Mellow Mushroom update: drugs are family-friendly, gays aren't?
Cleveland-Holloway: The time to speak up is now

A tax man cometh -- but which one?

One of the real wins for local governments in this year's legislative session was the ability for counties to pass local-option taxes to help defray, among other things, the mounting expenses our communities face for growth -- schools, water and sewer, parks, and all the other accoutrements of North Cackalacky living.

Under the plan passed by the General Assembly and signed by Gov. Easley, local governments can bring to voters a choice between a 0.25% increase in the sales tax or an increase in the real estate transfer tax -- levied on the sale of real property -- from 0.2% to 0.6% of the sales price. (Though both may be floated to the public, only one or the other may be enacted, and only if the referendum passes.)

Now, the transfer tax proposal is one which faced an inordninate, nay deafening, level of opposition from the Realtor lobby in North Carolina. Nearly as feared as the developer and home-builder community and just as powerful, the two combine to fret over this plan. The Realtors even sent a 'real mom' (yeah right) around the state in a car, holding trumped-up pep rallies as to how a 1% transfer tax would kill the American dream of homeownership and steal our home equity right from under our nose.

Anyway, Durham's leaders are making a persuasive case for how we could use the additional revenue from these tax options to help defray the costs of growth. Heck, we're looking at bonds in the order of $210 million in school construction and renovation and $20 million in roads on the ballot this fall, and the passage of one of these taxes could pay more than half of the debt service on the new levy, we're told.

So, which one? Here's what Mike Ruffin had to say last week in the Herald-Sun:

Ruffin added that he's inclined to favor asking voters to raise the sales tax, instead of the transfer tax, lest the county get into a fight with the N.C. Home Builders Association and other development interests.

"If we were one of the first counties to put [the transfer tax] on the ballot, it would be a battle royale I'm sure, and a lot of opposition to overcome," he said. "The sales tax is generally an easier sell."

I think Ruffin is right on the ball in his analysis of the situation. Which I think makes a rather sad statement about the power the Realtor lobby wields in the public debate -- and could help lead to a rather regressive outcome for Durham's poorest.

Of course, sales taxes are roundly derided by economists for their disproportionate impact on low-income individuals and families. Some note that poor familes make fewer purchases and so they pay less tax than the wealthy. Well, that's true -- in absolute, nominal dollars. But low-income individuals tend to spend a much greater proportion of their total income on purchases than wealthier families do. Savings, be it a rainy day fund or a tax-sheltered 401(k) fund, are largely the provence of the middle-class and above. Yet the poor have a much lower 'savings rate,' and in many cases have a negative savings rate, whereby they can actually spend more than their income in a year, especially in cases of job loss or emergency.

Durham_hhi_growth As much as I love the Bull City, there's no question that Durham is a case-study for the concept of a divided America, one rich and one poor. The graph at left, from the 2006 Durham State of the Economy presentation, is a classic example. Compare the average household income in the city and county as a whole to that of residents of NECD, or the Fayetteville St. corridor. I don't imagine many of the residents of Liberty St. or Angier Ave. are saving beaucoup percentages of their take-home income; if anything, they're much more likely to be barely subsisting in many cases.

A transfer tax, on the other hand, is by its nature more progressive than a sales tax, given the income bias in homeownership. At the same time, given the large number of rental properties in Durham (many of which stay in the hands of long-term owners for a generation or more), it's unlikely to be passed along in the short-run to renters, a population that correlates highly with lower income.

Distribution of burden issues aside, Monday's Herald-Sun shows the latest analysis finds the sales tax netting about 15% less revenue than the transfer tax -- $9.8 instead of $11.6 million.

Ruffin and the county commissioners are realists, though. It's clear Ruffin knows what a fight he'd have on his hands if Durham is at the forefront of the transfer tax saga. But what does it say if we end up choosing a more-regressive, lower-payoff option to meet our infrastructure needs, all because all the real estate agents are aggrieved over commissions?

To be honest, the best solution of all to our funding issues would have been more local flexibility in passing impact fees. After all, it's growth in terms of new housing and new developments that are the biggest drivers of school, road and infrastructure development. Other Sunbelt cities, like my old stomping ground of Orlando, grow far faster than Durham despite having impact fees that run into the high four digits.

In the end of the day, though, the real estate profession is panicked that transfer taxes and impact fees might sway a couple of homebuyers at the margin -- and paranoid that homebuyers might start asking for reductions in the juicy 6% commission, the swipe of hard-earned home equity that sellers traditionally pay for using a 'full-service' real estate agent. (A profession, incidentally, that enjoys significant legislative protection in most states.)

There's no question that Durham needs the revenue; though our nominal tax rates are high relative to the rest of the state, it bears to keep in mind that Durham is blessed with--

  • A small size with significant watershed, limiting residential and industrial growth;
  • RTP, which brings in lots of jobs but is exempt from all City taxes;
  • Duke and the medical centers, which as non-profits reduce the usable tax base (though all the while bringing in many jobs and indirect economic benefit);
  • A deeply impoverished urban area in the eastern and southeastern quadrant with low tax values.

At the end of the day, new revenue streams are needed to get past these thorny problems. And I'll certainly understand a realpolitik decision by Ruffin and the gang to make that happen. Too bad the best options may still be off the table.

