South By North Strategies, Ltd.

A new report from the North Carolina Budget and Tax Center analyzes the budget challenges facing the state’s rural communities.

Too often lost in annual budget debates is the fact that local governments are far from self-supporting. While local government taxes – particularly the property tax and local option sales taxes – constitute a significant share of revenues for governmental operations, local revenues account for just one-fifth of annual public school funding, on average, in North Carolina counties. In historically rural counties, local revenues averaged 19 percent of total 2010-2011 funding for public schools, compared to 22 percent in historically urban counties. Complicating this issue are various legal and economic constraints on local governments’ ability to raise revenue when costs are shifted to them from the state or federal level. If North Carolina lawmakers continue to pursue a fiscally unsustainable, cuts-only approach to state budgeting, the strain on local government budgets will effectively force negative outcomes such as job losses and reductions or eliminations of services and supports for individuals and families that will weaken economic recovery. The results of sustained and dramatic budget pressures on local governments have already manifested across North Carolina and beyond in the form of severe personnel and core service cutbacks in hundreds of jurisdictions.