In six months, Jackson County residents will pay more in sales taxes to help build North Carolina communities deemed needier than this one.
Local tax dollars will flow into a $84.8 million state purse and be distributed to 79 counties based on percentage formulas. The hope is to strengthen public education and jumpstart economic development in struggling areas of the state.
County Manager Chuck Wooten described legislators’ decision to exclude Jackson and neighboring Macon as “disheartening” and “disappointing.”
“We’re recognized as being among the most distressed counties in North Carolina, yet we are not going to receive any of this additional revenue,” Wooten said. “When you look at some of the others that are receiving money, you start wondering exactly how the decision was made. It’s hard to understand how some of these counties are in and some are out.”
Jackson and Macon are Tier 1 counties. This N.C. Department of Commerce designation pinpoints the least prosperous areas of the state using four indicators: unemployment rate, median household income, population growth and the property tax base.
The three counties set to receive the sales-tax windfall are Tier 2, placing them squarely in the state middle in terms of counties’ economic health. Harnett County gets $3.87 million; Davidson County, $3 million; and Randolph County, $2.6 million.
Other far-western counties will receive sales-tax revenue. But, the amounts are significantly lower than what’s being distributed downstate. Swain (Tier 1) will get $275,000; Clay (Tier 1), $274,000; Graham (Tier 1), $263,000; Cherokee (Tier 2), $203,000; and Haywood (Tier 1), $34,000.
The county’s exclusion surprised local leaders. Just a few weeks ago, they’d anticipated possible revenue increases. Some legislators had lobbied to redistribute sales-tax revenue to communities that lose out when citizens travel to cities – like Asheville — and shop. That didn’t happen.
Instead, legislators are adding sales taxes to auto repairs and installation of appliances and will raise Department of Motor Vehicle fees. A standard eight-year driver’s license will increase from $32 to $40. The fee for a learner’s permit increases from $15 to $20.
“Unfortunately, our citizens will pay the taxes and the revenue will be distributed to other counties,” Wooten said. “I’m of the opinion that the taxes paid by citizens of Jackson County in Jackson County should stay in Jackson County.”
The list of counties excluded include urban ones such as Durham, Forsyth, Guilford, Wake and Mecklenburg. Rural counties that were left out are largely tourism-dependent, and include Avery, Catawba, Moore, Brunswick, Carteret and Dare. An influx of visitors helps boost sales-tax revenues in these communities.
Jackson County’s sales tax is 6.75 percent, generating $8.9 million in revenues last year for local government.
The attention being paid to sales tax comes as the General Assembly’s conservative leadership shifts the state away from relying on income tax revenue. They believe sales taxes are more fair and less volatile than income taxes.
As part of this broader plan, the pending sales-tax increase comes with a corresponding uptick in the standard deduction for personal income, as much as $500. And, beginning in 2017, the state tax rate will be reduced from 5.75 percent to 5.499 percent.
All but 11 Democrats voted against the state’s $21.74 billion budget, which will serve as North Carolina’s financial blueprint for the 2015-2016 fiscal year. Democrats say the sales-tax increase will hurt middle-income and poor residents.
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