Comments

dccnc

so much for perspective from the vocal minority:
by this time yesterday there were 11 comments on
your blog about MM,
and no comments so
far today on the tax issue.......

Michael Bacon

Some of us are just getting going, dccnc... ;)

I'm probably going to wait a bit longer to comment further on sales vs. transfer, but I did want to comment on impact fees briefly. While I definitely prefer the impact fee in principle, the one proposed over and over for 12 years by Durham would have raised significantly less money than the .6% transfer tax. (I don't have all the numbers handy at the moment.)

barry

there's no accounting for which topics draw comments and which ones don't. just the way it goes sometimes.

that said, i wish Kevin had taken a stronger stand in favor of the transfer fee. the realtor lobby is engaging in wht are essentially scare tactics with no basis in sound economics to basically increase the tax burden on those least able to pay.

in the long run, as North Carolina, and Durham in particular, experience the kinds of growth that are unprecedented here, but all too common in other parts of the country, that kind of backwards, regressive, and shortsighted thinking is going to lead to poor decision making, poor development policies, and significant reduction in the quality of life which was the reason many of us chose to live here in the first place.

Joshua Allen

Why not offer it as a choice to voters? The real estate lobby won't have to fight the county commissioners; they'll have to persuade the voters. I would much prefer a transfer tax that I have to pay only when I sell a house instead of a sales tax increase that I have to pay everyday.

In the end the real estate people are wasting their time fighting it because an increase of .2 to .6 transfer tax is not going to keep someone from selling their home. We're talking an extra $400 for every $100,000 your home is worth.... it's not that significant when you are selling a house.

AMS

I agree with Joshua & think Kevin's point about the regressiveness of a sales tax is on target. You mean to tell me that a few hundred more dollars at closing is gonna decide whether or not someone's going to buy a house in Durham Co? After the laundry list of fees, commissions, lender points, etc on a HUD closing statement ain't no way this would make or break a deal. A)the transfer tax will raise more funds, and B) it will not have any kind of noticeable impact on me.

AMS

I agree with Joshua & think Kevin's point about the regressiveness of a sales tax is on target. You mean to tell me that a few hundred more dollars at closing is gonna decide whether or not someone's going to buy a house in Durham Co? After the laundry list of fees, commissions, lender points, etc on a HUD closing statement ain't no way this would make or break a deal. A)the transfer tax will raise more funds, and B) it will not have any kind of noticeable impact on me.

Mark

"...it will not have any kind of noticeable impact on me." Maybe not, but for those who may sell their house at a loss, every dollar counts. There are issues of principle here as well, and those who have taken a risk of home ownership should not be penalized. Even if, as you say, is not that much and won't break a deal. Nope. It won't. But why nickel and dime a homeowner just because they are able to buy a home? Homeowners already pay property taxes. Do renters? Being a renter for most of my life, it was tough to become a homeowner. But now I am and I should not be penalized. Because once approved, then it's a tax that can be raised. It's not a one time thing. And if the Department of Real Estate wants to come in and protect a homeowner's interest, while preserving their own, so be it. But they won't be the only one or group objecting.

And, btw, when did everyone start believing that our present government here in Durham was spending the taxes they already receive wisely? Do you think that these new taxes will be allocated properly? So far, and from what I've read, I don't see a lot of people having a lot of faith in the present 'good ol' boy' staff at city hall. But I digress...

barry

Mark - i'm going to have a more complete answer to your comments over at my place later this morning, but for now, i want to reiterate that the question before the County Commissioners is not whether or not to enact either of these taxes, but whether to allow the voters of Durham to have a say in which (or neither) of these taxes are enacted.

If, as you say, the merits of the transfer tax do not warrant its enactment, then i have faith that the voters of Durham are smart enough to figure that out.

What i don't like is having a lobbying group representing a small segment of the population (Realtors) making that decision for me.

Kevin Davis

Mark,

A few things to think about:

1) Look, there are only a few options for local taxation. Sales tax, property tax, transfer tax, impact fees. If the Realtor lobby takes the latter two off the table, there's still an excellent chance your property tax will go up -- impacting you as a homeowner. The City/County don't need voter approval to raise millage rates, though they prefer not to have to do so for PR/economic development reasons.

2) Department of Real Estate? Realtors aren't government officials or part of an agency. It's a trademarked licensing term for members of the National Assn. of Realtors, a (very wealthy) trade group.

3) Renters certainly do pay property tax -- in that it's factored into their rent by any competent, profit-maximizing landlords.

4) And a big "ditto" to Barry's point -- the issue here is one of the public getting a voice on this option, and not having it squelched by the real estate lobby.

You raise an interesting point about trust in the status quo. I'm not 100% thrilled with every decision coming out of the City. OTOH, I think Council is by and large made up of well-meaning people with the city's best interest at heart. And I've been impressed by the professionalism of some of the line city staff I've met. But more on this later.

KeepDurhamDifferent!

Uh, what Mark said. Noticeably absent from this discussion is why the city needs the money -- to transfer to Duke-basketball-players-cum-developers? To build a performing arts center that Duke would build on its own if the city wasn't so eager to contribute? To demolish more historic structures? To fund more "hip-hop councils"? Keep Durham gritty, or we'll end up like Cary.

