The state Senate’s plan to change how sales tax revenues are distributed is an assault on cities and counties that raise the lion’s share of sales tax; wealth redistribution; and most of all, an ill-thought-out proposal that would hurt residents of New Hanover and Brunswick counties, local elected officials and business representatives said during a Tuesday, Aug.11 press conference.
“I know our local delegation gets it, but those beyond have to get it as well,” said Jonathan Barfield, chairman of the New Hanover County Commissioners.
The Senate gave final approval to the plan Tuesday, and it now moves to the state’s House of Representatives. State Sen. Michael Lee, R-New Hanover, was one of three Republicans voting against the proposal. Sen. Bill Rabon, R-Brunswick, supported the plan despite the projected impact on Brunswick County and many of its towns.
Under the 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 county 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 original proposal that allowed only 20 percent of sales tax revenue to remain at the point-of-sale.
New Hanover County would lose about $6 million per year — roughly 2 cents on the property tax rate, Barfield said. Changing the formula to send more money collected here to rural areas could result in higher property taxes or severe cuts in service, he said.
“To add that burden on our citizens would just be unbearable,” he said.
Wilmington Mayor Bill Saffo said the plan would take about $22.4 million from city coffers during the next four years. While that is a slight improvement over the $29.6 million from an earlier version, he echoed Barfield’s concerns about higher taxes or reduced services.
Saffo said he read a story quoting a rural county official who said the additional few hundred thousand his county would gain would be used to lower property taxes. In effect, Saffo said, the plan would allow rural counties to decrease their property tax rates at the expense of other taxpayers.
Part of the sales tax already is shared with the state and with other counties based on population, Saffo said.
“We are the only state in the nation that distributes local-option sales taxes on a per-capita basis,” he said.
Tuesday’s joint news conference was part of an organized effort to combat the changes that are heavily favored by state senators from rural counties. The group calls itself the Alliance for a Prosperous North Carolina and has dozens of members, including cities and towns, urban counties, chambers of commerce and private businesses that oppose the redistribution plan.
Thus far, New Hanover County’s three beach towns have not joined the alliance, but the Wrightsville Beach and Pleasure Island chambers of commerce were represented, along with the Wilmington chamber.
Wrightsville Beach officials have said their town would lose $123,000 a year — about 10 percent of the town’s annual sales-tax collections.
“To redistribute wealth based on our current legislative goal of improving business activity and state activity seems to lack thorough research … and we look to Governor McCrory to honor his pledge to veto it,” said Sue Bulluck, representing the Wrightsville Beach Chamber of Commerce.
New Hanover County Commissioner Rob Zapple said he might be able to get behind a proposal that helped rural counties without penalizing communities like Wilmington and New Hanover County.
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