Sampson is one step closer to having a quarter-cent sales tax option on the November ballot with last week’s Senate approval of House Bill 1224, which offers an avenue toward revenue but calls for a sales tax cap and limits how revenues can be spent.
Republican supporters say the measure would give more options to most counties to generate local revenues. But opponents, particularly Democrats from Wake County, say it would harm counties that received previous authority from the General Assembly to generate more revenue than others — particularly to assist with broad public transit projects.
The bill caps the local sales tax that nearly all 100 counties in North Carolina can charge at 2.5 percent — a combined state and local rate of 7.25 percent. Most rural counties, including Sampson, would get broader flexibility to levy sales taxes, but the bill would reduce the authority for local sales taxes in Wake and three other urban counties, now set at 2.75 percent.
“The sales tax issue this board supported has come out of the Senate, and it is now before the House. It will not be finalized until the House acts on it … if all these things happen, it comes out of the House and the county wants to do this, then this will help us,” Sampson County Board of Commissioners chairman Jefferson Strickland said. “It’s if, if, if and it’s a year away, but it’s out of the Senate.”
Commissioner Billy Lockamy said he felt that with the sales tax bump, along with a tax increase, a pay, classification and benefit study in the works and some budget cuts, “I think we’re going to be all right.”
A local resolution seeking legislative approval for an additional quarter-cent local option sales tax, approved in a 3-2 vote, stated that empowering the county to levy the option would provide the additional revenues for critical needs, while “equitably spreading the tax burden” among the populous.
However, Paul Meyer, executive director of the North Carolina League of Municipalities, noted the league’s “grave concerns” about the legislation’s effects on future revenue options for all of local government and said it needed further study.
“Restrictive categories and caps on local option sales taxes would have the effect of overriding local decision-making authority and could damage the ability of local communities to work together to promote economic development in the most effective ways possible,” Meyer stated. “The legislation takes into consideration only one-half of the local government equation for economic development. The issues raised by this legislation are significant and will affect residents living inside and outside municipalities for years to come.”
According to the Sampson board resolution, the measure would serve to “broaden our revenue sources and reduce our dependence on ad valorem property taxes as the principal source of revenue.”
The county’s current tax rate stands at 7 cents. The referendum, if voted in, would take that to 7.25 percent.
“Though we have been accused of somehow limiting local government authority with this bill, in reality, it does the complete opposite,” Sen. Brent Jackson stated following the Senate’s passing of the bill. “HB 1224 simply expands an existing statute to allow for broader use of the funding generated by county sales taxes.”
Where funds generated under this statute previously could only be used for transit, the senator noted, this bill would allow them to also be used for education or transportation.
“By granting counties the authority to hold a referendum to levy a quarter-cent sales tax, the state is providing local governments with an additional tool to help meet their fiscal obligations,” Jackson said.
More than 90 counties are now at 6.75 percent or 7 percent. Senators overseeing the bill say the measure would give those counties more choices to offer voters if they want to approve new taxes — through either quarter-cent or half-cent increases, with proceeds going to education, public transportation or other purposes.
“This legislation is in line with conservative principles, as it gives local officials greater flexibility, but places final authority in the hands of the people, who must approve their leaders’ decision at the polls,” Jackson attested.
An additional quarter-cent sales tax would generate just over $900,000 a year for Sampson, equivalent to between 2 and 2.5 cents on the property tax rate. The county would net about $850,000 of that sum, with roughly $60,000 to be split among the municipalities.
Should it be placed on the November ballot, and ultimately approved by the county’s voters, the additional quarter-cent sales tax would not take effect until April 2015.
Chris Berendt can be reached at 910-249-4616. Follow us on twitter @SampsonInd.