County Special Taxing Districts Kara A. Millonzi Associate Professor of Public Law and Government UNC Chapel Hill School of Government Summer 2016

Can you legally commit certain property tax proceeds to specific expenditures?

1.Disaggregate general property tax levy 2.Hold voter referendum on general property tax levy for particular purpose(s) 3.County service districts 4.Rural Fire Protection Districts 5.Voted Supplemental School Taxes 6.County water and sewer districts G.S. 153A-149 G.S. 153A, Art. 16 G.S. 69, Art. 3A G.S. 115C, Art. 36 G.S. 162A, Art. 6

DISAGGREGATE GENERAL PROPERTY TAX RATE

RateDescriptionAmount County General$3, Libraries$ Parks Bond$ Fire$ Public Schools$ TOTAL $

RateDescriptionAmount.5210County General$3, Libraries$ Parks Bond$ Fire$ Public Schools$ TOTAL $

RateDescriptionAmountBudget Expenditures.5210Orange General$ $ Libraries$287.94$ Parks Bond$ Fire$317.09$ Public Schools$989.93$ TOTAL $

VOTER REFERENDUM ON TAX LEVY

CourtsDebt ServiceDeficits ElectionsJailsSchools Social Services I. No Tax Limit Most, but not all, other authorized county functions II. $1.50 / $100 Valuation Limit Raise maximum tax rate for Category II functions Add function to Category I (no tax limit) Authorize county board to levy up to maximum rate (or up to maximum amount) for Category II function Authorize county board to levy up to maximum rate (or up to maximum amount) for purpose not listed in Category I or II (but county has to be otherwise authorized to undertake the purpose) III. Voter Referendums Does not count against $1.50 limit

RateDescriptionAmount.5210Orange General$ Libraries$ Parks Bond$ Fire$ Public Schools$ TOTAL $ Shall Carolina County be authorized to levy annually a property tax at a rate not in excess of.15 cents on the one hundred dollars ($100.00) value of property subject to taxation for the purpose of funding Library Services?

SPECIAL TAXING DISTRICTS

“Think of a special district like a cult. It can take your money and you may not even be aware you’re in one.” --John Oliver, March 6, 2016

“No class of property shall be taxed except by uniform rule, and every classification shall be made by general law uniformly applicable in every county, city and town, and other unit of local government.” NC Const. Art. V, Sect. 2(2) “[T]he General Assembly may enact general laws authorizing the governing body of any county, city, or town to define territorial areas and to levy taxes within those areas, in addition to those levied throughout the county, city, or town, in order to finance, provide, or maintain services, facilities, and functions in addition to or to a greater extent than those financed, provided, or maintained for the entire county, city, or town.” NC Const. Art. V, Section 2(4)

County Service District (CSD) Beach erosion control Fire protection Recreation Sewage collection and disposal systems (including septic systems) Solid waste collection and disposal systems Water supply and distribution systems Ambulance and rescue Watershed improvement / drainage projects Cemeteries General Law Purposes

All Municipalities Beach erosion control Fire protection Recreation Sewage collection and disposal systems (including septic systems) Solid waste collection and disposal systems Water supply and distribution systems Ambulance and rescue Watershed improvement projects Cemeteries All Counties Beach erosion control Downtown revitalization Urban-area revitalization Transit oriented development Drainage projects Sewage collection and disposal systems (including septic systems) Off-street parking facilities Watershed improvement projects

Board Findings Notice Public Hearing Board Adopts Resolution District Effective on July 1 Board sets district tax rate Services / Projects Within 1 Year

Board Findings Notice Public Hearin g Board Adopts Resolution District Effective on July 1 Board sets district tax rate Services / Projects Within 1 Year 1.Determine Need, Demand, Feasibility “to a demonstrably greater extent” 2.Define Area 3.Make Plan

