Local debt means future taxes

A simple change to ballot language and another small change in ball could have huge impacts on local borrowing. Dan Way reported for Carolina Journal that “Debt fared better than taxes in local referendums.”

Only one bond referendum failed. Wake County alone received permission from voters to issue $1.017 billion in bonds for the community college, the school district, and parks, greenways, and recreational facilities. Other communities added $741 million in debt. That means local governments will nearly double the $2 billion in Connect NC bonds state voters approved in 2016.

In contrast, voters rejected two-thirds of local sales tax increases on the ballot this year. Seven of the 11 tax increases that passed did so in primary elections this May when turnout was lower. Votes on new taxes and debt should only be on ballots in November, ideally in even-numbered years.

The language question would make clear the connection between debt and taxes. Wake County’s operating budget for the current fiscal year is $1.8 billion, one-sixth of which goes to principal and interest payments on debt. The budget included a tax increase of 6.4% over last fiscal year and the bonds could mean another 5.8% tax increase on top of the current rate. If voters knew what the bonds would do to their taxes each year, they might have second thoughts. Bond referenda should “explicitly note the property tax implications of voting yes on bond referenda in bold capital letters on a ballotas required in Minnesota.

Joseph Coletti / Senior Fellow

Joe Coletti is a senior fellow at the John Locke Foundation focused on fiscal policy issues. He previously headed the North Carolina Government Efficiency and Reform initiativ...

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