January 22, 2009 Issue
Avery Voters Consider Land Transfer Tax in February 3 Vote
Early voting has begun on the land transfer tax referendum in Avery County, and election day is Tuesday, February 3. The proposal before the voters is whether or not to approve a four-tenths of one percent (0.4%) tax on property sales. On a $100,000 property, the tax would amount to $400.
According to County Manager Robert Wiseman, revenue generated from the tax will be used solely for educational capital needs. “None of the revenue from this tax will be used for anything other than classroom capital needs and perhaps future construction—no teacher salaries, no coach supplements,” he said. “We have $2.5 million in needs in the schools right now. If Avery County had had the transfer tax in place the last two years, we could have knocked out all those needs.”
Wiseman said that both the Avery County Board of Commissioners and the Board of Education unanimously agreed that all proceeds from the local-option tax would be used to meet immediate and long-term capital needs in the county and would not replace any funding that is already in place.
Wiseman continued, “Right now, our coffers, fund balance and capital reserve are good. We’ve worked hard to build up that balance. But we’re looking at building a new school.”
The county is carrying approximately $7 million in long-term school debt, Wiseman said, and the estimated cost of the new Banner Elk Elementary School is $8 to $10 million. Wiseman thinks $8 million is a conservative estimate and the cost will be closer to $10 million, raising the county’s committed education debt to $17 million. The revenue generated from the tax will not only meet current capital needs, but could also relieve the pressure on future school construction and possibly prevent a tax increase, according to information posted at www.avercountync.gov.
A 0.4 percent tax, Wiseman said, “is not going to be a deal breaker because $400 [on a $100,000 sale] is not much, but when it goes into a classroom, suddenly it’s not a miniscule amount any more.”
But the battle lines in Avery County over the referendum have been drawn, and Wiseman is frustrated by the tactics and claims of those opposed to the tax.
“In my opinion, there’s a lot of misleading information coming from special interest groups outside the county. They say the tax will be detrimental to real estate sales in Avery County. I beg to disagree,” he said.
The North Carolina Association of County Commissioners backs up Wiseman’s opinion. An NCACC brief on the transfer tax notes, “Despite claims to the contrary from the North Carolina Association of Realtors, the land transfer tax has not negatively impacted growth, the cost of housing or economic development in the six counties in North Carolina that have the tax. Camden, Chowan, Currituck, Dare, Pasquotank and Perquimans have had a 1 percent land transfer tax in place since the 1980s.”
“The Association of Realtors has a tremendous bankroll,” Wiseman said. “They call it the ‘Home Tax’ and that’s misleading. It has nothing to do with your home. Unless you sell the property, there is no tax. If the property is left as an inheritance, there is no tax. If the property is given as a gift, there is no tax.”
Wiseman said three recent telephone campaigns have been directed at Avery voters. Wiseman received a call from a person conducting a “survey” who asked him how he felt about the increased taxes that Avery County citizens will have to pay if the Home Tax passes and then asked if the Board of Education would need more funds if they had spent their money wisely.
“This is misrepresentation and subliminal suggestion,” Wiseman said. “Certain people for their own reasons appear to be preying on the emotions of our citizens. The word blitz is very appropriate.”
But why hold the referendum in February? Why wasn’t the land transfer tax referendum on the ballot in November?
The possibility that the General Assembly will revoke the local-option transfer tax in the 2009 session came to the commissioners’ attention shortly before the November election, Wiseman said. By the time they learned about the probability, it was too late to get the referendum on the November ballot. With the 60- to 75-day lead time required for a referendum vote, the earliest possible election date was February 3. “If the commissioners had not acted when they did,” Wiseman said, “the referendum could have been scheduled after the right to vote had been revoked.
Wiseman said he cannot by law promote a position or discourage citizens from voting a particular way; he can only provide information that is educational and encourage people to vote. “I’m trying to spread information around, but not in an effort to encourage people to vote one way or another,” he said. On the other hand, those who oppose the land transfer tax can tell people to vote in a certain way, he added.
Charlie Burleson of Beech Mountain Realty and Rentals said he is opposed to the land transfer tax because it targets one segment of the population. “I’m opposed to a tax when everyone will benefit and only one segment [property sellers] will bear the burden,” he said. If such a targeted tax were to pass, he said, “Who’s next?”
Burleson continued, “Obviously taxes are important, but they should be spread across property taxes.” Burleson said he would not be opposed to a property tax increase to pay for the schools’ capital needs. “Property taxes are necessary,” he said, “and new schools are obviously very important to all of us.”
Burleson said the N.C. Association of Realtors, an organization that has aggressively fought the land transfer tax, has offered its support to help defeat the local referendum and that a local taxpayers’ organization has formed to fight the tax.
The N.C. Association of Realtors maintains that the land transfer tax would reduce the property owner’s equity, is regressive because it places a higher tax burden on lower-income households, would make homes less affordable and therefore hurt the economy and that the revenues from such a tax would be unreliable.
According to information at the Avery County website, the Avery County Property Owners Against the Transfer Tax, the local taxpayers’ organization that has formed to fight the tax, “is headed by an individual with the N.C. Association of Realtors in Greensboro who, to our knowledge, owns No property in Avery County.”
Background on N.C.’s Land Transfer Tax
In 2007, in the face of increasing infrastructure needs resulting from rapid growth, uncertainty about county Medicaid contributions and unfunded state mandates, county governments were looking for a source of revenue other than having to increase ad valorem taxes. One alternative was the real estate transfer tax. Both the Avery and Watauga County Boards of Commissioners passed resolutions supporting the local tax option.
After considerable political wrangling and a $600,000 media campaign by the N.C. Association of Realtors to fight it, the North Carolina General Assembly gave all counties the authority to levy up to a 0.4 percent tax on the sale of real property—land and structures—within their boundaries if voters approved the tax through a referendum. Later in 2007, 23 counties, including Ashe, balloted the transfer tax and it failed in all of them.
In May 2008, Sen. David Hoyle (D-Gaston), a real estate developer/investor, introduced legislation to repeal the law, legislation that would take away the ability of counties to levy the tax after voter approval. In June, the Senate voted 38-6 to repeal, and the bill moved to the House where it died in committee.
Legislators expect repeal legislation will be reintroduced in the 2009 session. The General Assembly convenes for the 2009 session on Wednesday, January 28.
Text of the Avery County Land Transfer Tax Referendum
The Avery County ballot for the land transfer tax reads as follows:
“Real property transfer tax at the rate of up to four-tenth (0.4%) of value or consideration.
- For
- Against
Early voting continues until Saturday, January 31. Voting hours on weekdays are 8:00 a.m. to 5:00 p.m.; on Saturday, January 31, voters can cast ballots from 8:00 a.m. to 1:00 p.m.
As of Wednesday morning, 57 Avery citizens had cast early ballots.
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