Data Report 4

High Country County Revenues and Expenditures

This is the fourth in a continuing series of articles meant to provide demographic data and statistics to local officials and local interests to assist in their decision-making efforts.

A Different Data Source
The first three reports in this series relied heavily on the Decennial Census for facts and figures. This effort is going to look at what is available from a different source, the Department of the State Treasurer, to present revenues and expenditures of the counties of the High Country over a recent, five fiscal year period. Comparable municipal information can also be found on the Department's website, www.treasurer.state.nc.us.

This financial information is a combination of the unit's annual audit and the Annual Financial Information Report that it files with the Local Government Commission.

Dynamic Budgets
It is difficult to make direct comparisons of governmental budgets from year to year due to their dynamic nature. Capital improvements can temporarily skew annual spending, property tax rates depend in part on the prevailing eight-year cycle of revaluation, certain functions can be part of the county's structure or can be contracted out (such as ambulance services, airports, and mass transit) and thus not be part of the revenue stream. New taxes and fees come into existence, line-item designations change, special projects arise temporarily, county budgets adapt accordingly.

Property Taxes Lead the Way
Roughly forty per cent of all county government revenue in the High Country for the last five reported fiscal years has come from taxes assessed on real and personal property (compared to 37% as a State average). Real property is assigned a worth based upon a schedule of values that has been adopted in each county for various types of land usage (homestead, agriculture, forested); condition, size, material, and features of any building/dwelling thereon; and other considerations that might add or detract from the location's value (geographic or man-made).

All real property in North Carolina must be revalued at least every eight years, at which point it theoretically carries a tax value equal to its potential selling price between a willing buyer and owner. This comparison of tax value to selling value is known as its 'sale ratio'.

Once a new schedule is in place, property maintains its assigned worth until either some attribute is changed (such as a new, modified, or removed building or it is subdivided), the value is successfully challenged, or the next valuation is adopted. In the meantime, if property changes hands for more than its tax value, the effective overall tax rate decreases due to the values of other parcels increasing indirectly while their tax value stays the same.

Sales Taxes
Sales taxes have accounted for roughly 20% of county revenues in the High Country during the last five fiscal years (the State average has been in the 12-13% range, note that only 88 counties had complete reports included in the 2003 tabulation). The High Country has seen moderate growth in sales tax revenue through 2002, but did note some slippage into 2003 (when the additional ½ cent local option sales tax is taken into consideration).

Other Taxes
While property and sales taxes are primarily uniform in principle throughout the State, the 'Other Taxes' category demonstrates how individual units address local needs. The only category that is standard and current throughout the seven counties in terms of Other Taxes is '911 charges'. Additionally, counties can have their own occupancy taxes, receive funds for the disposal of discarded tires and large appliances (white goods), have a separate tax for a special purpose (such as a fire district), a tax on pet ownership, a charge on property transfer, a levy on leased vehicles, and a fee for a privilege license.

Permits and Fees
Every county in the Region generates revenues from the issuance of building permits or the inspection of construction and/or other functions. Also each county Register of Deeds office brings money in from the issuance of official certificates. The largest additional source listed separately under Fees is the cost of a personal handgun permit.

Sales and Services
Talking trash is speaking of a major revenue producing service of counties in the High Country. Solid waste transfer and disposal has accounted for over $6 million in local revenues in each of the last five fiscal years. Counties own facilities and equipment that are leased to other entities and thus generate income. Three counties in the Region operate ambulance services, two oversee airports, and three direct mass transit enterprises that bring funds to the revenue side of their balance sheets. Recreation and third party delivery of health and social services also add noticeably to the Regional total of Sales and Services.

Intergovernmental Transfers
The Federal government, State of North Carolina, and individual local governments transfer funds among themselves to pay for various services or to fulfill assorted legislative mandates. (An effort has been made in the accompanying tables to list the top two or three sources for each category in terms of absolute dollars over the last five fiscal years.) Human service related functions comprise the majority of Federal assistance to the Region. State money is also provided for human services as are the costs of economic development, community development, and schools.

Miscellaneous Revenues
Counties also realize income from the sale of surplus property (real and equipment), various leases, certain ABC related sales, the sale of bonds, and private contributions.

Expenditures
What comes in also goes out, and sometimes at an even greater rate. Expenses for the High Country counties are shown both by function and by object in the following tables. Education, human services, and public safety are the top three categories for expenses. As noted, there are instances when outflow exceeds income and this is where the unit's fund balance is called upon to provide the difference, as required in North Carolina.

From a Decision Maker's Perspective
Property taxes comprise the largest revenue source for High Country counties. Local property tax rates have consistently been lower than the State average for the five years presented. Revenues from sales taxes have increased over the span but most recently the addition was due to an increase in the rate charged. User-related revenues (except special district taxes which are tied to property values), as included in Other Taxes, Permits and Fees, and Sales and Services in this report, have risen as a percent of the local budget over the last five years. Intergovernmental and Miscellaneous revenues fluctuate from year to year and project to project and are not predictable revenue sources. Some State reimbursement methods have changed or ceased, investment returns are down due to lower interest rates, expectations of services from local government continue to grow.

The challenge for decision makers to continue to provide sufficient revenue to fund governmental services lies in formulating a balance in the worth of real and personal property, sustaining a stable retail base, and providing a range of operations that users are willing to pay a reasonable fee to access.

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