Profits or progress?

One of the most heated debates of the N.C. General Assembly’s current session hasn’t even come up yet in any committee discussion or floor debate in either the state House or Senate. Instead, it’s being fought via television commercials, slick and misleading direct mail, and preposterous claims on television talk shows.

The issue is how to pay for the new schools, parks and open space, affordable housing and transportation improvements needed to keep up with the state’s exploding growth.

No one disputes projections recently released by the Partnership for North Carolina’s Future predicting that the state’s population will increase by 50 percent by 2030. That means the state needs to build a new school every week for the next five years just to keep up. And even now, the group reports (drawing on statistics from the state demographer), 178,000 students spend their school day in trailers because the classrooms are full.

In addition, says the partnership, more than 2 million people already face a housing crisis, living either in substandard housing or in homes they can’t afford. And more than 100,000 acres of forests, farmland and natural areas are lost to development every year.

Those are the facts, and all but the do-nothing, free-market fundamentalists agree that state leaders should do something about it by making major investments in the state’s infrastructure to preserve the very quality of life that has everybody moving here.

Most interest groups and advocates also agree that a massive statewide bond issue must be part of the solution. But building schools, preserving open space, investing in affordable housing, and helping local governments with water-and-sewer projects could cost as much as $5 billion, and paying off the debt will require a dedicated revenue source. That’s where the wheels come off in the debate and the misinformation begins.

The Partnership for North Carolina’s Future and other supporters of making the investments believe that all possible revenue sources should be considered—including a 1 percent real-estate-transfer tax that local governments could implement if the people approved it in a referendum.

But the mere suggestion of a transfer tax ignited a fierce propaganda campaign by the N.C. Association of Realtors. The group is apparently worried that the $600,000 Realtors contributed to legislative campaigns in 2006 may not be enough to persuade lawmakers to exempt the real-estate industry from paying its share of the costs associated with the state’s growth.

The several-hundred-thousand-dollar campaign comes complete with television ads, a Web site (itsabadidea.org) and slick direct mail whose offensive claims and twisted language resemble those used in negative political campaigns.

The first TV ad branded the transfer tax a “tax on the American dream,” forgetting that the American dream also includes quality schools, parks and an adequate transportation system. And that schools and other government services are part of the reason people want to live in North Carolina—which, in turn, is why homes increase in value.

The rhetoric went from talking about the American dream to attacking the motives of people who want to preserve it. The latest direct-mail piece says that the Partnership for North Carolina’s Future should be called “The Coalition to Raise Your Taxes,” and that everyone involved with the partnership has “something to gain when the Legislature raises our taxes. It’s just that simple.”

That’s true. It is simple. Groups in the partnership do have something to gain: enough schools to educate the state’s children, more affordable places for families to live, more parks and open spaces for state residents to enjoy. That petty, selfish partnership.

The Realtors, on the other hand, have but one objective—protecting their profits, which, based on the gross-sales figure reported on their Web site, added up to at least $1.72 billion in 2006. (That figure covers only sales of existing homes; the actual number is certainly much higher.) Improving the state’s quality of life—or protecting billions in profits? That’s what this debate really comes down to.

It’s also why the Realtors don’t even want people to vote on the transfer tax. Asked on a recent television show why he’s opposed to a referendum on how to pay for public schools, Tim Kent of the Realtors Association said it would be an “exercise in futility,” because a poll conducted by the Realtors shows that the majority of people in the state oppose the transfer tax.

Interesting idea, replacing actual elections and popular votes with polls conducted by special-interest groups. Might be a perversion of democracy, but it would save the state a lot of money.

No matter how hard the Realtors try to spin it, though, a transfer tax makes sense as a way to help pay for the costs associated with growth—which is what brings the Realtors their massive profits. And that, after all, is the money they’re now using to mislead the public and the General Assembly.

All things considered, it might be time for the Realtors to launch a new Web site to set the record straight: it’s-about-protecting-our-billions.org

[Veteran news reporter Chris Fitzsimon, the executive director of NC Policy Watch, reports on what’s happening in the N.C. General Assembly in his daily column, “The Fitzsimon File.”]

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2 thoughts on “Profits or progress?

  1. EglScout

    This is nothing but a phony crisis being used to scare people into allowing the government to create new taxes and regulations. Consider all of the infrastructure, etc., that has been constructed since 1950, or 1900, or 1865, etc., without this tax. If there is a school that needs to be built, it will get built without this tax, just like all of the others that have already been built. We don’t need bureaucrats getting into our pockets more, but less. If they are successful at this tax, then they will be on to the next project to take money from us. Stop them now.

  2. ashwken

    Just to clarify:

    Currently, every time a piece of real estate is sold, a State Transfer Tax is charged the Seller. This Transfer tax is calculated as $1.00 per $500 of Sales Price, so that a sale of $100,000 has a Transfer Tax of $200 (100,00/500).

    According to the article “The Partnership for North Carolina’s Future and other supporters” have proposed that Counties be given the authority to also collect a Transfer Tax.

    Although I have not seen the TV Advs referred to in the article, the article suggests that “the real-estate industry” is seeking a tax exemption.

    The State Transfer Tax is a tax on Property Owners (this tax is also referred to as an Excise Tax or Deed Revenue Stamps). The only impact that this will have on the “the real-estate industry” is that it may impact the sale of real estate to Buyers who have a choice of where to locate.

    There are a set of services that we require, if you don’t want to fund it at the Federal level, and you don’t want to fund it at the State level, and you don’t want to fund it at the County level, how do we pay for these services.

    Property Taxes, Transfer Tax, Sales Tax, Local Options, Assessments, Revenue Bonds…

    Pick your poison.

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