JLF Research | Policy Reports
Counties and towns are critical levels of government in North Carolina, providing or administering many services while taking in billions of dollars of revenue. This is especially true as the state government has increasingly shifted more taxing authority to localities to make up for money kept by the state. While the importance of county and municipal government is great, obtaining comparative data is difficult. To help address this problem, By The Numbers provides information on how much local government costs in every city and county in North Carolina.
Using the most recent data available on property taxes, sales taxes, and miscellaneous taxes and fees from the State Treasurer’s Annual Financial Information Report (AFIR), this report calculated county and municipal tax and fee burdens in two ways: 1) as a percentage of income (for counties), and 2) per capita (for counties and municipalities). We then constructed a set of rankings to view the cost of local government more clearly.
Although this analysis is by no means definitive, it gives citizens more useful information for grappling with this complicated issue.
North Carolina collected $21.9 billion in state tax and fee revenues for Fiscal Year 2011 (from July 1, 2010 to June 30, 2011), the latest year for which data are available. This represented 6.3 percent of the personal income of the state’s citizens. In addition, local governments collected an additional $15.2 billion in property, sales, and other taxes and fees, representing another 4.4 percent of personal income. Combined, they represent a state and local tax and fee burden of 10.7 percent. Federal collections raise the total tax burden on North Carolinians to approximately 27.3 percent of personal income, on average.
Nominal (non–inflation adjusted) local government revenues increased by some $400 million in
FY 2011 as compared with the previous year. This is not to say that all revenue sources increased. Sales tax revenues were flat while property tax receipts increased by about $150 million. Water department revenues and other tax and fee income also saw significant increases.
This continues the pattern seen since the onset of the Great Recession, in which local governments have become increasingly dependent upon property tax receipts. In 2007, property taxes made up 56.5 percent of non-utility local revenues; in 2011 the figure had increased to over 65 percent.
Local tax and fee collections per-capita stood at $1,242.17 in the median county in FY 2011, compared with an inflation-adjusted $1,287.56 the year previous. That amounts to 4.15 percent of per-capita personal income in the median county, down from 2010 when it was 4.24 percent of per-capita personal income.
It is important to note that incomes vary among counties and within counties over time, and this can affect the rankings. Counties of similar size and tax collections can vary in their burdens because of differences in per-capita incomes. Differences among counties can also reflect the extent to which residents live in towns and cities, which places more taxpayers onto municipal tax rolls.
The population estimates used for FY 2011 are the first which are based upon 2010 Census data; previous years’ population figures have not been revised based upon the census and thus need not be consistant. As a result, substantial differences can exist between FY 2010 and FY 2011 per capita figures for communities.
Furthermore, data in this report are subject to other reporting issues, which include revisions of per-capita personal income estimates and localities filing their required AFIR reports in an untimely manner. For that reason, the figures for previous years in this edition of By The Numbers may not exactly match those reported in previous editions. As such, the current edition’s figures take precedence.
Download PDF file: By The Numbers: What Government Costs in North Carolina Cities and Counties FY 2011 (694.6KB)