County, city and town officials urged taxpayers Thursday to help them oppose a proposed sales tax redistribution that could cost parts of the Cape Fear region millions of dollars.
To illustrate the potential impact of the N.C. Senate bill, dubbed the Sales Tax Fairness Act, New Hanover County Board of Commissioners chairman Jonathan Barfield compared it to the quarter-cent sales tax increase county voters approved in 2010, which has brought in $7 million.
“It would take away, in the first year or so, that same $7 million that the county raised,” Barfield said at a news conference Thursday morning held at the Wilmington Fire Department’s Military Cutoff Road fire station.
Under the proposal, sponsored by 16 senators, sales taxes would be allocated to counties and cities on a per capita basis versus the current way of sending the money back to the communities where those sales taxes are spent. The legislation would be phased in over three years.
Area mayors said this would have a more damaging effect on communities that attract tourists.
“Such an idea ignores the local public investment made to make places an attraction for it,” Wilmington mayor Bill Saffo said at the news conference. “For example, a majority of the cost that this fire station goes to are related to people traveling in and around the Mayfaire area. ... These investments continue to attract office development and additional commercial space.”
The estimated loss to the city of Wilmington, if the proposal were adopted, comes on top of the $2 million loss from last year’s termination of the privilege license tax, Saffo said.
“This loss of revenue is equal to losing funding for 69 police officers or 73 firefighters. These losses also equal the budgeted funding for both our entire streets division as well as our recreation division,” he said.
Some legislators have suggested raising property taxes to offset the losses, officials said.
“Raising property taxes to such an extent would have a chilling effect on attracting future development to our communities as well as to our entire state,” Saffo said.
He said he hopes the state can find another way to help rural communities.
For Carolina Beach, the loss would equal an estimated $500,000 initially and then $440,000 a year, Carolina Beach mayor Dan Wilcox said.
“We are having a hard time finding the fairness in this fairness proposal for sales tax. We’re a small town, but it’s going to impact us substantially,” Wilcox said at the news conference.
In Kure Beach, raising the money to make up for the sales tax losses is estimated to require a 5-cent property tax increase, the town’s mayor said. “We don’t have any fluff in our budget, and this would devastate us,” said Dean Lambeth, Kure Beach mayor.
The mayors of Wrightsville Beach and Leland said they agree with their counterparts in other areas.
Gov. Pat McCrory opposes the measure. In an interview on a Charlotte radio show, he called it “class warfare,”
according to The Charlotte Observer.
Money lost when comparing current law to proposed law
| New Hanover County |
$13.7 million |
-26% |
| Carolina Beach |
$447,009 |
-29.5% |
| Kure Beach |
$376,311 |
-49.6% |
| Wilmington |
$3 million |
-12.8% |
| Wrightsville Beach |
$712,165 |
-61% |
| Leland |
$623,741 |
-16.8% |
| Source: Legislative Fiscal Research Division |
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