March 18, 2015

County, town officials anxiously await
word on sales tax redistribution


There's plenty of angst to go around these days as Dare County and local municipal officials start to work on their budgets for the next fiscal year even as they keep an eye on what the General Assembly might decide to do with a proposed redistribution of local sales tax money.

The potential impact to Dare County could mean a $10.8 million loss in revenues needed to support the county's budget – about 10 cents in tax-rate talk. 

The towns also would feel the impact. Chris Layton, Duck town manager, said that very preliminary estimates show a potential loss to that town of $250,000 to $300,000 – the equivalent of about 2 cents in tax rate.

The county has hired lobbyists to work on this and other state issues. Officials from the local governments have huddled. And local elected officials are spending a lot of time on the phone or on the road in attempts to convince legislators that this isn't a good idea.

In a Robin Hood "take-from-the-rich-and-give-to-the-poor" move, Republican N.C. Sen. Harry Brown told the News & Observer of Raleigh that he will file legislation that changes how the state distributes a portion of those taxes to local governments.

Early rumblings about the plan indicate that the formula used would favor poorer, rural counties by cutting the amounts given to wealthier counties, such as Dare, which collects a high portion of sales tax because of its tourism-based economy. 

According to the News & Observer, Brown “provided a document authored by legislative staff that details a system that distributes the money based on population. The document says its 'parameters' were set by the office of Senate leader Phil Berger.”

The Island Free Press' requests for the document, which is a public record,  have not been answered.

According to the News & Observer, the plan document shows that high-poverty rural counties, such as Greene, Caswell and Jones, would see their sales tax revenues more than double.

Currently, 75 percent of the local sales tax money goes where the tax is collected and the remainder is shared based on population. That remainder is also "adjusted," based on a formula used to extrapolate population. 

The rate used for Dare County – which benefits most from the adjustment formula -  increases its portion by almost half while other counties have rates that reduce the amount that they otherwise would receive.

Although Dare County has a year-round population of about 35,000, its seasonal population climbs to about a quarter of a million each week during the tourist season. That increased population brings with it needs for increases services, such as law enforcement, Emergency Medical Services, and public works. It is unknown whether that is adjusted in the formula.

Click here to see the current adjustment factor table for North Carolina counties.

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