By Sarah Nagem
Editor’s Note: An earlier version of this story incorrectly stated the amount of local funding for Richmond County Schools.
When the Scotland County Board of Commissioners approved a new budget last month, there was some welcome news: The county’s property tax rate finally dipped below $1.
But the new tax rate – 99 cents per $100 of a property’s value – is still the highest in the state.
Some Scotland County residents have long decried the county’s property tax rate, which at one point was $1.10. During the 2021-2022 fiscal year, neighboring Robeson County had a rate of 77 cents and Richmond County had a rate of 83 cents, according to the North Carolina Association of County Commissioners.
Scotland leaders say several factors have contributed to the county’s higher rate, including a lull in new construction, low property values, school funding and the thousands of acres of game land in the northern part of the county.
“It all sounds like complaining, and I don’t mean to do that,” said Whit Gibson, chairman of the commissioners. “We are not a rich county.”
The median sale price of a home in Scotland County is about $172,000, according to Realtor.com. With a tax rate of 99 cents per $100 of value, a new homeowner would pay about $1,703 in property taxes every year.
Guy McCook, a former Scotland County commissioner who owns Hasty Realty in Laurinburg, said it’s not fair to compare tax rates, particularly when it comes to rural vs. urban counties.
A 2,500-square-foot home in Wake County might be valued at $400,000, for example. With Wake’s property tax rate of nearly 62 cents, a homeowner would pay about $2,480 per year.
A similar home in rural Scotland County might have a value of $250,000. Scotland’s higher tax rate would mean a homeowner would pay roughly the same in property taxes as the homeowner in Wake County.
“As a commissioner, I spent a lot of time trying to educate people about that,” McCook said. “But our taxes, by comparison, are not that high.”
McCook said he hears longtime residents criticize the tax rate. But newcomers, he said, don’t seem to care as much.
“The people moving in – they don’t know what the tax rate means,” he said. “They want to know what they will pay in taxes.”
Gibson says he’s not aware of any industries that have opted against Scotland County due to the tax rate.
“They’re coming here because they like the people, they like the area,” Gibson said. “That tax rate doesn’t scare them one bit.”
The tax base
Property taxes are a major source of income for North Carolina counties, including Scotland. The larger the tax base, the more money is available to spend on services such as police, firefighters and schools, and amenities such as parks and community centers.
The county has a tax base of nearly $2.3 billion, according to the recently approved budget. The county expects this fiscal year to receive nearly $23 million in property tax revenue – accounting for nearly half of its $50 million overall budget.
Scotland County, home to about 35,000 people in southeastern North Carolina, has been slowly lowering its property tax rate over the past decade or so. An influx of residents and businesses would help boost the tax base, which could allow commissioners to lower the rate further, said Scotland County Manager Kevin Patterson.
Scotland saw a 211% increase in new business filings between the summers of 2020 and 2021, the Border Belt Independent previously reported. It was the largest jump during that time period among North Carolina’s 100 counties.
McCook said new homes are being built in the county after a years-long halt of the housing market. He said the last two years have been the best yet for Hasty Realty. So far this year, he said, the company’s revenue is up 17% from this time last year.
Low inventory in the county has led to multiple offers on homes for sale, McCook said, adding that the competition ultimately leads to higher property values. The median sale price of homes in Scotland County is up more than 24% from a year ago, according to Rocket Homes.
“Increased property values are what will allow the county to reduce the tax rate,” he said.
New construction will give an immediate boost, but the county will have to wait until 2027 to reap the benefits of higher values on existing properties. That’s when the next revaluation will take place.
More residents could also mean the county will have to spend more on schools, local roads, recreation and other services.
Patterson said the county was able to lower the property tax rate this year partly because it has already funded a few capital projects, including the community centers in Wagram and Laurel Hill. The county will use money from the federal American Rescue Plan to help convert an old school in Laurinburg to a community center.
The board did not want to consider lowering the tax rate further, Patterson said, because many economists predict the United States will soon experience a recession.
“We do believe there’s going to be a little bit of a recession, and we don’t know what that’s going to do with our tax proceeds,” Gibson said.
So how will Scotland County’s tax dollars be used in the coming year?
Commissioners allotted about $13.5 million for health and human services, $6.2 million for law enforcement, $4.3 million for emergency services and $2.1 million for recreation.
County employees will get a 4% cost-of-living raise, along with an increase of up to 1.25%.
The biggest expenditure is Scotland County Schools, with an allotment of about $13.9 million. (That includes about $3.6 million for debt service for schools.)
Gibson and Patterson said Scotland leaders take pride in adequately funding the public school system, which serves about 5,500 students.
Patterson said some residents who don’t have children in schools grumble about Scotland’s funding for the district.
“Here’s the thing I love telling people, and it really irritates them: We’re not funding education for your children. We’re not funding education for my child. We’re funding education so our community has access to it – so we can have entrepreneurs 15 years from now.”
Gibson said he hopes the county can continue to lower the property tax rate.
“We feel like we’ve managed our money fairly well,” he said.
Follow Sarah Nagem on Twitter: @sarah_nagem