Local governments – municipalities and counties – are limited in the number of ways they can raise money to meet their needs. Mainly, money comes from fees and taxes.

So it is that when some of the money sources dry up or are taken away, pressure is exerted on the remaining revenue sources to make up the difference. The other immediate option is to reduce services and infrastructure projects.

Hickory and Catawba County will see property tax increases for the budget year that begins July 1. One reason is a deterioration of the tax base. Businesses have depreciation at their disposal. Residential property has decreased in value because real estate generally sells for less these days, and rating property for taxation is tied to prevalent open-market sales figures.

A house that would have sold for $200,000 10 years ago may not be worth that now, even though the traditional market assumes real estate values routinely increase if the property is well-maintained or improved.

The effects of the recession are still evident. Hickory has attracted new businesses and many older properties have been revitalized. However, the net gain has not made up for all that was lost.

In recent years, the General Assembly has altered or dropped some of local government’s revenue sources such as the inventory tax and privilege licenses.

These elements put a strain on local governments trying to raise the level of services and development of amenities to make business and residential acquisition more attractive.

Hickory, for example, will raise the ad valorem tax rate by 6.65 cents, bringing the total rate to 56.65 cents per $100 property valuation. The added cost to individual taxpayers will not be as great as it would have been because property assessments went down.

Assessments are virtually locked in for four years – until the next revaluation. Unless the real estate market spirals upward, there is a good chance that a lot of property will be rated less after the next revaluation. Thus, the homeowners’ tax bills could decrease slightly if the tax rate remains the same.

It’s anyone’s guess if the prospect of a tax increase would have affected the outcome of Hickory’s referendum on two bond issues. We think the bond issues are good ideas, but the tax factor does affect the decision-making of many – if not most – people.

If the bonds are a catalyst for more growth and the tax base grows, the pressure on revenue through taxation could ease.

In the meantime, there will be complaints about taxes going up and a degree of regretful hindsight about the bonds. We think Hickory’s plans for the bonds will pay off, and we note that other municipalities will likely raise property taxes.

Still, nobody likes tax increases, and every local government will have to demonstrate that taxpayers really are getting a big bang for their buck.

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