UPDATED: Dare County is the big loser in
bill that would shift sales tax revenue
By SANDY SEMANS
officers for the county and town governments in Dare County have been
scrambling to try to determine just how hard local budgets will be hit
if Senate Bill 369, sponsored by Senate Majority Leader Harry Brown, an
Onslow County Republican, and filed on Monday, becomes law.
bill proposes a three-year phase-in to a per capita sales tax system
distribution to replace the current formula, which portions out the
sales tax based 75 percent on point of sale and 25 percent based on
The new plan would increase – in some cases
double – the amount that some poorer, rural counties would receive,
while reducing revenues flowing to more prosperous areas.
said at a news conference on Monday that the rural counties are being
shortchanged by a system that gives sales taxes to urban centers with
shopping malls and big-box stores.
Of all the counties that
would see decreased revenues, Dare County would take the largest hit –
a 59.2 percent reduction in sales tax revenues.
Dare County Finance Director David Clawson, projections using
countywide sales tax revenues from the last fiscal year ending June 30,
2014, the potential lost sales tax revenues for the county and the
towns will total approximately $16.7 million.
The loss to the
county’s budget equals about $11.5 million. That loss could translate
into a property tax increase of about 9 cents. A document supplied by
Brown’s office showed a tax increase of 8 percent, but that was the
countywide amount and not the portion that is used by Dare County
In addition, incorporated towns would lose sales
taxes used to bolster the budgets of those towns -- anywhere from 6.63
percent in Manteo to 7.6 percent in Nags Head. The towns would have to
raise property taxes from 3 cents in Duck to almost 5 cents in Nags
Head and Kill Devil Hills.
Those increases would be on top of
the countywide increase of 9 cents. So the total property tax increases
in the towns would range from about 12 cents in Duck to more than 14
cents in Manteo.
Click here to see a chart on the estimated impact of the redistribution plan by county and towns.
the news conference before the bill was filed, Brown repeatedly made
reference to “adjustment factors” created in the late 1980s and
insinuated that Dare County was receiving preferential treatment in the
amount of sales tax revenue that it receives.
He asserted that
“the home county of a former powerful Senate leader receives 49 percent
more revenue than if it were strictly on a per capita basis, while
Columbus County receives 19 percent less.” He was apparently referring
to former Senate President Pro Tem Marc Basnight of Manteo.
failed to mention that the adjustment to the per capita portion of
sales tax that Dare County receives is applied only to the 25 percent
of the amount based on population. The remaining 75 percent from point
of sales is not adjusted. The amount lost attributed to the removal of
the adjustment is about $700,000 – just 6 percent of the total loss.
of the state’s richest counties that receive a disproportionate share
of sales tax revenue – Mecklenburg, Wake and Durham – were awarded over
85 percent of state JDIG incentive funds last year and receive more
dollars under the new transportation funding plan – programs paid for
by all taxpayers,” notes his press release. Dare County
receives no JDIG funds and very little in the new transportation
Brown’s chart shows that the losses to
those counties with the new formula would translate into only 1 or 2
cent tax increases due to the larger populations of those areas.
of its strong seasonal tourism economy, Dare County has large sales tax
revenues, although its 35,000 population is relatively small. The
tourism economy also brings with it summer populations of up to a
quarter of a million people a week. The current formula was intended to
compensate Dare -- and other coastal counties -- for services and
infrastructure needed during the tourist season.
Click here to see a county-by-county breakdown of the legislation's impact.