For the moment I want to focus on Kevin's line about the watershed limiting growth -- am I reading that right? My Wake Co. colleagues are moaning and groaning about the water rescrictions and their brown lawns, while mine is mean and green (albeit covered with more ivy and clover than Kentucky fescue).

barry

David - the tax is being considered by the county, not the city.

Just a hunch, but i'm thinking that the anticipated growth in public schools, which are funded by the county and driven by, well, new residents with kids moving into the area, might have something to do with it.

chris

Why exactly do we want "growth?" I've never heard a very good answer to this question. I wouldn't mind seeing the population of Durham County decrease some.

barry

Chris - it's not a question of "wanting" or "not wanting" growth.

We live in a very pleasant area, despite the current heatwave and drought. People who live elsewhere would like to live here, and, this being a free country and all that, they have every right to do so.

Additionally, there's lots of land in and around Durham that can be developed for them to live on.

And, again, this being a free country, the people who own that land have the right to sell it or develop it more or less as they see fit.

So, growth is going to happen one way or another.

The best we can do, short of mandatory sterilization after 2 children and a big wall around the county, is to manage our growth the best we can.

The tools we have to do this are planning and zoning regulations on the one hand, and taxing and spending policies on the other.

chris

Barry - I agree with your point about growth being inevitable, but I think it's important to make the distinction that growth is not really a goal that we should be encouraging. If growth is inevitable, why have we given away so many taxpayer dollars to encourage downtown development? When I listen to elected officials, they always seem to "want" growth. I just don't understand why. This growth never seems to pay for itself in the long run.

If you look at national trends, this country is obviously moving to a European model, where wealthy people move back to the city, and poor people have to make long train or bus commutes from the suburbs to serve the city residents. When I read this blog, I'm always puzzled by how people are so excited about this process happening in Durham. Sure, suburban development is a bad thing, but in the long run, the effects of urban gentrification might be worse.

In the end, I find myself becoming a libertarian when it comes to local government. I'd rather give them less tax revenue, so they can't find ways of paying for new ballparks, parking decks, and theaters. I sure as hell didn't vote for that stuff.

Barry

Chris - The democratic process allows for you to attempt to convince others of the wisdom of your position. I am not convinced that revitalization has to lead inevitably to gentrification. Nor am i of the position that development, tax, and fiscal policies need to benefit those who are already wealthy. Reducing poverty and increasing livability are not mutually exclusive.

but since change is inevitable, the libertarian position merely ensures that those who already have the best access to capital get to make the decisions unfettered by the encumbrances of government, which, for those of us who are not already capital enabled, is the only available means by which we can pool our resources and counter the inevitably bad choices that unfettered capital lead to.

Michael Bacon

I have two goals as far as growth. First, I think Durham has a chance, in the long run, of becoming a uniquely socially, economically, and racially integrated place, that can be developed in a highly sustainable way. My first goal is to try to make that as true as possible.

Given that, I think the world is a better place the more people live in a place like that. So if we succeed, I want a lot of people to move here. People have to live somewhere.

chris

Barry - Do you really have that much faith in "the democratic process?" The people with the most capital already run this country. The vast numbers of people in this country who don't vote are not stupid. They just recognize that it doesn't matter who they vote for, and that business interests control the government either way. The very low voter turnout numbers in Durham County prove that our local community has pretty much no faith in "the democratic process." If elected officials had the power to make real change, then people would vote in high numbers.

Don't get me wrong, I'd love to see a real democracy, but I've come to the conclusion that supporting our current system is not the right way to get there. I view this country's whole governmental structure, including corporations and the media, as a vast criminal enterprise, which has absolutely nothing to do with the constitution. This power structure hates the REAL libertarian party more than the liberals, because libertarians oppose the corporate handouts which account for the majority of our tax dollars.

Anyways, this political debate is largely useless, because nothing substantial will change, but the argument about taxes is pretty simple. If you don't support the government, do everything you can to give them less money. (Although they will probably just find another way to take it.)

Michael Bacon

See, on principle, the whole libertarian argument is so incredibly odious, that I almost get my dander up when it comes out. Ultimately it advocates little other than might-makes-right and a return to feudalism. But it's also so entirely self-defeating, it's much more productive to just ignore it entirely. The pure Libertarian philosophy is construed in such a way that any action which might actually allow it to have influence in politics is objectionable under the terms of the philosophy. As such, it remains an entertaining side show.

chris

Michael - You have missed my point. As I said, I'd love to see a real democracy that serves the needs of the people. Unfortunately, I think the current government, which is run by business interests, is so bad, that I'd rather vote for a libertarian candidate, who just wants to dismantle the whole thing. So, the criticism should be directed towards our current "democratic" government. Why don't people vote in higher numbers? I think that I know the answer, and I feel many of the same sentiments. I wish more "liberals" would make this connection.

barry

Well, if you ignore that ugly little bit of western history from, say, 1200 through the present, yeah, libertarianism might be a pretty workable form of government.

