AFP’s ‘Distress Call’

The local chapter of Americans for Prosperity hosted a “mayday” event Thursday evening at the McSwain Ag Center in Sanford, calling it a “distress call” to defeat the .25-cent sales tax issue on next week’s ballot. About 35 or 40 people attended and saw presentations from two staffers from the John Locke Foundation.

You can read reporter Gordon Anderson’s account of the meeting in today’s Herald.

I have a great deal of respect for Lloyd Jennings, who heads up the local AFP chapter, as well as state AFP Director Dallas Woodhouse and many of the fine people at the John Locke Foundation, who do some wonderful work. But last night’s presentations featured the kind of fear-mongering and misleading claims that confounds the JLF’s detractors. In many ways it was a disappointing night that didn’t live up to its billing.

I wasn’t there infiltrating the event, even though The Herald has endorsed the sales tax measure on the ballot. I have attended a number of AFP events and salute Jennings for his heads-up work and appreciate AFP’s mission, which is to educate citizens about economic policies and mobilize them as advocates in the public policy process. But aside from opening remarks by Jennings, it was mostly the JLF show, with staffers Becki Gray and Terry Stoops making presentations – Gray’s essentially summarizing JLF’s recent “Regional Brief” about the sales tax and Stoops’ consisting of a broad overview of Lee County Schools spending over the years. The presentations were designed to convince you that Lee County was overtaxed (true) and that because the school system’s spending has increased so much, and because the county had plenty of cash reserves, the sales tax increase should be soundly defeated.

That’s where the problems started. These were the kinds of “superficial” arguments we touched on in our editorial, which you can read elsewhere in this blog (I posted it Sunday).

Among my observations from last night’s meeting:

– Gray talked about the $1.6 million Lee County had spent on “corporate welfare” over the last few years, calling those payments “bribes” that put other businesses at a competitive disadvantage. What Gray was really talking about, of course, was incentives. JLF opposes incentives paid to businesses and industries. I won’t outline all the pros and cons of incentives here, except to say in North Carolina, they’ve become a necessary evil; we hate ’em, but because everyone else is doing them, we’re at a competitive disadvantage if we don’t. At any rate, counting the $1.6 million in incentives awarded by the county as part of the $10 million the JLF counts as revenues that could be diverted to avoid having the sales tax implemented…it’s nice in theory, but not close to realistic. My friend Chad Adams, who works for the Locke Foundation, and I have spent hours talking about incentives. My take on it is like this: imagine if baseball legalized performance-enhancing steroids. It’d be horrible and would take a lot of fun out of the game…but if you played, and found your skills far behind those of players you were fighting for playing time against, wouldn’t you take them, even though you didn’t believe in them? What if it meant getting a roster spot and feeding your family? Incentives are the legalized steroids of economic development.

– the comment was made that sales tax supporters are claiming that the tax (and I’m paraphrasing the comment here) ” ‘will only cost you about a cup of coffee a day,’ but it’s actually a lot more than that.’ ” This was a problematic statement. Based on average retail spending in the county, the .25-cent sales tax increase (from 6.75 percent to 7 percent) will only cost the average family about $25 per year, according to the “Fair Tax” group headed up by the Chamber to promote the tax. Now I know the AFP and the JLF think this Chamber group is aligned with the devil himself, and they don’t trust their numbers…but $25 is the equivalent of $10,000 in annual spending on items on which the tax would be calculated (not including most non-prepared foods, prescription drugs and cars). It’s a good chunk of spending. A property tax increase of 3.5 cents to raise the same revenue will cost the average homeowner about $47, according to this same group, by the way. Assuming the sales tax passes, that $25 a year is equivalent to only about 7 cents a day. Assuming you only drink coffee on weekdays, that’s still only 10 cents a day. I’m not sure where you can get coffee for a dime these days…so to say “it’s going to cost you a lot MORE than a cup of coffee a day” is very misleading.

– Stoops talked about the increase in local education expenditures and showed some slides supporting his premise that Lee County Schools were overspending compared to student growth. There may be truth to that, but the problem with his data is that he didn’t discuss how unfunded mandates or additonal operating expenses related to new school construction contributed to the increase in spending. I don’t doubt Stoops has done his research, but you can present numbers in a lot of different ways to support a lot of different theories, based on what’s convenient for you. If you’re going to show off your new coin, show me both sides.

– speakers criticized the county for supporting the tax partly because the commissioners couldn’t be bound to any promises that the tax revenues would be used for repairs and renovations…in other words, since the commissioners’ apparent commitment to use the funds to help make repairs at Lee Senior isn’t binding, it’s a bad idea. But later in the presentation the county was criticized again because, “We don’t know what the plan is for the money!” Damned if you do, damned if you don’t…

– there was talk about the county’s reserve fund, but no discussion of the county’s debt capacity. They go hand in hand.

