Property taxes alone can’t shoulder needs of schools

School construction needs are starting to make a lot of headlines across the state as many counties are considering placing school bond issues on the ballot this fall. Several factors are making classroom space a hot commodity in North Carolina.

In recent years, the General Assembly has mandated smaller class sizes in the lower grades. From 2000-03, North Carolina experienced the fourth-highest increase in the nation in number of elementary school-age children. And, of course, there is always the 800-pound gorilla in the back of the room – the county share of Medicaid.

School construction needs and Medicaid costs are the prime budget drivers for North Carolina counties. We are the only state that requires counties to pay for a fixed percentage of the state’s Medicaid share even though counties have no latitude in the Medicaid program.

In 2006-07, the county Medicaid share is projected to be more than half a billion dollars. Nearly half the counties in the state are spending more to subsidize the state’s Medicaid share than they are on school capital needs. This is keeping many of these same counties from fully funding their local school system’s budget requests.

Counties and cities need additional revenue options, such as a local-option sales tax, impact tax or land transfer tax, to help meet the increasing demands being placed upon them by our state’s changing economy and growing population. So far, the state has resisted our attempts to obtain additional revenue authority.

As a result, county commissioners are being forced to rely more and more on the one source of revenue that we control – the property tax. Last year, 45 county boards of commissioners were forced to raise property taxes for 2005-06, including 19 counties that saw increases of more than 10 percent.

According to the N.C. Public School Forum’s 2005 local school finance study, the per pupil spending gap between the top 10 spending counties and bottom 10 spending counties is more than $1,600 per student and has grown by more than 85 percent since the Leandro lawsuit was filed. It will continue to grow as long as the state refuses to relieve counties of the Medicaid burden and refuses to allow counties additional revenue options.