Michael Bacon

Chris,

I didn't miss it. Even though I marginally agree with the premise, the analysis and the proposed solution are silly.

chris

Michael - What did I say that was silly? The political apathy of the American voter is entirely logical, and I'm just saying that I'm part of that apathetic group. There's a pretty large percentage of people who look at politics and government, and just say "Fu** it", and walk away. Is this the wrong response? In my opinion, the people who still think we can make this system of government better by participating in it, without addressing the major root problems, are actually part of the problem. I don't see much evidence of success.

By the way, I never proposed any solution. If you can think of an honest solution, that doesn't involve drinking the American democracy Kool-Aid, I'd love to hear it.

gails14

Chris said,
"If you look at national trends, this country is obviously moving to a European model, where wealthy people move back to the city, and poor people have to make long train or bus commutes from the suburbs to serve the city residents."

Look at San Francisco, look at New York, look at Seattle. Residential areas close in to the city was not the first choice as people moved to the suburbs. As traffic has become worse those areas once shunned by the more affluent have become the hottest places to live. Look at the renovation of brownstones in New York, DC and Baltimore. Look at the housing prices in San Francisco and Seattle. Housing costs more the closer to the city center.

Trinity Park residents - celebrate now - your neighborhood will be the "in" place to live when it happens to Durham!

Barry

"What did I say that was silly?"

How about this:
"Unfortunately, I think the current government, which is run by business interests, is so bad, that I'd rather vote for a libertarian candidate, who just wants to dismantle the whole thing."

And what, exactly, would that leave you with, assuming that you got enough other people to vote with you?

Lurker

Just posting an article to bring up more commentary. I hope you don't mind, Kevin.

http://www.newsobserver.com/opinion/columns/story/663463.html

Michael Bacon

Lurker: I have difficulty posting constructive response to that article. It's so full of upside-down facts and canards, it's hard to even draw a bead on it. There are two explanations -- either that Martinez poorly researched the article, or he's being deliberately misleading. Neither one is encouraging, but I have to say I do not know whether Martinez is an idiot or just a tool.

If someone really wants to advocate some of the positions in that piece, I'll be happy to respond. But to respond to it in toto would require rehashing lots of stuff that's already been covered here and elsewhere, so unless someone is inclined to take it seriously, I'd rather just discard it out of hand.

David

I read the article. It seems to make rational arguments about accountability, who could benefit and who will pay. I will not agree with everything and all but I will take it seriously. Else, I cannot take what anyone says here seriously either.

I do not think that Bacon can be absolute about this piece or brush it off because there are points that do not agree with his views. Martinez appears to talk about what could happen and what kind of tax would make better sense. Bacon is already making noise as if he knows what will happen and that this tax is the best method to help Durham. At least Martinez is citing references and facts I can verify.

I do not know this Martinez guy from Adam. He may be an idiot. He may be a tool. Or he may be writing from a well thought out perspective. Should we consider Bacon to be an idiot to help punctuate our point. No! But, it appears that Bacon would be inclined to think others either idiots or tools for generally disagreeing with his politics.

Not everything I have read on this blog today is based on fact. As much as I was not against the tax, I wonder now the credibility of those who are attacking others, like Martinez whom I do not even know, or stating alleged facts when they are actually points of views like implying that the 'real mom' the Realtors were touting was not real. How does anyone know this other than to interject such information to skew thought?

Maybe the article is true about raising property taxes. It hurts more but will help more too. Then every citizen gets it every year. Eh. With that fear alone, I would vote for the transfer tax any day. But in reality, if the transfer tax passes, now homeowners will have two major taxes that will have the real potential of increasing regularly. So, why even start with a new tax that has that potential. Just raise property taxes.

I did mot mind the tax initially but after reading the arguments here and elsewhere I am more opposed than in favor.

Michael Bacon

Fair enough. I have a problem with Martinez because this isn't, by a long stretch, his first column that I would term misleading. But I suppose calling him names, while enjoyable, isn't productive.

So, as quickly as possible, here's my critique of this article... Martinez approvingly quotes Tim Kent of the Realtors Association here:

"A statewide 1 percent transfer tax rate would have had an impact of up to $720 million [annually] on taxpayers," Kent said. "The 0.4 percent rate will result in $250 million. We think our campaign reduced taxpayer impact significantly." The N.C. Association of County Commissioners estimates the 0.4 percent rate will generate $311 million."

In Durham's case, this is a little silly. As has been pointed out several places, the transfer tax would be used to fund an already planned bond initiative. The revenue from it would supplant property taxes. On the whole, the revenue to the county would be neutral -- it just comes from a different source. So the NC Realtors really aren't changing the total taxpayer impact at all. They're just changing who pays, how much, when.

"By renaming it the "Home Tax" in smartly produced ads, the Realtors made their arguments understandable in the public arena. If there was any doubt, their Web site, www.itsabadidea.org., made it crystal clear. This was pretty good stuff."

This is just difference of opinion, but from where I'm sitting, the campaign bombed. Opinion polls, if I remember right, showed almost no change in support for a transfer tax across the campaign. Calling it a "home tax," again, in preference to a property tax, is also pretty silly. Both are taxes on homes. Again, the question is, which one do you pick?

"Supporters told legislators the tax is needed to pay for growth, a legitimate concern in most North Carolina counties. But this tax doesn't do that. The $800 derived from the sale of a $200,000 home can just as easily be spent on new carpet for a commissioner's office as it can for buying school desks."

