Annexation and Taxation without Representation

The proposed committee substitute for House Bill 524 (a combination of house bills 524, 645, and 727) is a really bad plan.

If this bill becomes law, cities and towns would be able to annex, with the approval of the Local Government Commission, and collect taxes for three years, but ultimately never provide services.

The LGC is a government board that deals with local governments' financial issues. Board members include the State Treasurer, Secretary of the Department of Revenue, Secretary of State, State Auditor, and a handful of appointed lawyers and former city officials.

Legislators in committee described LGC oversight as “meaningful” and emphasized its power to deny annexation proposals that are not financially feasible. The bill does give the LGC that power, but in reality it is unlikely that the LGC will use it wisely. If you take a good look at the board members, it’s pretty obvious that they won’t be paying much attention to the interests of the annexees.

LGC oversight will probably be a rubber stamp that allows cities and towns to collect property taxes from people they never intend to provide services. The bill extends the window for the provision of services from two to three years. If after three years no services have been provided, cities and towns must stop charging taxes.

In short, this bill allows local governments to use involuntary annexation as a way to fill temporary budget holes. It gives them the power (with rubber stamp approval) to levy taxes on people who will never really be part of the city or town and will never receive any services.

NC needs annexation reform, but this bill is not the answer.