Opinions
Local tax hikes predicted
RALEIGH -- North Carolina
taxpayers should be warned. It is
very likely that a great many coun
ties and municipalities will have to
raise taxes next year.
That is the prediction of the two
chief lobbyists for local govern
ments in Raleigh, Ron Aycock, ex
ecutive director of the N.C.
Association of County Commis
sioners, and Leigh Wilson, ex
ecutive director for the N.C.
League of Municipalities. Both ap
peared before the legislature's
Local Government Finance Study
Committee and presented depress
ing reports on the fiscal condition
of local governments.
"I think there will be a steady in
crease in property taxes across the
state," Wilson said in an interview
after the committee's meeting. The
tax increases will be "modest," he
said, probably averaging between
two and five cents per hundred
dollar evaluation.
County tax increases in the com
ing year will be a "fact of life,"
Aycock said. These will come, he
said, on the heels of a year when
40% of North Carolina's counties
raised taxes, another kept
them at the same level and mo?i of
the other 20?'o revalued property
Watching
By Paul T.
O'Connor
thus making it difficult to deter
mine if there was any real increase.
A few counties lowered taxes
slightly, he said.
The biggest financial concern
comes from the approaching loss,
on Oct. I, 1986, of federal revenue
sharing funds. Congress is
eliminating that program. That
will cost North Carolina
municipalities $49 million and
counties S76 million annually.
Aycock said the loss to the coun
ties constitutes 5.4 % of total coun
ty revenues in a year and 8. 1 ?7o of
the money that can be collected
from property taxes.
"In theory, all other things be
ing equal, in order to make up for
the loss of this one federal pro
gram, county government would
have to raise its property tax by
8.1%,*' he said.
About half the counties and
60% of the cities were using
federal revenue sharing money for
capital expenses. Theoretically,
those who were using that money
for capital projects will be able to
maintain current services. They'll
just have less money for capital
projects.
But the two reminded legislators
of another major problem facing
local governments, the deteriora
tion of their infrastructures. Water
and sewer lines are inadequate in
many areas, many new schools are
needed and local governments ate
finding that they must often help
pay for a road if they want the
state to build it. Local govern
ments can delay capital spending
due to the loss of revenue sharing
funds, Wilson said, but these pro
' jects can't be delayed for long.
Other problems will contribute
to the momentum for new tax in
creases. In farm counties where
there have been revaluations,
Aycock said, the tax base has
shrunk because land prices are
dropping. When that happens, the
tax rate has to increase.
Insurance premiums for many
local governments have jumped by
as much as 1,000%, Wilson said.
And, federal economic develop
ment and housing programs are
being cut along with revenue shar
ing.
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NC housing is growing problem
By Donald M. Saunders
In 1968, an advisory committee
to the governor recommended that
the North Carolina General
Assembly adopt as its goal "the
achievement by the year 1980 of a
decent, safe and sanitary home in
an adequate and healthful environ
ment for every North Carolinian."
In 1985 -- five years after the
committee's target date -- that goal
is farther away than ever. In fact,
due to cuts in the federal housing
program. North Carolina is now
facing a severe housing crisis which
affects the lives of an increasing
number of its citizens.
The problem is enormous. A
study by the North Carolina Hous
ing Commission in 1983 revealed
that fully 34.7 percent of the
state's housing was "deficient" or
"substandard". Many of these
units had inadequate plumbing or
heat.
Statistics alone do not tell the
whole story. There is, of course, a
human side behind the numbers.
For some people the housing crisis
means living in cramped quarters,
with no privacy for their family.
For others, particularly the elderly
who can ill afford to pay a large
amount of their fixed income for
housing, the crisis means having to
choose between heating and
eating. For other North Caroli
nians the housing crisis simply
means homelessness.
The tragedy affects people in all
parts of the state. In Charlotte
2,500 families are on a waiting list
for public housing assistance. All
have been waiting more than two
years. In Greensboro, the waiting
list numbers 3,000 families. The
situation is the same throughout
North Carolina's cities - housing
assistance is simply not available to
families now seeking it.
In rural areas, where little public
housing ever existed, the farm
crisis is taking its toll. Foreclosures
on many small farms have displac
ed families from their traditional
homesteads, leaving them with
nowhere to go. On many farms,
agricultural workers live in condi
tions unfit for human habitation.
Poverty and the housing crisis
go hand in hand. Over one million
North Carolinians now live at or
below the poverty level. An in
creasing number of these poor
households are headed by women,
who often are solely supported by
the state's relatively low payments
NORTH CAROLINA FOtHMt
for dependent children and food
stamps. Housing assistance is not
part of those entitlement pro
grams. Thus a mother with one
child may have to provide for all
her family's needs, including rent,
on an income of slightly $200 per
month plus food stamps.
The Promise Of A Decent Home
The federal government's in
volvement in ensuring an adequate
supply of decent and affordable
housing for the poor can be traced
back to the New Deal. After the
suffering and homelessness of the
Depression, the need for a federal
housing program was clear, and
the Housing Act of 1937 passed
Congress with strong popular sup
port.
In 1949, Congress reaffirmed
the federal government's commit
ment to housing the poor, passing
a second housing act which called
for "the realization as soon as
feasible of the goal of a decent
home and a suitable living environ
ment for every American family."
That goal has remained the cor
nerstone of national housing
policy for the past 36 years.
But despite that clear goal,
federal housing programs have
been as varied as the administra
tions which proposed them. Under
Roosevelt, the public sector assum
ed major responsibility for financ
ing and constructing low-income
housing. The Kennedy and
Johnson administrations shifted
the responsibility from the federal
government, offering developers
low interest loans to build housing.
Subsequent federal housing pro
grams have continued the shift
towards private sector involve
ment.
Under the Reagan administra
tion? federal funds for ihe national
low-income housing program have
dried up almost completely. Be
tween 1980 and 1984, the
program's budget was cut 85 per
cent. The federal government con
tinues to subsidize middle-income
homeowners, however, through
the interest deduction on taxes for
home mortgages.
The shift away from public sec
tor involvement in low-income
housing is already proving
disastrous for poor families -- in
North Carolina and across the na
tion. Current interest rates and
construction costs make it almost
impossible for private developers
to build housing units that rent at
the cost close to what a poor fami
ly can afford. And in North
Carolina's fast-growing cities,
developers can earn much higher
profits building apartments and
condominiums for new residents
with high incomes. The housing
needs of the poor are simply not
being taken care of by the free
market.
The Future In North Carolina
Given the cut-backs in the
federal program, state and local
officials are beginning to assume
new responsibilities for housing.
The 1985 General Assembly
created the Housing Trust Fund
Study Commission as a beginning
point for studying ways that the
state can fill the void created by
federal cuts. The commission,
which will begin meeting this fall,
will examine possible public/
private partnerships to address the
problem of financing low income
housing.
The commission will also ex
plore the use of some non-tax
revenues, such as the interest from
escrow accounts, in conjunction
with tax-exempt bonds to make
rents affordable for those below
the poverty level.
A handful of local governments
are also looking at ways to ease the
problem.
The General Assembly recently
gave localities the authority to use
sales and property tax revenues for
housing ? which several cities are
now doing.
Municipalities are exploring way
to leverage outside financing with
local revenues, and in some com
munities, housing codes are being
enforced more effectively.
Until the federal government
recommits itself to a national
housing program, states and
localities will have to try to fill the
gap as best they can.
Housing the poor is a mammoth
task, but one which a humane
society cannot ignore.
Editor's Note: Saunders, director
of the North Carolina Legal Ser
vices Resource Center, is a
specialist in housing law. He lives
in Raleigh.
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