Senate budget has uneven impact on county revenue

Posted June 19, 2015

— A major change proposed to how the state distributes local sales tax revenue is drawing criticism from urban counties.

Most sales tax revenue currently goes wherever consumers spend it, with the remainder doled out across the state. But Thursday, senators gave their final approval to a version of the budget that would reverse that formula and send more revenue to rural counties.

With a competing version of the budget already approved by the House, members of the two chambers will work over the next few weeks to hammer out the differences.

Supporters of the Senate plan, such as budget writer Sen. Harry Brown, R-Onslow, argue it's more fair to people who live in rural areas and drive to urban counties to shop, spending sales tax dollars needed back at home for roads and schools.

Critics like Sen. Joel Ford, D-Mecklenburg, disagree.

"This plan attempts to make weak counties strong by making strong counties weak," Ford said.

Budget data shows stark cuts for some

The Senate plan would implement new taxes to services and give local governments the option to increase sales tax rates. Senate leaders say that extra money will help soften the budget blow for urban areas.

But county leaders say that puts them in a tough spot: Sell a tax increase to the public or cut services.

Data released this week from the Office of State Budget and Management shows that, without sales tax increases – and without new sales taxes to services the Senate budget also plans for – several counties would face significant hits to their sales tax revenue over the next five years.

In New Hanover County, revenue would decrease almost 17 percent by the 2019-20 fiscal year without sales tax hikes, according to OSBM data.

"I think what they're calling it is tax fairness, but when it comes to New Hanover County, it's anything but," Mark Broyer, interim public affairs director for the county.

In the Triangle, Durham County would lose 12.4 percent of its sales tax revenue, and Wake County would lose 10.6 percent by 2020 when the plan is phased in, according to OSBM numbers.

Chris Dillon, Wake County intragovernmental relations manager, said the county's only real option to recoup that cost is to raise property taxes by about 3 cents per $100 valuation – or an additional $60 for a $200,000 home.

"The only thing we can cut to recoup that type of loss is education," Dillon said. "You can't nickel and dime a 10-percent cut. You have to go where there's big money."

Not all counties lose under plan

Yet, some counties would see a big boost.

Harnett County would get 47.1 percent more in sales tax money, Franklin County would jump 45.8 percent and Granville County would see 43.5 percent more.

Wake and several other counties oppose the Senate redistribution plan. Although they agree rural counties need more resources, they say the Senate's plan is the wrong way to do it.

"In the past, when help was offered to rural counties, all boats rose. It was not take from one and give to another," Dillon said. "This is a change in the statewide philosophy of how to grow North Carolina."

During debate, it also drew criticism from Democrats in the Senate.

"I'm quite surprised – as Republicans – that you would be involved in the redistribution of wealth," said Sen. Paul Lowe, D-Forsyth. "You're talking about a socialistic principle: Taking from somebody who has to give to somebody who doesn't."

But Sen. Tom Apodaca, R-Henderson, says a lot of that sales tax money is paid by shoppers from rural areas. The plan ensures that more of it goes home with them.

"The ones that dislike it the most are the ones that live in the big cities," Apodaca said. "The ones that live in the small counties that are struggling, we just go to the big cities and spend our money."

The measure has drawn criticism from Republicans in the House, which will be instrumental in finalizing a compromise budget.

Gov. Pat McCrory has also noted his disapproval, telling The Associated Press on Wednesday that local governments would be forced to raise property taxes to make up for losses.

"It would result in a hidden tax increase on millions of people in North Carolina, from the coast to the Piedmont and to the mountains," McCrory said.


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  • Nicolle Leney Jun 22, 2015
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    Maybe some of the counties can raise property tax, but out of 100 counties, Durham already has 24th highest county property tax. So our property taxes are going to end up getting RAISED to supplement a county like Chatham, who will get a 58.4% increase, but their property values (43rd) are LOWER than Durham's. How is that even nearby remotely fair???

  • Jeff Edwards Jun 20, 2015
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    So you think the previous system is fair? Not by a long shot.

  • Todd Whitmer Jun 20, 2015
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    I'm neither small minded not cruel, what I am is fair. I agree that chapel hill is expensive but what pushing this through will do is drive families that are struggling in wake county further into poverty. Step outside of yourself.
    As for working hard! You make a presumption that my work isn't labor intensive. In addition to my 9-5 I help by volunteering my spare time and work a garden to help provide fresh veggies to my neighbors.

  • Sally Bethune Jun 20, 2015
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    I live in Chapel Hill, where if all you need is a Carolina T-shirt or a super expensive dress you are in business. Thus most of my money is spent in Durham, with the exception of groceries and restaurants. You have to be cruel and small minded, if you drive thru Snow Hill, Roanoke Rapids, or Lumberton in Robeson County which is the poorest town in the US and not feel an obligation to help. No construction jobs because unlike in Wake Co, there are not a plethora of cheesy subdivision being built every day. You can't grow big money crop, the prices farmers get from growing corn and soy bean are down, it takes a great deal of water and chemicals to grow cotton. Tobacco is labor intensive and the price at the warehouse is just about what is was 10 years ago Please share some plans for how these places can "make some smart investments" and thrive. AND if you think you "work your tale off", get your tale out and pick an acre of cotton.

  • Todd Whitmer Jun 20, 2015
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    How many walmarts are nearby? Don't look to the larger communities in the state to fix your problems. Solve the issue by being smarter about where and how your town spends what little cash it has—I travel quite a bit for work but my home is in wake county, where my money belongs.

    Besides my dollars are already going to services within the county that I don't use. I don't have kids but my tax dollars go towards schools. That money should really be going to the educators many of which are close friends of mine. They are leaving the state faster than they can be replaced because the G.A. and the governor value their big corporate backers over the quality of the educators they can retain.
    This problem is way more complex than just raising the taxes on one set state residents to "give a leg up" to another segment.
    Using this model, why are large businesses, corporations and the wealthy not paying their fair share?

  • Sally Bethune Jun 20, 2015
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    For the first time in 4 years I agree with the republicans. I'll used Benson as an example: they use to have a shirt factory, big agriculture and their little downtown had ever storefront open for dining, clothes shopping, a hardware store, a pharmacy and a "beauty shop and a couple of banks. Now it is all but disserted. That is the scenario all throughout the State. No job, no storefronts. Do you think the folks in Benson buy their clothes in Benson...no they travel to Raleigh or Durham where there are a great deal of job growth and opportunity. Our small communities all over this state need a leg up! It is fair and the right thing to do.

  • Todd Whitmer Jun 20, 2015
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    All of this aside, this isn't good for NC. I work my tail end off and hardly see how raising my taxes (which is what republicans swear is not going to happen) to support another part of the state seems a bit more of a communist strategy than one that will promote growth.

  • David Bunn Jun 19, 2015
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    Look up the Leandro lawsuit.

  • Todd Whitmer Jun 19, 2015
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    That's rich... Gimme a break.