An effort at compromise on a proposed sales tax revenue distribution in the state legislature would still have a multi-million impact on the New Hanover County budget and cost Wrightsville Beach an estimated $123,000 in revenue, county officials told Lumina News Friday, Aug. 7.
Under the new proposal spearheaded by Senate Majority Leader Harry Brown, R-Onslow, sales tax revenue would be split 50/50 between the county where it is collected and by population. That formula, a departure from the current 75/25 split, would still shift more money from urban areas and tourist destinations to rural counties, however, the change isn’t as stark as Brown’s prior proposal that would allow only 20 percent of sales tax revenue to remain at the point-of-sale.
New Hanover County Manager Chris Coudriet said county finance officials estimated the impact to be $24 million to the county budget.
“Instead of breaking two legs, it’s only breaking one leg. We would still have broken bones,” Coudriet said. “That’s money needed for infrastructure in Wilmington. It’s needed for lifeguards in Wrightsville Beach. It’s not a good deal for the taxpayers in New Hanover County.”
Notably, the new Senate plan, unveiled on Aug. 6, takes the sales tax proposal out of the state’s budget plan, which has been stalled in negotiations for several weeks. Gov. Pat McCrory has pledged to veto Brown’s earlier proposal, which would have distributed 80 percent of sales tax revenue based on population.
McCrory’s office hasn’t released a public statement on the new proposal.
But Wrightsville Beach Town Manager Tim Owens said the proposal’s estimated hit of $123,000 was still “a lot of money” compared to the town’s $10.5 million budget.
“That’s potentially two, maybe two-and-a-half employees,” he said.
Coudriet said the impact would be about 10 percent of the town’s overall sales tax collection, as about $1.28 million in sales tax is revenue is collected in Wrightsville Beach. Coudriet cited statistics from the North Carolina General Assembly’s Fiscal Research Division.
Overall, of the 7 percent sales tax collected in New Hanover County, 2 percent is allocated to be split between the point-of-sale and distribution back to other counties based on population. Another 4.75 percent is sent back to the state, while the county collects an additional 0.25 percent that isn’t part of the state’s sales tax system.
Coudriet said that while poorer North Carolina counties need help, he didn’t believe the argument that these counties couldn’t raise their property tax any further than they had. Even though those counties’ property taxes may be higher than in New Hanover County, the difference in property value mean that county taxpayers bear a higher burden.
“Instead of focusing just on the tax rate, the tax burden should be factored in,” Coudriet said.
While New Hanover County is considered one of the wealthier counties in the state, it’s not reflected in wages, which trail the state average by 14 percent, he said.
Reflecting similar comments made recently by state Sen. Michael Lee, R-New Hanover, Coudriet said counties that would receive additional sales tax revenue should provide details on how they would be distributed.
“What are they going to do with that money?” he asked. “How will that change the trajectory of these communities?”