“The voters would not only have a choice of the capital projects, but a way to pay for at least part of them in a way that would not affect the property tax rate,” said County Manager Sam Greenwood.
The property transfer tax — 0.4 percent of the selling price of a home or land — would bring in roughly $2.3 million for the county at the moment, but would ebb and flow with the real estate market. Commissioners are pitching the property transfer tax as a way to pay for at least part of the bond projects.
The tax of 0.4 percent would amount to $800 on a $200,000 home. The real estate industry is opposing the tax, however, no one was at the commissioners meeting Monday to speak against it.
The real estate transfer tax only recently became an option for counties. State lawmakers passed legislation two weeks ago that would allow counties to enact the property transfer tax. But there’s a catch. The tax must be approved by local voters.
So far, no other counties in the area have chosen to hold a vote on the issue so soon. The timing just happened to be right for Macon, which already had a countywide vote scheduled for Nov. 6 on the bond projects. Neighboring counties seem content to wait at least until the 2008 primary in May when voters will be heading to the polls anyway, in lieu of holding a special election just on the property transfer tax.
In the meantime, county leaders in Jackson and Swain will be watching how Macon’s vote plays out, hoping to gauge the potential success of such a vote in their own county.
Macon commissioners wanted to put language on the ballot that specifies the property transfer tax would go toward the bond projects.
“Can we include stipulations of how the money is to be spent?” Commissioner Ronnie Beale asked. But the state, which is being picky about how the ballot is worded, won’t allow it. Instead, the commissioners will have to find other ways to convey that message.
“When we talk to the public, we want to be clear on what we intend to do,” said Commissioner Charlie Leatherman
To help make the case, commissioners passed a resolution Monday night stating their intention to use the property transfer tax to pay for the bond projects.
“The spirit of this new revenue source is not to be in addition to an increase on the property tax rate, but in lieu of it,” Commissioner Jim Davis said.
If all the bond projects pass, the land tax won’t be enough to pay for it all, however.
“It’s not in and of itself going to pay for the bond,” Commissioner Brian McClellan said.
Beale said the public will want to know how much their property taxes will go up if the bond passes — and how the land transfer tax would offset that. Greenwood said such a comparison should be part of a public information campaign presented to voters. The property transfer tax is currently enough to cover annual debt payments on about $38 million if borrowed over 30 years.
Wording the ballot
Counties don’t have to enact the full property transfer tax of 0.4 percent allowed by the state. They could enact a tax of 0.1 percent, 0.2 percent, or 0.3 percent instead. The language on the ballot will call for a property transfer tax “of up to 0.4 percent.” County commissioners can then pick the amount they want to enact.
Since commissioners have every intention of enacting the full 0.4 percent should the referendum pass, McClellan said it was misleading to word the ballot otherwise.
“If it is going to be four-tenths, call it what it is so people will know what they are voting on. I think we need to make it clear that four-tenths of a percent is what is being talked about — not ‘up to,’” McClellan said.
But it turns out the county has no leeway over the wording on the ballot. The state has dictated how the ballot language must be worded. The ballot will give voters the option of being “for” or “against” the following statement: “Real property transfer tax at the rate of up to 0.4 percent of the value of consideration.”
Commissioner Jim Davis had another issue with the language. Davis doesn’t like it being called a property “transfer” tax.” That is a misnomer, since it suggests any property transfer, even between family members at no cost, would be taxed, Davis said. In reality, the tax is based on the selling price, so if the transaction has no price tag, as with an inheritance, it wouldn’t be taxed. Davis suggested calling it a property “sales” tax instead of property “transfer” tax, but again the state’s selected terminology can’t be altered.
If Macon County doesn’t enact the land transfer tax, it will see a shortfall in its budget in coming years. The new tax option was concocted as part of budgetary horsetrading between the counties and the state.
The state will no longer make counties pay a portion of Medicaid costs, but in return, the state is taking away a half-cent sales tax counties currently get. In Macon County, the half-cent sales tax reaps more than Medicaid costs. Relieving the county of Medicaid — but also taking away its half-cent sales tax — leaves Macon in the hole by about $700,000, Greenwood said. For the first couple of years under the new deal, the state will compensate the county for the loss resulting from the swap. But the state will phase out this compensation over the years. So five years from now, the county will be $700,000 short of where it is now.
Greenwood said the option of enacting the land transfer tax was offered as a “band-aid” to counties by the state, since not every county will see benefits from so-called Medicaid relief.