Well, that is, unless it's on the referendum that the voters approve that it goes to pay for school construction bonds. As it likely will be in Durham. This is simply anti-government carping, not a germane argument.

"There are only two fair ways to pay for growth. First, redirect spending on non-core government functions into new schools, infrastructure and public safety. Second, raise property taxes so nearly every citizen pays for growth, not just a targeted few."

Again, note the agenda here. This isn't about the transfer tax, or good government, or anything else. Take a look at the county budget here: http://www.co.durham.nc.us/departments/bdmg/Budgets/FY07-08/Adopted/index.html . The biggest chunk of expenditures comes from Medicaid payments, but the lion's share of that money comes through the county from the state. (It will all come from the state next fiscal year, but this year the county is required by law to contribute.) Martinez claims he wants to redirect money from other "non-core government functions." He doesn't specify what he means by that, but clearly it's not public safety ($51 million), infrastructure (difficult to define calculate, but roughly $15 million), or education($103 million). Once we get past those, and the legally required Medicaid payments, what's left? Well, the cost of the courts, the DA, the tax office, the clerks, HR, the commissioner's stipend, and the county's IT system, lumped under "general government" ($31 million). I'm assuming Martinez doesn't want to cut that. So that leaves a few things: what's termed "Cultural and recreational" facilities which is mostly the library system and a some money for the NC Museum of Life and Science ($9 million total), and community grants (just under $1 million). Ah, that's what Martinez is after! That $10 million would replace the transfer tax revenue. Yes, by shuttering the oldest public library system in the state and closing down the Museum of Life and Science, we could fund 2/3 of this year's bond issue and avoid the transfer tax.

That is, of course, unbelievably shortsighted. Does Martinez actually think that? Or is he just using the "non-core government functions" canard to scare people about the transfer tax? I don't know.

But here is the statement in the current FY2007-08 budget from the county:
"The growth in our tax base alone cannot sustain the levels of increases we are seeing in
Medicaid (24.53%) and approved public school funding (7.29%) without an increase in
the property tax rate. Increases in costs for energy, fuel, health care, and competitive
salaries also continue to apply pressure on our budget. For FY 2007-08 these factors
necessitate a 3.09% increase in the tax rate from 80.9 cents to 83.4 cents"

In other words, unless we cut CORE services, a tax increase is coming, and it's either going to be one of two kinds of "home taxes" (property or transfer), or a sales tax. Based on all of the presented arguments and evidence, I think the sales tax is the most sensible, fairest thing to do.

Michael Bacon

For what it's worth, I decided to put the full text of that comment as its own entry on my blog here: http://bullinfull.typepad.com/bif/2007/08/responding-to-r.html

If you want to respond to me directly, please feel free to comment there or here.

chris

Michael - I think that you are incorrect to be so dismissive of the cost savings that can be achieved through cutting "non-core government functions". If you look at overall city/county income and expenses, there have been some huge discretionary expenditures. Take a look at the new theater, DBAP, American Tobacco parking decks, and actually the city's whole Office of Economic Development. I would throw the DCVB in as a discretionary expense as well. How much money would be saved if we scrapped these two departments in their entirety, and never took out those big loans, and applied the savings to our school system?

I fully understand that Alan DeLisle, Reyn Bowman, and others will point to these economic studies that show how much money the expenditures will generate for us taxpayers, but it's a bogus argument. I'm sure you can also generate tax revenue by only spending on core government functions, keeping the city and county tax rates as low as possible, and letting the inevitable growth take it's course without taxpayer handouts.

Oh well, I guess the citizens had to explicitly vote for the massive loans on the DBAP, parking decks, and the new theater, so it's our own fault . . . . . . . or maybe I forgot something.

Barry

"Maybe the article is true about raising property taxes. It hurts more but will help more too. Then every citizen gets it every year. Eh. With that fear alone, I would vote for the transfer tax any day. But in reality, if the transfer tax passes, now homeowners will have two major taxes that will have the real potential of increasing regularly. So, why even start with a new tax that has that potential. Just raise property taxes."

Umm, maybe because as soon as the idea of a property tax increase is floated, the usual suspects will be all over it telling us how the county needs to cut back on its discretionary spending so as not to burden the tas payers any further?

"I fully understand that Alan DeLisle, Reyn Bowman, and others will point to these economic studies that show how much money the expenditures will generate for us taxpayers, but it's a bogus argument. I'm sure you can also generate tax revenue by only spending on core government functions, keeping the city and county tax rates as low as possible, and letting the inevitable growth take it's course without taxpayer handouts."

Oh, lookee here. We didn't even have to wait for a property tax increase to be talked about.

David

Mr. Bacon, thank you for your response and links to the relevant issues at hand. Any and all information will help this voter make a well-rounded decision on what is supported. After sitting in on the special meeting at the old courthouse this evening, I am certainly, again, not entirely against the transfer tax, but am concerned that the commissioners are looking at this tax as an almost desperate attempt at raising funds. Not a wrong attempt by any means. I sat there thinking about my own participation in our beloved city and actually felt terrible the choices our commissioners must make for the benefit of their citizens and the county in general.

