County commissioners will pursue a real estate transfer tax as an alternative way to help pay for school construction, the board decided Monday night.
Struggling with how to deal with millions of dollars in debt brought on by new schools and facing another $47 million bond issue, the board has been seeking revenue sources other than the property tax.
At Monday nightâ€™s Board of Commissioners meeting, County Manager Stan Kiser presented a report on several options â€” the real estate transfer tax, sales tax and impact fees.
All three options require approval from the General Assembly, which is admittedly difficult to gain.
Voters will decide in May on a $47 million bond referendum that will go toward new school construction and repairs and renovations to current structures.
The money would pay for a new elementary school in the west to relieve overcrowding at Union, Love Memorial and North Brook elementary schools; a new middle school in the central part of the county; expansions to East, Lincolnton and West high schools including gyms, cultural arts wings and health classrooms; and renovations and repairs to existing sites.
By the 2006-07 fiscal year, the countyâ€™s bond payments will spike by more than $3.4 million, bringing school debt payments to almost $9.4 million. This increased cost is outside the normal operational expense of the county.
That same year, the county debt is expected to surpass $101 million â€” $93 million of which will be school debt.
Those millions of dollars have to be paid back, and currently, the county has one way to do that â€” by raising property taxes.
One cent of property tax generates about $522,000 in revenue.
It is estimated that if the $47 million school bonds are approved, the property tax will have to be increased by 4.8 cents over three years. Coupled with this yearâ€™s revaluation, that could mean swelling costs for property owners.
And thatâ€™s something county leaders say they want to change.
Kiser presented the board with three alternative ways to bring in money other than raising the property tax.
Increasing the sales tax people pay in Lincoln County would provide a relatively stable and consistent source of revenue, he said. But since it would apply to all residents, an increase would probably encounter the greatest resistance.
Impact fees are charged directly to new development in order to offset the effect that the development causes. But the fee would add to the cost of home construction, Kiser said, and could have an adverse impact on new home buyers.
Kiser recommended going with the real estate transfer tax. If sellers pay a 1 percent tax on land transfers at the time of sale, it would generate millions of dollars in revenue for the county.
Additional debt would still have to be offset by property taxes.
One positive aspect of this option is that since the tax would be paid at closing, individual cash flow is typically readily available, Kiser said.
But like impact fees and a sales tax increase, the real estate transfer tax does require approval from the General Assembly.
The Board of Commissioners voted unanimously to draft a resolution to send to the General Assembly. Legislative approval could take up to three years, Kiser said.
Rep. Joe Kiser, R-Vale, was out of town this week and could not be reached for comment.
But commissioners agreed that despite the tough road to gaining approval, it is worth it to make an attempt.
Theyâ€™ll also ask the Lincoln County Board of Education and the Lincolnton City Council to join them in the push.
“I think the taxpayers of Lincoln County deserve having us try,” commission Chairman Jerry Cochrane said.
In other business, commissioners:
Agreed to start charging $3,000 instead of $1,800 for new homes and businesses to join the East Lincoln Sewer District. The raised fee will allow the county to gradually reduce the tax rate that residents in the district pay. By 2019, it should be eliminated.
Commissioner Tom Anderson said the goal of the change is to shift the burden of the cost of improvements from the tax rate to a development fee.
Agreed to transfer the beds currently used at the Lincoln County EMS headquarters to the city of Lincolntonâ€™s fire department. EMS will soon be switching from 24 to 12-hour shifts and will no longer need the beds.
Set a public hearing to receive comments on the proposed bus system from Lincoln County to Charlotte for the boardâ€™s April 5 meeting.
by Alice Smith