There has been a great deal of interest in the distribution of local sales tax revenue in North Carolina in the past few years. I will admit that as a scholar of local sales tax policy and effects, it has been an interesting time to be in the state (and made me much more popular!). Not surprisingly, I have been having a lot of conversations with people across the state about SB 126, so I thought I would put some of my thoughts down on proverbial paper.
In the 1990s there was a wave of euphoria about cost accounting and particularly Activity Based Costing (ABC). One book in particular stands out in my mind as particularly euphoric: Common Cents: The ABC Performance Breakthrough by Stephen Turney. While it had a clever title, few people remember this book now, but many people remember ABC. Many finance and budget managers do not recall ABC with fondness. In fact, when government budget and finance managers are asked about the use of ABC in their organizations now, most will say that they are not using it. However, when asked if they are doing some form of cost accounting, the measure is much higher. In this post, I explore why budget and finance managers are willing to say that they are doing cost accounting and not ABC. I further explore (and mix) the metaphor of common sense/cents about cost accounting by thinking of its uses as two sides of the same coin.
Yup, you guessed it, today’s blog post is on revenue forecasting! My current blog series is about some of the non-legal finance issues that are out there and revenue forecasting, while required by law, is a really important one! There are many people that are involved with revenue forecasting in local governments. While many outside of government may just assume that there is some accountant or budget wonk sitting in a back room who is somehow magically able (or has some very scientific formula) to predict how much money is going to be coming in next year, we know better.
There is always room on the wall for a new shiny credential and on your resume for that matter.
The mission of the North Carolina Local Government Budget Association (NCLGBA) is to promote the budgeting profession through education, networking, and advocacy. As a strategy to promote the educational component of this mission, the NCLGBA created a certification program in July 2008 for members of the association to become Certified Budget & Evaluation Officers. Individuals seeking to become a Certified Budget & Evaluation Officer must possess a certain level of professional experience, must take four courses, and must pass three exams. I am writing this blog to respond to some of the most common questions associated with the certification, with the goal of promoting the certification program among budget and evaluation professionals.
In a previous post, I mentioned objective and subjective data along with the NCDOR’s new reappraisal standards. That information will be helpful when reading this post. The new reappraisal standards have been in development for over two years and have involved committees with members from the NCDOR, UNC School of Government, and NCAAO. In August, the NCDOR emailed a draft of those standards to all assessors for review and comment. Some comments from local tax officials have been related to the need for additional staff in order to meet the new standards. Chapter 5 of Assessment Administration. Chicago, IL: IAAO, 2003 is a well written chapter detailing the management tasks needed for an assessment office to meet requirements and goals. This post focuses on how planning well includes an effective justification of the assessor’s need for staff and resources. Understand first that we all engage in planning almost every day. It’s either done formally or informally. So if we’re going to plan anyway, we should plan well and be exposed to the best practices. Regarding planning, Albert Einstein is rumored to have said, “If I had 20 days to solve a problem, I would take 19 days to define it.” Our objective in this post is really to turn staff and resource concerns into math problems, without requiring Albert Einstein’s help for the solution.
These new reappraisal standards, if followed, will alter your goals and plan objectives. For example, checking and updating property characteristics data at a designated level of accuracy is an example of a plan objective tied to the goal of meeting the NCDOR reappraisal standards. That objective requires specific activities. Activities require people and resources. We hope all local tax officials desire to do quality appraisal and reappraisal work for the public they serve. Our taxpayers deserve competency, fairness, and equity. No doubt, high standards are needed and the NCDOR should be applauded for issuing them. NCGS 105-273(10a) defines a local tax official as including a member of a county board of commissioners. And while all local tax officials most likely desire to do a good job and meet standards, raising standards undoubtedly can require more staff or other resources, which in turn requires adequate funding.
“[T]he budget becomes an expression of public policy in terms of the resources a government is willing to allocate for equitable property taxation. The budget is also a reflection of how much political support exists for accurate and equitable assessments. Legal and administrative responsibilities cannot be met if resources are inadequate.” Assessment Administration, 119.
It’s getting harder to fund city government in North Carolina.
On the one hand, that might seem hard to believe. People continue to flock to many cities and towns across the state. More than half of the state’s population lives in a municipality. One recent projection from American City Business Journals sees the Raleigh and Charlotte metropolitan areas alone adding nearly 3 million people in the next 25 years. Those newcomers who choose to live in city limits will join existing city residents in paying city property taxes, and join all those who shop in North Carolina in paying sales taxes that cities receive a share of. Continue reading
Tax Abatement, visual by Ruth Lerner
I’m here to help alleviate fears. In August 2015, the Governmental Accounting Standards Board (GASB) issued GASB Statement No. 77, Tax Abatement Disclosures. The guidance, which if it were applicable to North Carolina governments, would be effective for fiscal year end June 30, 2017. The requirements are relatively simple – if a government has any tax abatement agreements, as defined in the standard, there are certain note disclosure requirements that must be made regarding the agreement(s). A tax abatement in is defined in the standard as follows: Continue reading
It is comforting to know that as assessors and appraisers, we speak the same language. We had a great learning experience last week in IAAO 331, Mass Appraisal Practices and Procedures. Our instructor was David Cornell, CAE, MAI. David is from New Hampshire and brought fantastic discussions to our group of 23 North Carolinians. The discussions and examples we experienced can be used for improving appraisal equity and uniformity in individual jurisdictions throughout our state. One of the items that we discussed was a worthy repeat from other mass appraisal courses: The importance of data in the assessor’s office. Not only do we need to collect the right data for model specification, but we have to collect it accurately.
At the upcoming NCAAO Fall Conference, the NCDOR will be conducting sessions on their new reappraisal standards, to be published later this year. Continue reading
Registration is open for the School of Government’s Budgeting in Local Government course!
This is a great course that is designed for anyone who has responsibilities regarding local government budget preparation. It also counts towards the Local Government Finance Officers Certification Program and the North Carolina Budget & Evaluation Officer Certification Program.
I am always excited to teach in this course, but I am particularly excited this year because Bill Rivenbark and I are co-directing it (before I take the reins next year).
Some of the topics include: economic development, tax efficiency and equity, financial condition analysis, revenue forecasting, citizen engagement, budgeting for schools, budgeting for enterprises, and the revenue-neutral property tax rate.
I hope to see some of you there this November!
Here is the link to register: https://www.sog.unc.edu/courses/budgeting-local-government
Benjamin Frankin, (1706-1790) , North American printer, publisher, writer, scientist, inventor and statesman. Source: Wkipedia
Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.
Benjamin Franklin, in a letter to Jean-Baptiste Leroy, 1789