I am absolutely appreciative that they opened up the hearing to the public. Though the night was filled with a plethora of speeches... colorful, sidetracked, on target and substantial... I left the meeting feeling like our city truly needs the support of its citizens. More than what has been given thus far. And I am not talking about money, revenue or anything financial. Those who were there and those who participate regularly must be congratulated. But we need MORE citizen interaction to assist our commissioners with ideas and concerns. Not motivated by agenda, but by the need and desire to make Durham a greater city than it already has become. We have a long way to go, but it can be done.

With that, I respond in that way primarily by what Commissioner Page indicated that the county commissioners have not made a clear decision about anything just yet. But moreover, that they appear to be open to any form of, may I say, brainstorming and suggestions from the public regarding what they can do to help raise money. I wish we could all band together and voluntarily donate a yearly amount of cash when needed to help improve infrastructure, but that won't happen on the wide scale. So, it appears, given the opportunity the county has been given to consider this tax, the county will take advantage of this unique opportunity. Certainly, it will not go forward without voter approval... or so it seems. And that's great. But I do think that it must be considered for the ballot.

Maybe not this year, maybe so. Do we have all the facts? Is it too last minute? Or is it so simple and straight forward that promoting a transfer tax, or a sales tax, that we should get it on the ballot now before it peters out? I dunno. But I am definitely not against it being placed on the ballot.

One concern from tonight. Actually a few, but it seemed that if the issue was placed on the ballot and was defeated that after 30 days the consideration to make it go through could take place. I was confused. But if it did fail and not get passed by the voters, could the commission just pass it anyway??? If so, that would be a great bother and a slap in the taxpayers face if it did not pass. But I am not entirely certain the tax would be defeated. I felt very generous and loyal after listening to Commissioner's Heron's speech afterwards. Those of you who were there may know what I am talking about. Those of you who were not, well, why were you not attending???

Mr. Bacon, you mentioned at the council meeting some exceptions might be something to consider. As you now know, the commission has its hands tied on that one. But, creatively speaking, I am sure if the transfer tax existed, that the city could enact some credits or incentives for those who might fall into the categories that others brought up (first time homebuyers, elderly, and also residents who live in their property for a defined period, those who move from one part of Durham to another, etc). I don't know.

But together, all of us citizens of Durham, can work together regardless of differences to come up with solutions. Seriously. The commission and city council hold regular meetings that we can also attend providing they are not closed sessions. Do we have groups here in Durham designed for the sole purpose of brainstorming solutions in a productive fashion in order to help and make our elected officials' jobs more manageable? A street team, perhaps, that can rally a diverse group of people to discuss how we can raise money for this city apart from our personal agendas.

And a note on agendas. I understand that many of the people speaking tonight work for various groups out there and indicated that they were not representing the group in question, but it seems that if a particular tax or cut were to directly affect there connected group's agenda, would they really support anything that could jeopardize or minimize that group's present funding? Even if it meant, as a city or county whole that a tax or cut would be in the best interest of the citizens of that city or county? I guess that's what you call conflict of interest and that can be somewhat difficult to overcome. But pushing something forward that benefits the whole even if it means sacrificing the few is sometimes a better route to take.

At this point, I'm a bit sleepy to attempt to gather any further, if at all, logical thought. Mr. Bacon, I was surprised to see your physical presence there but not surprised when I did since I have seen you at other meetings before. You do have a presence and a commanding voice. Very strong. I would only say that the highlights of your points are definitely well-taken only muddied by any criticism of others to help highlight that point. You already have passion and drive, that's infectious. It just appeared that your words were a bit manipulative that only clouded your points. Just a comment from someone on the fence. But I was impressed.

However, I was also impressed with the information the various Realtors brought up. Primarily because of their delivery and information presented in a non-emotional way. From my point of view. From others, they may have seen differently.

What I did not enjoy about several of the speakers were the dramatics. Entertaining. Yes. I chuckled. But that's not why I was there. Though it is a bit bothersome when I see someone walk up to the podium, deliver their statement, and either start whispering to their neighbor or leaving the room without listening to or considering the points of the other speakers. The "about me" attitude, I guess. No matter what side a person is on, if I observe this, I generally disregard their statement as one based on selfish behavior. It is just plain rude. Of course, Mr. Bacon, I saw that you were right there in the front row till the very end.

I am sure others were present too. It is purely the fact that I commented on your comment only hours before the meeting. And when your name was called to speak, it left your presence obvious to me from where I was sitting.

Nevertheless, I would charge everyone to take careful thought when voting should these tax issues make it to the ballot. It's really an honour that we can have that opportunity as community members to vote on such an issue. But I also charge everyone with writing to our commissioners with support and creative ideas to help them come up with feasible and realistic revenue generating ideas for our county and city. The transfer tax is, sadly, one of the few options they have at the moment. That, in of itself, is a sad statement. Because our government really should have more options. We, as citizens, can broaden those choices, too. And, as I saw it, the commission was made up of people too. Just like us.

Good night and thank you, everyone, for your commentary on this important matter.

David

"Of course, Mr. Bacon, I saw that you were right there in the front row till the very end. I am sure others were present too. It is purely the fact that I commented on your comment only hours before the meeting. And when your name was called to speak, it left your presence obvious to me from where I was sitting."

