We noted last week our long-held suspicion that local officials would attempt to use the property revaluation as a pretext to slip in some more spending and extra taxes while trying to ignore or redefine the “revenue neutral” standard that state law requires to be stated when new tax rates are set after a property revaluation such as occurred in Alamance County recently.
We thought last week’s budgets – from Burlington and Mebane – were preposterous, with the two city managers proposing 21 percent and 11 percent hikes in property taxes above the “revenue neutral” estimates for their respective jurisdictions!
But managers in other jurisdictions this week – in Elon and Graham – had equally audacious, brazen tax rate hikes in their proposed budgets, as well: more than 14 percent in Elon and almost 21 percent in Graham above the revenue neutral levels in each jurisdiction. Surely, taxpayers are keeping in mind that these tax rates are just what their municipality is recommending. These rates are above and in addition to the county tax rate. County manager Heidi York will probably unveil her proposed countywide tax rate next week.
Everyone cares about the bureaucrats; who’s looking after the taxpayers’ interest?
Everyone (in government) seems to think their employees deserve generous across-the-board raises (so-called “cost-of-living” increases) – 5 percent in Graham and about the same (though separated into two categories) in Elon.
And, likewise, all municipal managers seem to ignore the increased costs that their municipality’s taxpayers must bear for other municipal employee benefits, such as higher health care premiums (costing $58,000, for instance, in Graham.)
Elon town manager Richard Roedner has compassion for his employees, if not for his taxpayers. “Even with merit and longevity increases,” he says in his budget message, “our employees have all seen a decrease in purchasing power over the past two years.”
Hello? How about the decrease in purchasing power for your town’s taxpayers?
And not to be outdone by such existing generosity, Roedner hints that there will be additional sweeteners coming for town employees in the form of “paid parental leave or paid elder care leave” which he understates, in our opinion, to characterize as not having a “significant impact on payroll lines, with the exception of overtime for some positions.”
He does acknowledge other likely effects: “There will be a loss of ‘productivity’ based on hours worked, but it is hoped that employees who enjoy more work/life-related benefits will be more satisfied employees.”
Oh, we’re just so glad that high-paid town employees will enjoy even more satisfaction at the expense of all the town’s beleaguered taxpayers. We just wish someone – in government or on the town council – would have an equal amount of concern or consideration for the taxpayers who are expected to fund all these extra benefits.
A little history on Elon’s over-taxation
We found particularly galling some of Roedner’s comments in making excuses for the fact that his proposal would significantly exceed the revenue neutral level for tax rates.
“We have had the same tax rate of 45 cents since 2017 while the cost of goods has increased,” town manager Roedner explained during a regularly-scheduled council meeting on Tuesday. “So, we have obviously not been keeping up with the cost of living.”
In fairness to Roedner, he hasn’t been manager very long, so perhaps he just doesn’t know the history of his town’s track record on property taxes. But longtime Elon residents will likely remember the burden of over-taxation under which they’ve lived for more than a decade.
Two revaluation cycles ago, in 2009, Elon did not adjust (i.e., lower) its tax rate at all to reflect the higher value of Elon homes, businesses, or property in the revaluation of that year. Instead, town officials continued right along with the same tax property tax rate as before revaluation.
That amounted to about an 18 percent increase in taxation, since property values, on average, had risen 18 percent across the county.
Then another 5 cents was added in 2012. (Which amounted to about another 13.5 percent increase in Elon’s property taxes.)
In 2017, the town’s elected officials (then a board of aldermen) approved the highest percentage increase in property tax rates (compared to a revenue neutral standard) among local municipalities that year. They raised the property tax rate to 45 cents from 42 cents, which was even higher (by 8.5 percent) than the 41.48-cent revenue neutral estimate of that year.
So when Roedner whines that the town hasn’t had a property tax rate increase since 2017, he obviously neglects to mention or acknowledge the fact that his property owners have been paying more than their fair share for at least 14 years.
The purpose of a tax rate is not to accommodate inflation, contrary to Roedner’s interpretation.
In fact, a better, more fair approach would be to adjust, or “index,” the property tax rates to accommodate for inflation. (That, by the way, is the way federal income tax rates work; they’re adjusted each year so that taxpayers are not automatically pushed into higher and higher tax brackets by higher incomes that keep pace with inflation.)
Natural growth in each municipality’s tax base – through new residential construction, more business and industry – is what’s supposed to provide additional sources of municipal (and county) revenue.
Elon (the town’s) problem with Elon (the university)
Granted, Elon (the town) faces considerable pressures different from some other municipalities because so much of the town’s land is taken up by two large non-profit organizations that don’t pay any property taxes: Elon University and Twin Lakes retirement community.
Which brings us to a sidebar point: the town needs to get more revenue from the university, in particular, which is eating up more and more of the town’s real estate for an ever-expanding university campus footprint without paying any property taxes.
While most municipal taxpayers across the county are paying about the same tax rates as they were paying a decade or more ago, Elon municipal taxpayers are being asked to pay tax rates that are about 30 percent higher than they did just a decade ago. And that’s before Roedner’s newest proposed tax rate hike, which proposes to add another 14 percent.
We’ve observed before, and pondered without a successful answer, why Elon residents perhaps are just more tolerant than their counterparts in other municipalities.
Or perhaps they’re just not paying attention.
Or perhaps everyone thinks everyone else in town can afford to pay more.
But if there’s anything that should incite a taxpayer rebellion, we’d think it would be the kinds of tax rate hikes that Elon has imposed, both subtly and overtly, over the past 14 years.
Municipal tax hikes in municipal election years historically rare
Another troubling anomaly about the municipal budgets being presented this year is the following. We’ve noticed that typically municipal governments work to keep taxes fairly stable during election years (municipal elections are in odd-numbered years, such as 2023).
So, in the past, it has been more likely for county government to raise property tax rates during odd-numbered years (and avoid tax hikes in even-numbered years when commissioners are on the ballot).
For municipalities, it is more common to avoid tax hikes in odd-numbered years (when municipal offices are on the ballot) and hike them, instead, during even-numbered years.
For so many towns and cities to be considering such large tax rate increases this year, we have to think there are going to be a lot of candidates coming forward seeking elective municipal offices between now and November.
Some new blood will certainly be needed if existing mayors and councils go along with the kinds of whopping tax bills their administrators are recommending.
See editorial views on earlier budgets presented by Burlington and Graham city managers: https://alamancenews.com/whopping-city-tax-increases-proposed-in-burlington-mebane/
