2007” is available at the JLF web site. For more information, please contact Adams at (919) 828-3876 or cadams@johnlocke.org. To arrange an interview, contact Mitch Kokai at (919) 306-8736 or mkokai@johnlocke.org.