Two Wilkes County commissioners were among dozens of officials from counties across the state who helped push for a plan to redistribute sales tax revenue during a news conference in Raleigh Tuesday.
Sen. Harry Brown of Onslow County, a Republican and Senate majority party leader, organized the event to boost support for his plan to change the formula for distributing state sales tax revenue among city, town and county governments.
Eddie Settle, chairman of the Wilkes County commissioners, and Wilkes County commissioner Keith Elmore were among those there. Sen. Shirley Randleman, a Republican from Wilkes, also attended.
Settle said he has seen different estimates of the amount of sales tax revenue Wilkes County government would gain under Brown’s proposal, which is included in the Senate budget plan. The annual sales tax revenue gain he saw for Wilkes most recently was $1.2 million.
Settle said he was told that 83 counties would gain and 17 would lose sales tax revenue under the plan. Rural counties in general would gain the most.
During the event Tuesday, officials from various counties said they need additional sales tax revenue for schools and other public services.
Officials in urban counties like Wake and Mecklenburg and tourist destination counties like Dare oppose the legislation because it would reduce their revenue.
Currently, 75 percent of sales tax revenue is distributed based on where a purchase was made and 25 percent based on the population of each county, city and town. The House budget retains this plan.
Brown’s plan would adjust the formula over four years until 20 percent is distributed based on the location of the sale and 80 percent based on population of each county and municipality.
Estimates of how much the new formula would help rural counties vary because two legislative reports, one authorized by the House and the other by the Senate, use different underlying assumptions.
The House report shows Wilkes County government gaining $2.7 million in sales tax revenue annually when Brown’s plan is fully implemented, while the Senate report shows it gaining $4.2 million. The House and Senate reports both show North Wilkesboro gaining $165,531, Wilkesboro gaining $145,695 and Ronda gaining $17,774.
Brown argues that the existing formula unfairly penalizes rural counties, especially when their residents shop in urban areas and the sales taxes they pay at the stores in the cities doesn’t come back to their home counties.
“We believe our current sales tax system needs reform,” said Brown on Tuesday.
“Today, retail is centered in a few prosperous urban areas. People from everywhere else travel there to buy everything from appliances to clothes to food, and they leave their tax dollars behind. As a result, the current system is inequitable,” he added.
Republican Gov. Pat McCrory, a former mayor of Charlotte, announced he would veto Brown’s bill.
“This legislation will decimate our travel and tourism sector, particularly in our mountain and beach communities, shop owners and their employees who depend on tourism for their livelihood,” McCrory said of Brown’s sales tax redistribution proposal.
McCrory said it would also cripple the economic and trade centers of the state, which he said power the economy.
“Instead of pursuing left-wing ideas that continually fail, it’s time for the General Assembly to get to work on job creation for all of North Carolina.”
Brown responded, “I can’t figure out if Pat thinks he is the governor of Charlotte or the mayor of North Carolina. Today (Tuesday), over 100 local officials from across the state came out in support of sales tax fairness. Sadly, the governor’s tone-deaf response to their overwhelming support is doubling down on a 2007 sales tax policy change that kicked rural North Carolina in the teeth.”
Kevin Leonard, executive director of the N.C. Association of County Commissioners, said his group prefers a solution that would not pit some counties against others.
“The association has been working with Sen. Brown and other legislative leaders throughout the session to find a plan that will benefit all 100 counties,” said Leonard.
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