A half-cent sales tax proposal currently being debated in the General Assembly is getting mixed support from counties.

Macon County is on record as opposing the proposal, while Haywood commissioners have voted to support it. Jackson County's commissioner chairman says he thinks commissioners there will support it, while his counterpart in Swain says he personally opposes it.

“It’s been a roller coaster ride,” said Paul Meyer, the assistant general counsel for the N.C. Association of County Commissioners. No one likes to raise taxes, Meyer said, but sales taxes are more politically popular than property taxes.

The state budget shortfall is rippling through the counties and towns of North Carolina, forcing elected leaders to scramble for money and take politically unpopular stands on a number of tax issues.

Macon County joined 60 others across the state in raising property taxes this year. Macon raised its rate from 43 to 45 cents per $100 of valuation.

Haywood County, unsure of what state budget plan will be adopted, is operating on an interim budget that did not raise taxes. Swain and Jackson adopted budgets with no tax increases. These four counties - and their approach to solving budget uncertainties - appear to mirror the debate in Raleigh: raise taxes or cut spending.

One state plan that appears to be gaining momentum and is endorsed by the county commissioners association calls for a local half-cent sales tax. According to a recent NCACC legislative bulletin, “The proposal would eliminate static reimbursements to cities and counties and substitute a local option sales tax coupled with appropriations to guarantee each local government 105 percent of what is currently received in reimbursements.”

Macon County Commission Chairman Harold Corbin said that he could “in no way” support efforts by the state to balance its budget on the backs of local taxpayers.

Swain County Chairman Jim Douthit said while commissioners there had not officially considered the proposal, he personally, opposed it. He said he felt the state had plenty of revenue but that there were too many “pork barrel” projects and too little fiscal responsibility.

“The legislature needs to do away with Democratic and Republican politics and concentrate on the needs of the citizens of North Carolina,” Douthit said.

Macon County Manager Sam Greenwood said NCACC had an earlier proposal that was much more palatable, one that somehow got lost in the shuffle. The earlier proposal included a menu of revenue raising options which included - but wasn’t limited to - a sales tax hike.

“Where’s the option now,” asked Greenwood.

Under the present proposal, counties would lose their reimbursement and be forced to either raise taxes or cut services. Greenwood said he feared a local sales tax would “open the floodgates for more unfunded state mandates,” like extending the no-excuse voting to include primaries.

The distribution of the monies from the half-cent sales tax is also a point of disagreement. Half the revenue would be returned to the source of origin and half would be distributed on a per capita basis.
Greenwood believes this would favor metropolitan areas.

Haywood County Manager Jack Horton disagrees. He believes the 50-50 distribution would benefit rural areas that don’t have a large retail base to generate sales tax. Meyer, of the NCACC, said the proposal simply follows the traditional manner sales taxes are disbursed in North Carolina.

Haywood County endorsed the sales tax option with a unanimous resolution passed July 13. Horton said the county would, “much rather have a menu of options,” but noted that was not a choice.
According to Horton the benefits of a sales tax are: moving from a static revenue source (reimbursements have been frozen at the 1990 level) to a growing source; not having to wait on state reimbursements to finalize county budgets; and lessening the burden on property taxes.

Jackson County voted Aug. 2 to re-send a resolution originally adopted March 1 to the governor and local legislators. That resolution supports a menu of revenue sources. Board Chairman Jay Denton said that while a variety of local options would be best, the board would support this latest proposal “out of necessity.”

“When it comes down to brass tacks, counties will have have to either increase revenues or cut services,” Denton said.

The fate of the option probably rests with the General Assembly.

“My sense is, if the state cuts the budget deep enough, this proposal will fall by the way side. If the budget is not cut, the half-cent sales tax is likely to pass,” Meyer said.

 

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