UPDATE: Latest sales tax plan passes Senate

August 11, 2015 | Local News | By: Irene Nolan

The North Carolina Senate today passed House Bill 117, the “N.C. Competes” economic development legislation that includes a scaled back plan to redistribute sales tax revenue.

The plan, even in its scaled back version, would take more than $4 million in revenue from Dare County and has motivated local officials to mount a fierce campaign to stop it.

The vote was 34-12. Sen. Bill Cook, who represents Dare County, was not present for today’s vote. He had an “excused absence.”

The House crafted version of the bill, which passed back in March, did not include the sales tax redistribution plan.

That plan was first introduced in March in the Senate as a stand-alone bill, Senate Bill 369, which never got out of committee. The Senate then wrote the plan into its version of the state budget for the next fiscal year, but that met resistance from the House and Gov. Pat McCrory.

The Senate then wrote the sales tax plan into the N.C. Competes legislation, which has been sought and promoted by McCrory.

Today’s action sends the bill back to the House for its concurrence. If the House does not concur with the Senate changes, the bill will go to a conference committee to hammer out a compromise acceptable to both chambers.

Local officials are urging Dare residents and property owners to write to all members of the House asking them to oppose the bill.

To make the process easier, Dare County has created a group e-mail that will distribute correspondence to all 118 House members. It is nchouse@darenc.com.

The latest Senate version of the plan, which passed today, splits the distribution of sales tax revenue with half based on point-of-sale and the other half on population. If made into law, the redistribution would go into effect in the fiscal year beginning July 1, 2016.

The 50-50 scenario would reduce sales tax coming back to Dare County and local municipalities by 24 percent. For that county that amount equals about $4.6 million.

Current law sends 75 percent of the revenue back to local governments where a product or service is sold and 25 percent distributed around the state according to population.

The first version of the sales tax redistribution, in SB 369 and the Senate budget, would have just about flipped the current law’s formula — 80 percent would be distributed around the state with only 20 percent to Dare and its municipalities.

Dare County has an advantage under the current law because its tourism industry draws big dollars in sales taxes relative to its small population.

Local officials have said that if the sales tax plan is changed, the county and its cities will be forced to cut services or raise property taxes — or both.