– finally, the comment was made that Lee County needs to put more money into maintenance for its schools to prevent the kind of disrepair Lee County High School is seeing now. Although that might be true, and maybe Lee County High School is complicit in its own structural demise, the comment struck me as contradictory: on one hand the schools are spending too much money, but on the other, they need to spend more…

I went to the meeting open-minded but left with a stronger belief in the need to pass the sales tax. We’ll know in a few days how Lee County voters feel…

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9 Responses to AFP’s ‘Distress Call’

  1. Terry Stoops says:

    Bill,

    Thank you very much for your comments. Let me start with your final point. Additional maintenance expenditures should come existing revenue by scrapping ineffectual programs, reducing overhead, etc.

    On one of your other points, I would like to know what these “unfunded mandates” are. I am not denying the presence of state and federal mandates. Instead, I have seen no evidence that the state or federal government has been negligent in providing funding necessary to comply with these mandates. If you are thinking of No Child Left Behind, for example, since 2001-02, NCLB funding has increased by over $200 million. It is not enough to say “unfunded mandates” and fail to identify the mandate or the funding that, apparently, falls short. Otherwise, it is nothing more than a Jedi mind trick that school boards try to play on taxpayers.

    In addition, I do not think there was anything “superficial” about my presentation or argument. To substantiate my argument, I cited the following data:

    – I discussed how school systems fund capital needs in NC and reviewed Lee County’s capital revenue and expenditures over the last five years.
    – I identified sources of capital funding available to Lee County now and in the future.
    – I analyzed staffing trends over ten years for all major employment categories.
    – I calculated student to personnel ratios for all major employment positions.
    – I tracked SAT scores over the last five years for Lee County, the state, and the nation.
    – I provided information on four-year and five-year graduation rates for Lee County by subgroup.
    – I compared enrollment growth and changes in the special needs population to funding (adjusted for inflation) and personnel growth over five years.

    Every one of these data points come directly from Department of Public Instruction sources, which I would be more than happy to provide. And if you still think my presentation was “superficial,” then your standards for the amount of information that can be packed into a 30 minute talk are much higher than mine.

    Finally, it is not my job to show you “both sides.” My job is to refute the various claims being made by those who want to pass this tax. I have yet to see the Chamber present “both sides” of the case and I do not expect them to.

  2. Chad Adams says:

    1) Incentives – The incentive money doled out will NOT cover the cost of schools. The point here is that you’re losing that money when it’s given back to companies like Wyeth (laying off people) and Moen (laying off people) and Magnetti (laying off people) who bring people to our county that need to be educated. That’s a fact and below I’ve copied my original opposition to incentives. You should also at least be honest and admit that it has not made Lee County’s unemployment rate any better than counties without incentives (like Moore). In fact, we’re higher. And if those companies were not here, would we be worse off? New people mean new schools, means more money, if you don’t get that money from the company then you have to get it from their competitors and others in the county.

    Since 1998 I have been generally supportive of “incentives” because I actually believed in them. I, like many others, believed they helped to create an easier environment for companies to come to and grow in Lee County.
    Over time, however, I’ve studied and read and sought to better understand the realities of these economic policies and I can no longer ethically support them.
    Citizens and businesses pay their taxes, it’s how local government provides services. If they don’t, local government will take away their property. Incentives lead us to believe that folks are paying their taxes, but in truth, they get back 50% of what they pay. No other companies get such a benefit. Does that mean that the county will only provide 50% of the services? No, it means that those who pay 100% of their taxes are subsidizing those who pay 50%. And it’s not about jobs as our EDC and county have never monitored job creation for companies receiving incentives.
    We do this because we think businesses won’t stay here or come here without them. But businesses make decisions for business reasons. And if the reason they come here is because of a 50% lower tax rate, then maybe we should examine why our taxes are too high for business.
    I cannot stand idly by any longer, these are bad for Lee County, and I believe there should be at least one official who wants local government to treat all businesses equally. As long as one supports incentives, they are not treating businesses as equals.

