Perhaps asking North Carolina voters to undo an egregious wrong that they did to the N.C. Constitution just seven years later is seen by legislative leaders as distasteful.
Of course, voters didn’t really do this egregious wrong. When they approved inserting tax increment financing into the state constitution in 2004, the amendment was so poorly worded that most voters probably didn’t understand the harm being done.
The folks in Roanoke Rapids understand the harm.
For the next 10 or 20 years, they will be paying off $12 million on a boondoggle theater that they soon won’t even own.
To pay off the debt, their property taxes will be invariably higher, their government services less robust.
It could have been worse. The town’s City Council – whose members are mostly new after the old ones were booted for the poor decision – reached an agreement to sell the theater to a private investor for $7 million.
The theater originally was financed for $22 million, but in a buyer’s market, you take what you can get.
Back when the project began, town leaders were sold a bunch of snake oil that this theater, just off Interstate 95, would be the lubricant that would bring other development to town.
The town used the new provision in the state constitution to borrow money without voter approval and set up a special property tax district around the theater site.
That’s the theory behind tax increment financing: a public investment attracts private investment, then the additional property taxes from those private investments are used to pay off the public investment.
In reality, in Roanoke Rapids, one hotel showed up in the new taxing district. Its owners may feel as snookered as the town’s residents, but at least it can attract some travelers off I-95.
Back when tax increment financing was put to voters in 2004, I wrote that taking power away from the people to approve borrowing was a bad idea and that the financing scheme would open the door for bad decisions by local governments.
Supporters, including the N.C. League of Municipalities and the North Carolina Chamber, took issue with that criticism, saying property taxes wouldn’t rise.
Really?
Tell it to the folks in Roanoke Rapids.
Earlier this year, state legislators considered a bill that would have allowed the town to impose a special one-cent sales tax to pay off the debt, an attempt to avoid property tax hikes.
The idea eventually was dropped, but so much for the “self-financing bonds” tag that supporters invented to dupe voters seven years ago.
What legislators should do is try to prevent future harm to other local taxpayers the next time a snake oil salesman comes peddling a tax increment financing project to some other town desperate for jobs and economic development.
The Republicans who now control the legislature tried to undo plenty of longstanding public policy this past year.
It’s too bad they didn’t start in a place that has caused some conspicuous harm.
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