Hunter introduces sales tax bill
Published 8:47 am Thursday, April 9, 2015
WINTON – A local legislator is co-sponsoring a bill to counter two Republican-sponsored bills aimed at redistributing sales tax revenues to rural counties from urban ones; but back at home, any change in the tax distribution is being met in some circles with skepticism.
GOP Majority leader and Onslow County senator Harry Brown introduced one sales tax reform bill in the General Assembly in Raleigh in March. Early last week Mecklenburg County Republican senator Bob Rucho introduced another. Both bills would distribute sales tax revenues based on each county’s population – not by where the sales take place. Both bills address only the local sales tax of about two percent, with the other 4.75 percent still going to the state budget.
Senate Republicans say the current system is unfair because rural residents are effectively supporting urban counties’ schools and services when they shop in those larger-populated areas.
Meanwhile, District-5 Representative Howard Hunter, III is co-sponsoring a House tax redistribution bill, along with two ranking Republicans, finance chairmen Jason Saine and Mitch Setzer.
The Ahoskie Democrat’s bill would allow all counties to raise local sales taxes by a quarter-cent – without a voter referendum in most cases, and the bill is backed by the N.C. Association of County Commissioners (NCACC), a group Hunter once served as president when he was a Hertford County Commissioner.
Hunter’s district encompasses the four northeastern counties that would gain revenue in Brown’s plan, but he thinks most leaders in his district aren’t entirely in favor of taking money from the cities.
“The bill that Brown has, you’re robbing from Peter and giving to Paul,” Hunter said Wednesday when the bill was introduced.
“I don’t just represent counties now, I also represent cities,” Hunter said in a phone interview with the News-Herald, “and cities have no way of making up that lost revenue. If they lose any more money they’re going to need to find some way to gain it. What our bill does is give counties a little more flexibility on enacting a quarter-cent sales tax either by resolution or referendum.”
Monday at its regular monthly meeting, some of Hunter’s former colleagues brought up the topic of the proposed bills at the Hertford County Board of Commissioner’s meeting.
“I talked to Representative Hunter and he said it’s (Brown’s bill) good for counties because it means some additional dollars, but it’s going to hurt the Town of Ahoskie because they’re going to lose sales tax dollars,” Commissioner Johnny Ray Farmer said. “He has proposed a bill that would allow counties to have a quarter-cent sales tax by either referendum or resolution.”
Hertford County Manager Loria Williams said she had not closely reviewed all of the bills, to date, but points out that this is something the Commissioners should approach cautiously.
“The Association takes the stance that they don’t want the General Assembly doing anything that can potentially affect our revenue streams,” Williams said. “Now, the locals pretty much have control over it (sales taxes). This bill (Brown’s) takes it out of local hands and it goes back to the state and the state will distribute that based on per capita. We don’t want the state of North Carolina changing that scheme whenever they get ready.”
Williams acknowledges that Hertford County stands to gain under Brown’s bill, but the Town of Ahoskie would lose $208,000.
“They would lose considerably,” Williams said. “That’s a serious budgetary gap to try to overcome.”
Generally, Williams said she and the NCACC don’t favor the legislators making any tax changes.
“Anytime they go up there they talk about changing the distribution formula once again, and we don’t want that,” Williams maintains. “Even though now it looks like I’m going to make some money, two years from now they’ll change it again.”
Williams says the NCACC favors keeping the control within the local realm.
“Regardless to the leveling, it (Brown’s bill) had some good premise behind it; however, whenever the General Assembly takes over the authority of anything it could change at any given time.”
Under Brown’s proposed bill, Hertford County has the lowest revenue increase ($536,000 or 13 percent). The other three Roanoke-Chowan area counties would see a revenue increase of near-to-over 100 percent: $1.4M for Gates County, $2.18M for Bertie, and $2.1M for Northampton. However, the Town of Ahoskie loses 18 percent of its sales tax revenue under the plan because it’s the centers of where the town’s commerce is most generated that stand to lose.
“The premise of Brown’s bill is for rural counties, which is a good idea, because it’s based on population” added Farmer.
The County Manager pointed out that the sales taxes now being collected aren’t on point-of-sale or actual sales.
“It’s a combination of those,” Williams added. “Ahoskie generates more because of where it is.”
“The bigger issue is we don’t want the state of North Carolina changing that distribution formula or having the authority to change it anytime they get ready, because the next time they change it, it might not be to our benefit,” she concluded.