Bad news for them; good news for NC?
From story in Sunday's New York Times:
But other states, especially those where housing prices soared in recent years, are also seeing their collections slow, especially in the sales and real estate transfer tax categories. While the economy remains generally strong and it is too early to predict whether the housing slump will have long-term effects, some states will have to adjust their wish lists.For example, New Jersey could face a $2.5 billion shortfall by mid-2008, Gov. Jon S. Corzine has said, and may lease its turnpike or its lottery to a private company to raise money. In California, where income tax receipts in January were $1 billion less than forecast, a nonpartisan legislative analyst has urged budget cuts and warned that the state could have about $2 billion less in revenue this year and next than Gov. Arnold Schwarzenegger has projected.
This will be relevant right here in River City North Carolina for a couple reasons.
First off, we're not immune to the effects of this sort of thing. Charlotte, Raleigh and even Greensboro are pretty fast growing areas. Should that growth slow, so would the flow of tax dollars that has made budgeting down on Jones Street a little bit more pleasant than in the first part of the decade.
Secondly, there's an interesting sort of irony here. The real estate transfer tax is one of the sources of revenues hit by this housing slow down yet it figures to be one of the big issues in the General Assembly this year. Lawmakers are looking at the transfer tax as a potential source of income for a bunch of things, foremost among them as a way to repay bonds for things like school construction and land preservation.
So if the housing market is slowing and transfer tax collections along with it, why is it an attractive option here in NC? The Times story gives us a hint:
Census data show that fewer people than usual moved into Florida last year. And an abrupt halt in the growth of public school enrollment this year suggests that families are leaving. Despite dropping prices, communities like Naples, Miami and Sarasota still have some of the most overvalued real estate in the nation, according to Global Insight, a research firm in Waltham, Mass.“People are packing up the equity and moving to North Carolina and Tennessee,” Mr. Snaith said.
If we're still among the states that are attracting people and growing, the transfer tax gives lawmakers a way to tap that growth right as these folks slide in the door. Other state's losses are literally our gains. Of course, one wonders how long it will be before the national trend catches up with us here.