    2) The $ amount you cited per year/day was an offhand comment by Dallas and is not in our summation or research. Tax is a tax is a tax. You can call it what you will and we can all play numbers with who pays it. In truth, the SMART thing (and you’ll agree) was to have put a bond before the voters explicitly for Lee Senior and let them decide. Not doing so is deceptive and when the building is paid, the tax will still exist. That’s not fear-mongering, it’s simple logic. $1.5 million/year divided by 58,000 folks equals your number $25.86 year. But a family of four is what you base things on, which brings us to $100 a year, still a paltry .30 cents per day (roughly). But the point is this. No matter which way you slice this proposal the answer is whether you need new or existing revenue. Making tough choices is what government should be about, not simply addressing the need for more revenue. Do you ever believe that there are programs that don’t deserve funding or should be cut? Or do we simply keep all things and fund them like we always have?

    3) Your blog says Stoop “may be” correct in his numbers. He cited those numbers from DPI. They have been verified. There is no MAY BE it is a fact. We can argue opinion, but his numbers were factual, period. It wasn’t a theory. We should be asking questions. Why are administrative positions growing so fast? That’s a legitimate question that has not been answered to the public and should be. Why aren’t test scores higher? These are legitimate, not fear mongering. If you paid for police protection and police protection costs increased by 70% over five years, you would expect some difference in the crime rate. If we’re not seeing a correlation between spending and outcomes, we are OBLIGATED to ask questions.

    4) Damned if you do or don’t. I know you don’t want to cast blame backwards about how we got here. But consider this. Both of the new schools were basically in the hopper or built prior to this board being seated. Why haven’t they focused their attention on repair work over that time? That’s a legitimate question. And it can and should be argued that some of the expenditures have created the problems at Lee Senior. Thus, adding the thousands of dollars in concrete at the social area without providing drainage created a water problem. That’s logic. If the problem didn’t exist ten years ago and does now, it isn’t magic, it’s caused!

    5) We have the numbers on debt capacity and Lee is running lower and lower on it. They’ve borrowed close to the edge based on the tax base. That debt capacity actually helps our arguments that Lee has been somewhat wasteful based on the number of students. In fact, if we proceed with the construction based on current numbers, we will exceed our debt capacity for a year or two according to the county manager and LGC. We didn’t present it because the meeting was about the sales tax and we were limited on time.

    6) The argument that you say is contradictory isn’t. We’re questioning the amount of money requested for the repair and the “need” for a new tax. Maintenance has been neglected and I’m still surprised continually that nobody seems to care. The same is occurring at the community college and still NOBODY seems to care until a building is about to fall down and we have to “act immediately to build something new.” That’s bad logic. Maintenance dollars are part of the continuation budget, when the school system uses continuation money in the expansion budget, maintenance suffers. And without tough questions, that will continue to be the case. We like to abandon schools in our county, Jonesboro I, Jonesboro II (still used for education but not good enough for kids), the one off Vance St. that is now full of condos and the old Wicker school. Why is it unfair to ask those questions? The school HAS been neglected. How can that be denied? Look at it, go over there, walk around. Buildings build correctly don’t just fall down unless they are neglected or poorly built. My house is 100 years old, I have had to maintain it to keep it.

  3. Steve Brewer says:

    Incentives are money given back to companies that build or expand and add to the tax base. We basically get 50% of something versus 100% of nothing. This is only if the company does what they must guarentee by contract. Unless the nation, not just the state, does away with them they are indeed a necessary evil. The 1.6 million dollars paid out means that there was roughly 1.6 million paid in that the County would not have had to as tax revenue.

    In 1977 East Lee and West were built and the County believed they would not need any more space because the population in Lee County was not growing. Both schools opened with three trailers out back. My point is that no one in County government has looked ahead or planned ahead. That’s why we are in the fix we are in today. That includes maintenance dollars. I agree that they should have been repaired and we shouldn’t have to build all new schools all the time. Unfortunately the past boards didn’t see it that way. Now we must catch up. It is sad but true.

    Citizens paid 7% sales tax before. It would be hard for me to believe that a person noticed the reduction to 6.75% when they paid for items. I would bet that many business people didn’t reprogram their registers for the decrease. I wish there were no taxes but that is just not the case. Property owners must get some relief. If the need is truely there and I believe it is, then the sales tax increase is the way to go.

    Nice blog Bill.

  4. Lora Wright says:

    I agree completely with Bill. (That’s Right I said it)
    We NEED this 1/4% sales tax desperately, I have found this to be a GREAT method to raise the needed money and keep property tax at it’s current rate. One can talk about what “should have, could have, or would have been done” but the FACT remains the same. That Lee Senior High is in desperate shape. Funny ,how NONE of the names mentioned in the article have children in the school system PLUS many are NOT even Lee County residents… Leave this one alone guys… go play in another County’s schoolyard ! But, I HAVE 2 children who have been through those doors during the last 4 years and one that will attend next year. I want a cleaner , safer better place for ALL children of this great County AND I want my property taxes to not rise. So , it’s pretty simple WE just finished the 7% a few months ago … let’s just go back to it. Work from TODAY forward on maintenance and other issues . And remember when it comes to our children I don’t need an outsider to go against what is best for them!