I am a victim of my own exhaustion. The former quote was not meant to bundle you in with the others I perceived to be rude. Just the opposite. You, along with the majority of those attending, were well attentive to others while they were speaking. Did not mean to single you out, of course. I figure that others here who are commenting were present as well. I just did not recognize their name. And to those, no matter what your view, I am proud to be a part of a group who ultimately cares about the city they live. Durham rocks!

Michael Bacon

David,

Thank you very much for your kind words. I have to say, I kind of enjoy the dramatics of the rhetoric, both doing them myself and watching others -- I think politics and civic involvement should be engaging and, yes, at times, entertaining. (Anyone who wasn't at the meeting, you missed Chuck Davis offering to do a dance to convince commissioners to supply more funding for arts for youth. Talk about a commanding presence... For what it's worth, David, Barry Ragin who's commenting here was the fellow who followed Davis.) But thank you for the criticism -- it's always nice to know what people find constructive and what people find off-putting. Part of the problem was that I showed up armed for bear, and the bear never showed. I was expecting a rhetorical barrage from the statewide realtors like they showed in the General Assembly and in the previous impact fee hearings, and wanted to knock them out of the air. (As it is, we're still up against the Realtors' multimedia ad campaign, which is the "home tax" silliness I was responding to.) I, like many others, was pleasantly surprised that an eruption of civility and sensible discussion broke out.

As for your comments about who's representing what group, remember that almost all of these groups are volunteer activism groups. While I didn't register my affiliations last night, I am loosely associated with a number of them. But the point here is that we don't have these opinions because we're members of activism groups; we're members of activism groups be cause we have the opinions and care about the city. Membership in civic organizations and attendance at public meetings are not causally related, but flow from the same wellhead -- that of caring about the city and believing civic involvement makes it better.

One last note -- as Barry pointed out on my blog, the last sentence of my long post above was a victim of my lack of sleep. I meant the *transfer* tax was the best option, NOT the sales tax. Ugh.

David

"I meant the *transfer* tax was the best option, NOT the sales tax. Ugh." That's what I thought and was confused when I read that since it was clear you were for the transfer tax. I guess it was a long day for all of us. ;)

"I kind of enjoy the dramatics of the rhetoric, both doing them myself and watching others -- I think politics and civic involvement should be engaging and, yes, at times, entertaining." Sometimes I do take the business of business too seriously at times and it is true that a little levity goes a long way. At it may have helped prevent the bear from rising up to do battle. Although, I was encouraged to see that everyone was even keeled with their presentations. However, sometimes dramatics can divert from the point at had and minimize the importance of the details at hand (noting the 'loud roar' reference early on in the meeting). But I did enjoy Chuck Davis' presence and humour at the meeting. Though I felt it was broadly off-topic. Or maybe it was with respect to the post-passing of the transfer/sales tax revenue, I just felt he either did not connect his concern with post-tax revenue or address the matter at hand. And really, the matter at hand like Mr. Ragin indicated on his blog was the matter of placing the items in question on the ballot. Though touched upon, Mr. Ragin was certainly the most direct and clear on this point.

As for agendas, I respect all those who can separate their personal views from those groups they represent. Always have. Tis a task not simple for anyone. Most importantly, one's affiliation with a group should not necessarily supersede the needs of the whole and you have clearly indicated that not everyone is void of maintaining that distinction. As noted, we all care about this city we live.

Altogether, a good meeting and good exchanges here on this and other blogs. Lots to consider and lots to iron out.

Michael Bacon

With regards to Chuck Davis and the Durham Arts Council, there's a bit of a back story to why they were there and why they sounded a bit off topic. The arts folks had been pushing for a prepared foods tax (essentially a tax on restaurant meals) to pay for the cultural master plan. When it didn't get approved by the legislature, partially because of Paul Luebke's opposition, they looked to the transfer tax as a source of funding. An email went out to multiple lists last week, including ABCD, which I'm on, asking for folks to come ask that the transfer tax be devoted to the cultural master plan.

Of course, right at the outset of the meeting, the commissioners made it clear that they wanted all transfer tax revenue to go to capital projects, which essentially eliminated the arts from consideration. So, they essentially modified their message to, "well, then, um, find us some other revenue!"

Which brings me to Chris's question, which I never got to. DCVB and the theater are both funded with hotel occupancy tax money. Between them, their share totals around $4 million annually, but the tax is mandated by the general assembly to go towards arts and tourism functions. That's also city money, not county money. Alan Delisle's office, which, again, is city money, is evenly split between workforce development and economic development. His total budget is just over $3 million, but half of that is outside grants, not city tax money. So, the total you could probably squeeze out of all of that for schools is probably $2-$3 million, or roughly $.01 of county property tax levy.

The budgets are public, Chris. I can't encourage you enough to look through them. I really wanted to get some folks together before they passed it to really peruse it, but it never happened. The more people looking at them, the better.

chris

Michael - I'm sorry, but with all due respect, your response is somewhat evasive. You answered the part about the economic development office and DCVB in great detail, but then decided to completely ignore the part about the big loans that have been taken out in the past for discretionary projects. I have looked at the budget, and I see a big 40 million dollar per year figure under debt service, but I don't know how to determine how much money is going to each individual debt.

