12/08/17 — Board seeks more information on possible sales tax increase

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Board seeks more information on possible sales tax increase

By Steve Herring
Published in News on December 8, 2017 5:50 AM

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Wayne County Commissioners Bill Pate, left, and Joe Daughtery listen as County Manager George Wood outlines what the county would need to do to implement a quarter-cent sales tax.

Wayne County commissioners on Tuesday instructed County Manager George Wood to continue his research into the possibility of a new quarter-cent sales tax for the county.

The conversation is being spurred by a state mandate to reduce classroom size in kindergarten through third grade.

Adding teachers and classrooms to meet that mandate will be costly.

No action was taken.

"We are simply not interested in raising taxes," Commissioner Joe Daughtery said during the Tuesday session. "We have done all that we could to lower taxes. But we are faced with some hard decisions, and I think the community as a whole, the county as a whole, is going to have to start recognizing we are going to have some tough choices right around the corner.

"To pay for these mandated services we are going to have to determine whether or not we are looking at a sales tax, property tax or a combination. I think we are starting the process of looking at what our options are."

It was Daughtery who asked Wood at the board's Nov. 21 session to begin researching the sales-tax process.

The quarter-cent sales tax would generate approximately $2,591,879 annually.

A 3.21 cent property tax increase would be needed to raise the same amount of money, Wood said.

Unlike some sales taxes where the revenues are split between the county and its municipalities, all of the proceeds from the quarter-cent sale tax would go to the county.

A voter referendum would be required before the sales tax could be implemented, and it would be at least next fall before a vote would be held, should commissioners decide to proceed, Wood said.

If the majority of those voting in a referendum vote for the tax, commissioners may, by resolution and after a 10-day public notice, levy the tax.

Wood pointed out that the law says commissioners may levy the tax following voter approval, but does not require that they do so.

Some questions have been raised as to whether the county could add language to the referendum ballot, earmarking the revenues for a specific purpose, such as schools, Wood said.

"But the state law lays out the ballot question," he said. "While you could advertise, I mean you could make it clear what the intent is, you cannot put that on the ballot. We don't have the authority to do that."

"Obviously, we are looking at this as opposed to a property tax in case we have to meet that classroom mandate," Chairman Bill Pate said.

Pate said he had spoken to a number of people who prefer a sales tax over an increase in the county's property tax rate.

"Everybody pays here (sales tax), not just property owners," he said. "What would be the latest that this board would have to make a decision if we do that, to get it on the ballot in November?"

Wood said he did not know and would have to check and get back with the board.

Wood said the county hopes state legislators will either amend or repeal the mandate or have the state pay for it.

State low-wealth funding is another challenge where schools are concerned, he said.

Currently the county's tax rate does not meet the formula threshold which is costing the county $2 million annually in school funding.

The long-term fix is to change the wording in the formula that exempts counties with military bases and a student population of at least 23,000 from the low-wealth formula, Wood said.

Currently that applies only to Cumberland County, home of Fort Bragg, and Onslow County, home of Camp Lejeune, Wood said.

Wood said the goal is to reduce the student population threshold to 17,000 students instead of 23,000 that Wayne County would be exempt from the low-wealth formula. Wood said he would continue to research the sales tax issue. Commissioner Joe Gurley asked Wood also look at including a sunset clause for the tax.