County Findings G.S. 153A-302 (a) Standards. – In determining whether to establish a proposed service district, the board of commissioners shall consider all of the following: (1) The resident or seasonal population and population density of the proposed district. (2) The appraised value of property subject to taxation in the proposed district. (3) The present tax rates of the county and any cities or special districts in which the district or any portion thereof is located. (4) The ability of the proposed district to sustain the additional taxes necessary to provide the services planned for the district. (5) If it is proposed to furnish water, sewer, or solid waste collection services in the district, the probable net revenues of the projects to be financed and the extent to which the services will be self-supporting. (6) Any other matters that the commissioners believe to have a bearing on whether the district should be established. (a1) Findings. – The board of commissioners may establish a service district if, upon the information and evidence it receives, the board finds that all of the following apply: (1) There is a demonstrable need for providing in the district one or more of the services listed in G.S. 153A-301. (2) It is impossible or impracticable to provide those services on a countywide basis. (3) It is economically feasible to provide the proposed services in the district without unreasonable or burdensome annual tax levies. (4) There is a demonstrable demand for the proposed services by persons residing in the district.

Board Findings Notice Public Hearing Board Adopts Resolution District Effective on July 1 Board sets district tax rate Services / Projects Within 1 Year  Published once, at least 1 week before public hearing  Mailed to each affected property owner, at least 4 weeks before public hearing

Board Findings Notice Public Hearing Board Adopts Resolution District Effective on July 1 Board sets district tax rate Services / Projects Within 1 Year  Cannot exempt property that is within district, or set a different tax rate for different types of properties  But can “gerrymander”

Board Findings Notice Public Hearing Board Adopts Resolution District Effective on July 1 Board sets district tax rate (optional) Services / Projects Within 1 Year  Must be set in annual budget ordinance  Rate, when combined with other county property tax rates, may not exceed $1.50  County board may restrict maximum rate to $0.15 / $100 valuation for fire and ambulance/rescue districts

Board Findings Notice Public Hearing Board Adopts Resolution District Effective on July 1 Board sets district tax rate Services / Projects Within 1 Year  County staff  Contract(s) with other governments or private entities

Expanding Existing CSD Area contiguous and needs services or 100% petition Findings Notice Public hearing Effective July 1 Reducing Existing CSD For water and sewer districts only Property owner petition Council finds that no longer need to include parcel or tract No outstanding bonds Notice Public hearing Effective June 30 Automatic reduction when annexation of some properties in district Consolidation of Existing CSDs Districts contiguous & same services/level of services Findings Notice Public hearing Effective July 1 Changing Boundaries of CSDs If districts adjoining and created for same purpose Either property owner petition or at discretion of county board Findings Notice Public Hearing Effective July 1 Abolishing CSD Council finds that no longer need to provide additional services / projects in district No outstanding bonds or notes Notice Public hearing Effective June 30 Automatic abolition when annexation of all properties in district

Rural Fire Districts Special taxing district for fire/rescue services Requires petition and vote to create/abolish Requires detailed process to modify Max tax rate either $0.10 or $0.15 –Sets tax rate –Contracts for services with one or more fire departments –May set zero tax rate and overlay one or more service districts County Board

Fire Tax District Fire Dept. A Fire Dept. B Fire Dept. C Tax districts vs. Insurance Districts/Response Areas

VOTED SUPPLEMENTAL SCHOOL TAX = SCHOOL BOARD TAX ADMINISTERED BY COUNTY

Step 1 School board sends petition to county requesting referendum on supplemental school tax (maximum rate of either $.50 or $.60 per $100 valuation) Step 2 County holds referendum (must include maximum tax rate and purposes specified by school board in petition) Step 3 If referendum successful, school board requests supplemental tax rate with budget request each year, up to maximum rate approved by voters Step 4 County board decides whether or not to levy supplemental tax each year, and at what rate, up to maximum requested by school board Step 5 County segregates proceeds from supplemental tax and distributes proceeds collected on a monthly basis to school administrative Step 6 Tax proceeds must supplement county and state appropriations and must be spent for purpose(s) approved by voters

Tax proceeds “to supplement the funds from State and county allotments and thereby operate schools of a higher standard by supplementing any item of expenditure in the school budget….” County board must hold referendum if requested by school board County board has no direct control over expenditure of supplemental tax proceeds

COUNTY WATER & SEWER DISTRICTS

Created by county commissioners Similar criteria and process as CSDs Separate legal entity, governed by county commissioners Taxing, bond issuing, contracting, eminent domain, rate setting, special assessment authority