  5. Kim Pritt says:

    OK – I rarely get involved in these kinds of conversations! I have my opinions and vote my conscience, but don’t usually get vocal or public about it by taking political sides! Also – I generally believe that we are taxed to death and it sickens me to think that so much of my hard earned money goes to some level of the government!!! Yes, I know that we have to share in the cost of running our great country, state, county, or town, but I don’t have to like it or feel the need to give even more!!!

    I started this out that way to make the point that what I am about to say is a huge step for me — but, I am going to go out on a limb and say it — popular or unpopular as it may be — it’s my opinion and here it is!!!

    I fully support the quarter cent sales tax and really hope it passes!!!! There, I said it!!! How we got here and why the additional revenue is needed is irrelevant — we need it and that’s that! Lee County HS must be given the attention it so desperately needs! So – what are the options??? We’re told that if the quarter cent sales tax increase doesn’t pass, our property taxes WILL be raised – period!!! It’s not a case of “sales tax increase or NO tax increase” – some or all of us are going to pay to come up with this revenue in one way or another!!!

    So, what is the more equitable, fair option here?

    # 1: An extra 1/4 of a penny on every dollar that EVERYONE pays (meaning all citizens making purchases in Lee County – including those who don’t even live here, but are just in our town spending their money) – an amount you will barely even notice!!!

    OR

    # 2: Spread the burden across a much smaller group of people by raising property taxes – meaning the only ones who will be raising this revenue are property owners that are already paying higher property taxes than we should be!!!

    7 cents on the dollar isn’t that bad! Let’s just pay the extra 1/4 of a cent and get the job done as fairly and easily as possible!!!

    On May 6th – turn that ballot over and vote YES for the sales tax!!!

  6. Lloyd Jennings says:

    The data was presented by the John Locke Foundation representatives that are highly qualified researchers and analysts. They deal with facts, not hype. The dats were all relevant, defensible, and the sources were revealed. As usual, the response from those that think every cent earned by an individual belongs to a government body do not accept verifiable, factual data. Instead, they shoot the messanger and use Shakespearean logic: “I think it so, because I think it so.”

  7. Zod says:

    Never trust the government to do for you what the free market can do better and more efficiently. Public education standards are necessary but public school attendance is not. Public school attendance should be optional and parents who don’t want to expose their children to such environments should have the right to higher teachers as part time home school tutors. That would shrink class sizes and shrink campus sizes and should allow the sales tax to be lowered, if anything.

  8. jayriley says:

    I like to compare “small taxes” with “boiling frogs”. If you boil water and then throw the frog in the pot, the frog will just jump back out. But, if you throw the frog into a pot of cold water and slowly heat the water, I bet you end up having frog leg stew. If the county raises property taxes 3%, I’m sure we’ll see an even larger group wanting extra oversight in county spending. Also, one of the earlier comments said that we should pass the sales tax so everyone feels the burden, not just property owners. The truth is, everyone pays every tax in some way or another. Example, the business tax. Any tax put on any business is directly passed on the the consumer. We would be naive for us to think that the business owners are going to eat a tax just because the government doesn’t explicitly say its a sales tax.

  9. Kim Pritt says:

    I agree, Jay — when any tax or fee is imposed it gets passed on to the next person in some way or another – no doubt there! But, that wasn’t my point. My point was that the total revenue goal would be spread across a smaller baseline (property owners), making the amount on the individual tax bill HIGHER than it would have been if it had been spread across a larger baseline (anyone making any purchase in Lee County). Believe me — if there appeared to be a choice of tax increase or no tax increase, I’d vote no and challenge our elected officials to tighten their belts. But, it’s been made clear that the only choice we have is increase the sales tax or increase our property tax – if the sales tax increase doesn’t pass, they have made it very clear that they will raise property taxes. Now – back to the point about how it gets passed on to the next person in some way or another — those property owners who have tenants or businesses will most likely pass it on – granted! But, take me, for instance and many other homeowners – I don’t have tenants or a business to pass on my costs to! I’m stuck with it — and my pocket will notice the property tax increase more than it willl notice a 1/4 of a cent on a dollar! A 1/4 of a cent, but the way, that we used to pay and I never even realized they had lowered it!!!

    So — I still urge voters to vote yes — not that I want any more tax burden than we already have — but because of the only two choices it looks like we’re being given, the sales tax increase is the most far!

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