Taxpayer Funded Advocacy: Government Spends Your Money to Get Your Money

Updated February 10, 2009

The latest blow came in Avery County, where in February 2008, voters once again defeated the land transfer tax despite the decision by local government authorities to hold a "special election" on the issue.  "Special elections" are sometimes held when local officials hope to depress turnout, since no other issues or candidates appear on the ballot - but they come at all the costs to taxpayers associated with any other election.

The rejection of the tax in Avery County allows proponents of the targeted tax to maintain their zero-for-zero losing streak on voter approval of the tax in nearly one-fourth of the counties in the state.  Shouldn't issue advocates be learning something from these repeated trouncings?  So why do they insist on continuing to spend your tax dollars to promote a tax that voters clearly don't want?

Thomas Jefferson once said, “To compel a man to subsidize with his taxes the propagation of ideas which he disbelieves and abhors is sinful and tyrannical.” By the standards of Mr. Jefferson, author of the Declaration of Independence, North Carolina is flirting with tyranny as governments across the state fund a new industry of political consultants trying to convince us to pay higher taxes – consultants paid for by you – the taxpayers.

Selling the message
As with most matters of public policy, private advocates on both sides of the issue are available and well-suited to give voters the information they need to make an informed decision about the land transfer tax. The problem is that local officials don’t like the outcome of the public’s consideration. In 24 out of 24 local referendums, voters resoundingly rejected the tax increase.

If elected leaders across the state have learned anything, it’s that taxpayers won’t willingly agree to a tax increase if they don’t believe that the targeted tax is necessary. The rejection of the tax is no less than a mandate, given the massive public resources that have already been poured into efforts to convince the public to vote for the tax. As the proposal to bypass voters moves through the General Assembly, we can therefore expect that pro-tax forces will up the ante, spending even more of your money to sell their case to lawmakers.

Three big players on your payroll
Local government leaders (and the state officials who support their point-of-view) turned to professionals to sell voters on the tax in local elections over the past two years – players who will likely benefit from your money as the campaign progresses.

Across the state, the godfathers of tax increase lobbyists are the heavyweights at the Partnership for North Carolina’s Future, a coalition which includes the League of Municipalities, the County Commissioners, the School Boards Association, Land for Tomorrow, and the Metropolitan Coalition, NC GO, and others. According to the Raleigh News & Observer, the Partnership spent over $400,000 in 2007 on advertising, polling and lobbying for the land transfer tax. One partnership member, the North Carolina Rural Center, was granted an eye-catching $120 million from the legislature during the 2007-08 budget year.

All of the members of the coalition have a financial stake in the success of local tax referendums, which seek to increase revenues for infrastructure needs through sales tax increases, land transfer taxes, or higher auto taxes.

Capstrat
Using a simple campaign message of “Let Voters Decide,” the Partnership, carefully quarterbacked by Capstrat, a Raleigh-based public relations firm, believed that by bypassing legislators who might cave in to counter-efforts by the powerful real estate and home builders lobbies, the land transfer tax would stand a greater chance of success. The coalition’s campaign included the fear-based message – that without the enactment of the proposed real estate transfer taxes, local governments would be forced to increase property taxes.

The end result of the campaign was success. Legislation was passed to allow the question to be placed on the ballot in future elections, making it more likely (or so the group hopes) to get money raised for all of the coalition’s objectives.

A frustrated Tim Kent of the NC Realtors Association said, “They [the local governments] are spending tax dollars so that they can get more tax dollars.” The Realtors teamed up with the NC Home Builders Association on a counter-campaign to “Stop the Home Tax.”

In the end, the two behemoth campaigns – one privately financed, and the other paid for by taxpayers – fought ferocious battles across the state, with 24 out of 24 county referendums on the land transfer tax failing to gain the approval of voters. While some counties responded by gearing up for new campaigns, most elected officials were forced to acknowledge that the tax is extraordinarily unpopular.

Gazella Communications
As noted by the Carolina Journal, in 2007, the NC Association of County Commissioners conducted a seminar by Kim Gazella, a former newspaper reporter who helped sell a $970 million bond issue in Wake County, on how county governments can use tax-paid resources to persuade voters to support ballot referendums in favor of land transfer taxes.

The seminar was held, at taxpayers’ expense, to teach local officials from across the state how to successfully persuade voters to approve the various initiatives that appeared on the November 2007 ballot. “Because most citizens aren’t too keen on new taxes, counties face a big challenge in educating them on why the options are so essential to their counties’ futures,” wrote the Carolina Journal.

