04/24/14 — Loss of tax money would hurt city coffers

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Loss of tax money would hurt city coffers

By Matt Caulder
Published in News on April 24, 2014 1:46 PM

The North Carolina General Assembly is tossing around a proposal to limit the municipal privilege tax to $100 per business, a move that could cost the city of Goldsboro $430,000 in 2015.

The draft proposal for the bill, approved by the State Revenue Laws Study Committee, is set to be discussed in the coming short session that starts May 15.

The draft proposal, if it becomes law, would not toss the current taxing system out the window, but would limit the upper reaches of the tax at $100.

The move would drastically hurt the city's revenue source from businesses, local officials say.

About $170,000 of the loss would come from the city's Internet cafes, which currently pay $2,500 annually, with a $500 charge per terminal.

If the measure is approved, the city's 3,600 businesses would only bring in about $120,000 in tax revenue, based on the city's current tax schedule.

The city charges different amounts on businesses based on if they serve alcohol or not among other regulations such as number of pool tables, bowling lanes or jukeboxes.

The bill has not been introduced yet, and there is no guarantee it will be, but the possibility still has city officials worried.

"It's always a concern when you're talking about the city losing revenue," Goldsboro Finance Director Kaye Scott said. "This is a large portion of the General Fund that would need to be made up. Any time the city has a revenue reduction it's a concern."

The city has a few options on how to balance out the budget in the event the bill is introduced and becomes law.

City officials said they could increase the fee schedule and make it up through permitting, increasing garbage charges or reducing expenditures.

Another way to make up the funds could be to increase the city property tax rate by 2.1 cents.

The current city property tax rate is 65 cents per $100 valuation.

"Knowing about it now gives us time to look at other sources of revenue," Mrs. Scott said. "It could be a combination of all of these things."

The city could not raise water costs to cover the possible decrease in revenue as the proceeds from the privilege tax goes to the General Fund and not the Utility Fund.

The proposal would also eliminate the ability of county governments to levy privilege taxes.

Currently, the County of Wayne does not levy any privilege taxes.