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Mooresville writer John Deem has a rock-anthem-inspired take this morning on the proposals in the General Assembly to shift sales tax revenues from urban to rural areas of the state:

Sales tax redistribution: Money for nothing and your trips for free

By John Deem

Nearly all of the debate over Republican legislators’ proposals for redistributing sales taxes has focused on fairness.

Is “point of sale” distribution unfair to rural counties whose residents spend money in urban areas but whose communities get none of the local sales tax collected on those purchases?

Is the notion of suddenly shifting millions of dollars in revenue unfair to the urban areas that must cut services, raise taxes, or both, to make up for unexpected shortfalls?

As is often the case when politicians create a solution then look for a problem, the local sales tax fairness doctrine misses the point completely.

Rural residents travel to urban areas to spend money because that’s where the businesses are. Those businesses are in urban areas because that’s where the people are. Lots of them.

It costs money to build and maintain roads, water and sewer systems, and other infrastructure to accommodate not just residents, but also the throngs of workers, shoppers, sports fans and others outsiders drawn to an urban area’s employers, stores and attractions. So does providing adequate levels of police, fire and emergency medical services not just for the local citizenry, but for the visitors taking advantage of everything the big city has to offer (and that their own communities do not).

Local governments in urban areas outspend rural communities on a per capita basis not because they can, but because they have no choice. Large populations create unique challenges that can’t be addressed through “equal” funding, which can be a puzzling concept for some elected officials who rest on the simplicity of ideology rather than the complexity of reality.

The fact is, residents of rural communities already get the best of both worlds. They have access to urban amenities, usually within a reasonable drive, but have to deal with few, if any, of the challenges urban communities must wrangle with every day. Meeting those urban challenges costs money – money rural communities don’t have to spend and, therefore, should not siphon from their big city neighbors.

That’s only fair.

NC Budget and Tax Center

Three counties get 56 percent of total incentive dollars

The money North Carolina spends on incentives to grow businesses and create jobs overwhelmingly favors the state’s most wealthy urban areas at the expense of the state’s most distressed—often rural—areas that need the most help, according to a report released yesterday by the Budget & Tax Center.

The state has five major incentive programs that were originally created to target business development resources to economically distressed and rural areas in the state. These programs are known as the OneNC Fund, the Job Development Investment Grant (JDIG), the Jobs Maintenance and Capital Fund, the Industrial Development Fund (IDF), and the IDF-Utility Fund. Unfortunately, the programs have not lived up to their promise and have invested more of these resources in the 20 wealthiest counties (designated Tier 3 counties by the Department of Commerce) than in the poorest 40 counties (designated Tier 1), the report finds.

Specifically, the report looks at the incentive awards made by these five programs from 2007 to 2013 and finds the following mismatches in investment:

North Carolina has awarded more than triple the amount of incentive dollars to projects in the wealthiest twenty counties than projects in the state’s 40 most distressed counties. If the state were truly targeting economic development resources to the regions that need it most, we would have spent more in the counties that are most distressed and need investment the most. Unfortunately, we see the opposite. The Department of Commerce has granted more than $840 million through its major incentive programs, and $592 million—more than 70 percent of the money—went to the state’s least distressed, Tier 3 counties.

The state‘s incentive projects promised to create or retain two jobs in the 20 wealthiest counties in the state for every one job promised to the 40 poorest counties. Given that the distressed Tier 1 counties are the most in need of jobs, effectively targeted incentive programs would attempt to deliver more jobs to these counties than to the wealthier Tier 3 counties. Yet the opposite is happening—the state has implemented incentive projects that promised to create almost 90,000 jobs in the state’s least distressed counties, more than double the 42,235 jobs promised to the most distressed Tier 1 counties.

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NC Budget and Tax Center

In the latest issue of Prosperity Watch, we take a look at the differences in poverty rates from county to county across the state, with special emphasis on comparing poverty in rural North Carolina and the state’s urban counties. For more details, see the latest issue of Prosperity Watch.