Wood: Sales tax proposal will help Wayne
By Steve Herring
Published in News on April 1, 2015 2:03 PM
Wayne County could benefit by as much as $2 million in additional revenue should a sales tax bill now being debated in the General Assembly become law in its current form.
However, it is too early to get too excited one way or the other over the legislation that would benefit the state's more rural counties, County Manager George Wood said.
The bill calls for the restructuring the county-levied sales tax system by repealing local sales taxes and lumping them into one state sales tax. The money going to local governments would be distributed based on population.
Larger metropolitan areas disapprove of the measure because they say they would lose money. Rural areas support it because they say it would more equally distribute revenue.
According to the state Association of County Commissioner, Senate Bill 369 "would fundamentally restructure the county-levied sales tax system by repealing the first 2-cent levies authorized for counties."
Those three are Article 39 (a 1 percent tax) and Articles 40 and 42 (both one-half percent taxes).
A competing plan, Senate Bill 608, has been introduced that also would repeal the same taxes. However, it would add two cents to the state sales tax for distribution to counties on a per-capita basis.
According to the NCACC, "A key difference in S608 is its hold harmless provision, which would distribute to counties and cities amounts equal to their 2013-14 sales tax net distributions generated by the county levy in Articles 39, 40, and 42.
"Any growth above the hold harmless would be distributed to the countywide area on a per capita basis. The county option of per capita or ad valorem distribution to its cities would continue."
The sales taxes affected includes the ones in which a certain percentage of each is earmarked for schools.
"It (revenue) comes to the counties first, and then we distribute a certain percentage to the schools," said Wayne County Manager George Wood. "I have not read the full bill, but the way I have read a synopsis of it, is we would get it. But I am sure they are going to hold the schools harmless where they still get some provision of that."
But at present, Wood said he did not what that percentage would be.
"I will be amazed if they don't have some provision in there that says they (schools) get the same amount of money they do now," Wood said. "Frankly, that is the fair thing to do because it is just like with the lottery money.
"A lot of schools and counties together, and this one (Wayne) is no exception, we plan facility expansion based on being able to cover the debt service with lottery money and the restricted amount of sales tax that goes to the schools. To arbitrarily take that money away would not be right in my opinion."
The sales tax revenues are being used for the new middle schools now under construction in the Spring Creek and Grantham communities.
Wood said he had not yet seen a spreadsheet showing the bill's impact on all of the state's 100 counties.
The counties have "been lumped together" in groups based on possible percentages of sales tax revenue, he said.
Wood said he thinks Wayne County is in the group for 8 to 14 percent.
"I don't know if we are on the high side or low side of that," he said. "I guess I take a longer view of it. It needs to wind through this legislative sausage making before we finally end up with a number. Where we are now, we are thinking we are about 10 percent positive (growth). We are estimating for next year's budget a little over $17 million (in sales tax revenues), but that is under the current statute. So if that changes that would be worth $1.7 million (more).
"It is too early in the game to say (what to expect) because as you know it goes through subcommittees and this committee. Then if what the House passes is different from the Senate, they have to have a conference committee to work through it. So we don't know what the impact will be. But as it stands right now we are thinking it is somewhere the 10 percent range, plus or minus."
Different people have different ideas on how it should be done, he said. However, it appears the majority of legislators favor redistributing more of the revenue to rural counties, he said.
It is possible that the bill will be sent to a study commission for the next session, Wood said.
"You just never know where it is going to end up," he said. "I can tell you it is a hot topic of conversation among counties. The NCACC is monitoring it very closely.
"Obviously they have got a split with their membership because you have got rural counties that would love to see this. Then you have urban areas that are opposed to it because it is zero sum gain, and somebody is going to win and somebody is going to lose."