Local News

Local Governments Consider Raising Sales Taxes To Balance Budget

Posted May 17, 2002

— The state budget has holes as well as local budgets. With everyone scrambling for more money, Gov. Mike Easley said he wants to give local governments the power to raise taxes, and many of those towns would jump at the opportunity.

Until further notice, it looks as if state taxpayers are about to pay a little more again.

"My budget is under $300 million in education. We take our cuts elsewhere in state agencies and we'll probably be cutting close to $1 billion," Wilson County manager Ellis Williford said.

To realign the budget, Easley is still withholding reimbursement money from local governments -- money it takes to run courthouses and provide law enforcement, which leaves a big hole in some local budgets.

"Our reimbursements are $2.1 million. That's about 8 percent of our general fund budget. We cannot absorb that on top of what losses we've had already," Williford said.

The lack of money may force some local governments to add one-half cent to the sales tax. Right now in Wilson County for instance, residents pay 6.5 cents for every $1 they spend at the store. An increase would bump it up to 7 cents.

Williford said the increase is certain if Easley holds onto the reimbursements. He said he is not too happy about passing on the tax, but at least the money would be out of the hands of state lawmakers.

"The sales tax, even though it's a tax increase, and a local tax increase, not a state tax increase, would be a lot more sustainable revenue source and one that would not suffer the whims of the state budget every fiscal year," he said.

Some county managers claim a sales tax is better than a property tax because sales taxes are often paid by visitors as well as property owners.

North Carolina has one of the lowest sales tax rates already. At 6.5 percent, there are only 17 states with lower tax rates. The highest sales tax is in Oklahoma at 9.75 percent.

There were close to 800 state and local tax changes across the United States last year, which was close to a 20-year record.


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