I think it's important to step back and take a look at the big picture. Our local government as a whole has taken out some large loans to fund nonessential projects, and have told us that these projects will "pay for themselves" through increased tax receipts. Then, they come back and tell us that the tax receipts haven't grown enough, and they need to raise taxes just to pay for essential city/county services. It's a pretty simple bait and switch maneuver.

And even if repayment of those unnecessary loans isn't a huge part of our annual budget, you must admit that it just looks bad. How do we have the tax revenue to pay for theaters, and ballparks, and parking decks, but we can't pay for basic services like schools and roads? It sure seems like we couldn't afford those extravagent purchases.

In the end, well-intentioned liberals do a great disservice to our community when they support the taxpayer handouts to business called "economic development". These downtown expenditures might seem nice, but are very divisive, and they make it difficult to have a serious debate about taxes and the budget. You could actually bridge the liberal/conservative divide on this issue, but I guess those downtown fantasies can cloud one's vision.

I know that these opinions are not popular among the downtown supporters who read this blog, but I think that I speak for the majority of Durham residents - a majority that happened to vote against borrowing money to build the DBAP years ago. The damn government just went ahead and borrowed the money anyways, and figured out ways to take out these nonessential loans without letting people vote on it. And now they need more money. What a surprise.

Michael Bacon

Chris,

Past budgets are public too, so you can actually go back and look up the bond issues. Frankly, I don't have time to go chasing down the exact percentages, but every time I've looked at any kind of split, what dominates these loans are road and school construction budgets. The next biggest chunks are those that go to the library and cultural things like the Museum of Life and Science and the Arts Council, though these are a fraction of the roads and schools. Theaters and parking decks are really small change. Sure, eventually that small change adds up, but I feel confident in saying that the reason the budget is stretched is because, like every other rapidly growing county in the state, our school system and infrastructure is stressed to the breaking point.

Well, and now I have to back up, because to be fair, that's only half true. The other reason why Durham's tax rate is through the roof is that most municipal and county governments make bank by and large on one thing: industrial taxes. While the county has RTP, the city doesn't, and both have taken gigantic tax base hits with the collapse of tobacco and textiles in Durham, which paid the city's bills for years. This is one reason why the redevelopment of downtown is so critical -- even though by designating them historic properties the city and county lose half of the tax revenue from the projects, just getting them back to being functional, high value properties makes an enormous difference in the budget.

And ultimately, that's why folks like Alan Delisle and Bill Kalkoff get taxpayer money. The warm fuzzies all of us have about downtown are all fine and good, but the real argument for it is to save the tax base. Just letting the market go where it will and letting the urban core dry up has been tried -- in Detroit, in Atlanta, in Washington, DC, and in big cities, small cities, and small towns across the coutry -- and it leads to city bankruptcy, urban blight, and all those problems we know so well. Downtown redevelopment and public investment doesn't always work out, but its success rate is far higher than "just let it be."

barry

Hey, no fair bringing facts and history into the debate.

chris

Barry - Thanks for the kind words. I've done my best to bring facts and history into the debate.

Michael - Let me try to get to my root complaint about your comments, and the comments of some others. I read your last post and think "you might be right," but I am also smart enough to understand that the issue of "growth" is incredibly complex, and I am instantly suspicious of anybody who speaks so confidently about it. You mention Detroit, Atlanta, and DC as examples of failed urban policies. That was probably true in the past, but all of those cities are currently enjoying urban renaissances. Was this produced by smart economic development policies, or did the suburbs get pushed too far out, or just become too bland and socially objectionable? Honestly, I don't know. I do know that there is absolutely nothing wrong with questioning the effectiveness of those economic development handouts. Both liberals and conservatives have publicly questioned the state handouts to Dell and FedEx among others, and the core concept is really the same in Durham, just at a smaller scale. Basically, we're all just guessing.

So, if I'm not sure, how do arrive at my opinions on these issues? Well, my opinions don't really matter. I make well over double Durham's median household income. That yuppie downtown stuff is great for me, and I'll probably be OK no matter what the government decides to do. Unfortunately, I'm a product of Durham public school system, so I frequently come in contact with former classmates who are most definitely earning below that median household income. I would NEVER speak enthusiastically about downtown development with these acquaintances. In fact, I usually make fun of myself for living near downtown.

These kinds of interactions are valuable to me, because I don't want to be a hypocrite. During Kevin's bus experiment, I'm sure he was enthusiastically engaged in conversations about downtown development with people who couldn't afford cars, but that would just be embarrassing to me. I sense that Durham's poorer residents have an implicit understanding that it doesn't matter much if you vote for Democrats or Republicans, because you are basically voting for the same crappy system. That's the kind of politics that I'm not ashamed of.

But again, I struggle with these issues. Maybe I do have some sort of paternalistic responsibility to nudge the government in the right direction, but there is always the danger that I'm just advocating the right direction for me. This governmental system has treated me OK, so deep down, perhaps I really want to keep the system, and put some inconsequential social justice spin on my civic motivations that lets me sleep better at night. I'll end by saying that it's my assessment that many of you sleep very well indeed.

The comments to this entry are closed.