July 17, 2015

Commissioners lobby in Raleigh
against sales tax redistribution plan

Three members of the Dare County Board of Commissioners traveled to Raleigh on Wednesday, July 15, to express concerns about the Senate’s budget proposal, which -- over the next five years in a sales tax redistribution plan-- would take tens of millions of dollars from Dare County and its six towns and send it to less prosperous areas of North Carolina.

While in Raleigh, Chairman Bob Woodard, Vice-Chairman Wally Overman and Commissioner Warren Judge met with six legislators and described the "devastating impact the proposed cuts would have on the county’s ability to provide services in the future," according to a Dare County news release issued today.

The push for changes to how the state distributes sales tax to the counties is coming from the Senate, where the idea was first introduced last winter in Senate Bill 369. Last month, the Senate seized upon House Bill 117, and added major portions of the redistribution plan to it.

Next, the Senate included sales tax redistribution in its version of the state budget. The plan is not in either the House or Governor's budget. Currently, the two chambers of the General Assembly are negotiating the final budget language.

The legislation proposes to shift the sales tax distribution over a period of four years to 80 percent based on population and 20 percent on point-of-sale.  Proponents of the bill say that the redistribution will help poor, rural counties by redistributing the wealth brought in by the more prosperous urban counties.

The switch will be especially painful for Dare County with its relatively small year-round population, compared to its very high population in the tourist season.

Because of its high summer visitor population, Dare's sales tax revenues, based on the current 75 percent on point-of-sale, are among the highest in the state. However, its permanent population is only about 35,000, so it stands to lose more revenues than any county in the state.

Financial impact charts presented to the Senate Finance Committee estimate that after the end of four years when the program is fully implemented, Dare County would lose just 7 percent of the estimated $20 million that it now collects. That equates to a $1.4 million loss. According to the same set of committee charts,  local municipalities would lose 44 to 46 percent of the sales tax revenues they now collect.

But those figures aren't correct, according to Dare County Finance Director Dave Clawson. The Senate projections are based on passage of an optional half-cent sales tax that could be implemented with a local referendum and increased sales tax revenues. The increased tax revenues would be achieved by expanding the sales tax base by adding tax on maintenance and repair of tangible personal property, such as vehicles, and to veterinary and pet services.

According to Clawson, county property tax increases to replace the funds that are used to support the county's budget would range from a 1.77-cent increase the first year to more than 7 cents at the end of four years because of the loss of $9.3 million. Local towns would have to raise property taxes from 3 to 5.5 cents to make up for the loss.

Click here to see the Senate Finance Committee's estimate of the impact of HB 117 on Dare County.

Click here to see Dare County Finance Director Dave Clawson's estimate of the impact of HB 117 on the county and its municipalities.

Sales taxes paid by Dare County’s citizens and visitors are currently used by the county and towns to provide essential services such as law enforcement, fire protection, and emergency medical services to serve the population that swells to over 300,000 each week during the summer season.

In addition to providing expanded services to meet the needs of the many visitors, Dare County already contributes significantly to other counties and towns in North Carolina. Over the last 10 years Dare County has contributed more than $80 million to the state. 

“The Senate’s plan would punish the citizens and property owners of Dare County and those in other counties who already give to the state more than they receive,” said Chairman Woodard. “As one of America’s top tourism destinations, the County has been able to attract millions of out-of-state visitors each year and North Carolina already benefits substantially from the dollars these visitors bring.”

As the Senate’s tax plan is negotiated with the House in coming weeks, Dare County Commissioners will travel to Raleigh weekly to lobby against the proposal.

Chairman Woodard explained the importance of going to Raleigh to meet with legislators by saying, “Financial analysts have told us that many North Carolina counties will be forced to raise property taxes if the redistribution plan is enacted. That is why it is important for us to voice our concerns now, to help avert this significant financial blow.”

Bill Cook, who represents Dare County in the Senate, voted for the Senate budget, but says he will work to get the sales tax redistribution plan removed during negotiations with the house.  In the House, Paul Tine, who represents Dare, opposes the plan.

In its news release, Dare County urges all citizens and those who own vacation or retirement property in Dare County to call or e-mail state legislators to encourage them to take a stand against the proposed sales tax redistribution plan. Contact information is available at www.ncleg.net.


Click here to see the Senate Finance Committee's estimate of the impact of HB 117 on Dare County.

Click here to see Dare County Finance Director Dave Clawson's estimate of the impact of HB 117 on the county and its municipalities.


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