Dare will still take a $4 million hit from latest sales tax plan

No direct budget talks have taken place yet in the General Assembly, but there are efforts to clear out the “clutter” before negotiations begin.
 
Anticipating the House’s resistance, the Senate scaled back a plan to redistribute sales tax revenue that was inserted into the Senate version of the budget and added it to House Bill 117, N.C. Competes, an economic development measure requested by Gov. Pat McCrory.
The new proposal splits the distribution of sales tax revenue with half based on point-of-sale and the other half on population. If made into law, the redistribution would go into effect in the fiscal year beginning July 1, 2016, and instead of being phased in over four years as in the previous plan.

The 50-50 scenario would reduce sales tax coming back to Dare County and local municipalities by 24 percent. Under current law, which dictates sending 75 percent of the revenue back to local governments where a product or service is sold and 25 percent distributed around the state according to population, Dare County would receive an estimated $19.1 million in the 2016-17 fiscal year.

Dare County has an advantage under the current law because its tourism industry draws big dollars in sales taxes relative to its small population.

Under the new plan, the amount would be reduced to $14.6 million, which is a $4.6 million cut, unless a proposal to expand the sales tax base is approved to include new sources of money. With that expansion, estimated sales tax revenues would be $15.1 million, which is a $4 million reduction — 21 percent — from projections for the same time frame under current law. The municipalities also would feel the same percentage of reductions under both scenarios.

Currituck County, without the expansion, would lose 8 percent or $707,624; with expansion of the base the percentage would drop to 4 percent and a $400,000 loss.

“The intended goal of the proposed change to help poorer, rural counties is noble, but the logic of this sales tax redistribution plan does not hold up under scrutiny,” Bob Woodard, Chairman of the Dare County Board of Commissioners, said in a statement last week.....

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By Sandy Semans Ross on August 9, 2015