Vote no: Government-borrowing plan unwise and unfair
Second of a two-part series
Let’s cut to the chase:
Vote against Amendment One on your election ballot on Nov. 2.
Amendment One would change the North Carolina Constitution so that local governments could borrow money by issuing bonds without the approval of taxpayers. This will be the third time that the state’s voters have been urged to approve the change. In 1982 and 1993, the voters have wisely refused.
The change would allow governments to use what is called “tax-increment financing.” Here is how it allegedly would work:
An area of a city or county would be defined and set aside for some sort of economic development project — say, for example, a manufacturing plant. Without getting voter approval, the local government would borrow money to make public improvements needed to ensure that the plant would be built and operated.
The private property within the district would, it is presumed, increase in value; hence, the taxes on that property would increase. The difference between the old tax revenue from the district and the higher revenue would be used to pay off the bonds that secure the debt.
It is a shaky scheme.
Proponents tell us that general property taxes outside of the district would not be involved, but that is not necessarily true. In fact, the proposal makes clear that tax revenue from elsewhere would be used to retire the bonds if there were insufficient growth in revenue within the district. The city or county couldn’t simply default on the bonds.
The League of Municipalities, one of the amendment’s proponents, says that there is little argument that tax-increment financing, or TIF, is a good thing. In fact, however, many studies question the wisdom and the fairness of it.
One was done by the Chicago-based Heartland Institute, which conducts studies on government policies and social issues. Its report said, “The analysis performed for this study found TIF does not tend to produce a net increase in economic activity; favors large businesses over small businesses; often excludes local businesses and residents from the planning process; and operates in a manner that contradicts conventional notions of justice and fairness.”
Advocates note that local governments in 48 other states already use tax-increment financing. That is the most useless argument of all. Remember what your mother used to ask you? If your friend jumped off the cliff, would you ...
Published in Editorials on October 8, 2004 10:58 AM