At the seminar, Gazella suggested several avenues that counties might use to distribute “educational materials” about the referendum proposals to local citizens, including ‘piggy-backing’ the propaganda on to documents already being sent out by the local government, including citizen newsletters; property tax & utility bills; and paychecks & stubs for government employees.

Gazella acknowledged that there is a fine line between “educating” citizens and telling them how to vote, but explained that local governments have a “stewardship responsibility” to educate people about anything connected with the initiatives, as long as they avoid an outright plea for a yes vote. “That’s really the line you don’t want to be crossing when you’re doing a public education campaign,” she said.

Apparently, however, Gazella’s idea of “stewardship responsibility” only extends to giving voters one side of the story.

Ballen Media
Orange County Commissioners implemented voter “education” on a land transfer tax initiative with a $100,000 taxpayer-funded media campaign in 2008. According to the Daily Tar Heel, Ballen Media, a state approved minority contractor which also performs services for the Health and Wellness Trust Fund, was contracted to educate area voters about the benefits of a proposed land-transfer tax on the May 2008 ballot. Using a variety of tools, including direct mail as well as newspaper, radio, & television advertising, the goal of the campaign was to reach 60-percent of all voters at least four times each prior to election day.

Of course, this “voter education” didn’t inform citizens about other alternatives that might allow the county to get along without new taxes – like streamlining current operations or cutting out waste and abuse. “We're either going to use this money, or we're going to raise property taxes,” said Commissioner Alice Gordon, to nods of agreement from her colleagues. (DTH 4/9/08)

At a local meeting, commissioners also seemed intent on misleading voters into believing homes aren’t taxed under their real estate sales tax. “Commissioner Moses Carey was concerned that pictures of homes on [the proposed] informational ads would support the idea that the transfer tax is a ‘home tax’.” Another commissioner suggested the advertisements feature office buildings, which he believed would be more likely to avoid creating an “emotional attachment.”

What the law allows
There are some actions for which local authorities can use public resources legally to “educate” taxpayers on a proposed tax, but by law, they cannot use your money to advocate for the passage of a bond or tax referendum. The question, then, becomes this: What constitutes “education” as opposed to “advocacy”?

The North Carolina Court of Appeals spoke to this issue in Dollar v. Town of Cary. The case concerned a $200,000 “smart growth” multimedia advertising campaign by the town of Cary in which the growth issue was contested among candidates in a municipal election. The Court ruled that a lower court’s granting of an injunction against a town’s advertising drive was proper, stating that “[w]here the advertising, however, is designed to promote a viewpoint on an issue in order to influence an election, it is impermissible.”

The NC Court of Appeals in Dollar went on to say that the “determination of whether advertising is informational or promotional is a factual question, and factors such as the style, tenor, and timing of the publication should be considered.” The court added that “[i]t is not necessary for the advertisement to urge voters to vote “yes” or “no” or “for” or “against” a particular issue or candidate in order for the advertising to be promotional.”

There is also guidance on this issue from the University of North Carolina School Of Government, which provides educational, advisory, and research services for local governments. In response to a query from the Chatham County attorney, David Lawrence, a staff attorney at the School of Government, stated that it “may be” permissible to appoint a citizens group to advocate for the adoption of a transfer tax “as long as no public money or other resources support the group’s work”. But Lawrence specifically added that the county could not hire polling consultants or draft leading questions for polling purposes, nor could public employees work on the pro-tax campaign during regular work hours.

But Orange County Commissioners engaged in an effort to impact the vote anyway, commissioning Hertzog Research to perform a telephone survey and spending an additional $100,000 of taxpayer’s money on a pro-transfer tax campaign.

What happens next?
State law clearly allows for the use of public dollars to “educate” voters, but the term “educate” implies that voters will receive a balanced view of all sides of the issue. The current efforts of government to impact the vote on local taxes, however, is anything but balanced. While each publicly-financed campaign has different characteristics, all have been devoted to encouraging approval of the tax.

The land transfer tax was rejected in every county in which it was offered up for a vote, causing Senate Finance Committee chair David Hoyle to remark, “Babe Ruth would not be happy with this record - they all struck out.”  Now state lawmakers will consider whether to strike out the Capstrat mantra of “Let Voters Decide” by empowering local leaders to impose a tax that voters clearly don’t want. 

And once again, your tax dollars will be used to “educate” these lawmakers – but this time, only to convince them to bypass your vote entirely.