Whether elected leaders or residents support a sales tax increase to pay for ongoing economic development efforts remains to be seen.

But it could be one of the best ways to accomplish the goal of creating a source of funding for programs aimed at bringing in new jobs, some officials say.

“We’re at the conception stage, where we were asked to give options to raise revenue, sustainable revenue, and when you get right down to it, from a local government perspective, there’s two sources: property tax and sales tax,” said New Hanover County manager Chris Coudriet.

Coudriet and the rest of the county staff didn’t believe raising the property tax rate and dedicating those funds to economic development “was as strong an option as looking at the sales tax route,” Coudriet said.

Increasing the county’s sales tax a quarter of a cent, for a limit of seven years, would raise $7 million a year, according to the county staff’s recent proposal. By comparison, a 1-cent increase in the property tax rate would only raise $2.9 million, Coudriet said.

Of the $49 million that would come from a quarter-cent sales tax addition, $23 million could be spent on pay-as-you-go infrastructure projects; $15 million for site acquisition and preparedness; $8 million for incentives; and $3 million to establish a revolving loan program for existing small businesses, Coudriet said.

City and county officials will likely get together again to talk about economic development efforts, including potentially the quarter-cent sales tax idea, in March, Coudriet said.

The county’s current tax rate is 2.25 percent, or 7 percent total with the state’s rate added to that.

But while Coudriet said he would strongly encourage county and state officials to consider the sales tax proposal, it’s too early to tell whether the idea will gain traction among lawmakers.

“I have not committed to supporting it or not,” said Woody White, chairman of the New Hanover County Board of Commissioners. “I do think it’s important to discuss it in light of our economic development needs.”

Those needs were studied in a report this year that the county commissioned from consulting firm Garner Economics. Pathways to Prosperity, referred to as the Garner Report, suggested that New Hanover officials “make the case for sustainable funding sources to improve the county’s economic development infrastructure and identify catalytic programs to use the monies effectively.”

In a meeting in August that included city and county officials, elected leaders informally chose that recommendation as one that could be addressed quickly, but with a more narrow focus on the need to extend water and sewer along U.S. 421 to set the stage for industrial development in the corridor.

White said the county staff is looking at other ways, outside of a sales tax increase, to find money for the U.S. 421 work and other, future economic development initiatives. 

“Raising taxes should not always be a first option. We ought to exhaust all other options first,” White said.

White said state Sen. Michael Lee (R-New Hanover) has been brought into the discussion to assist county leaders as they look for regional or state economic development dollars that might fit into funding plans for the infrastructure on U.S. 421. Extending water and sewer to the Pender County line would require about $12 million, White said.

In 2010, a majority of New Hanover County residents OK’d raising the local sales tax rate to help make up for a county funding shortfall of more than $13 million, a deficit that could have resulted in the closing of libraries and parks. With the quarter-cent sales tax increase added to a property tax increase, the budget was balanced, according to a Greater Wilmington Business Journal article.
County commissioner Jonathan Barfield supported the 2010 sales tax increase, but says in terms of another increase to pay for economic development, residents will need to be consulted.

“I think the conversation needs to be had on the many options that are out there,” Barfield said. “Let our community weigh in on what they’re willing to do, what their desire is in terms of economic development.”

Lee said the planning phase for any kind of economic development funding would be key to determining how to find that funding.

“Until set we set priorities, until we have a real plan in place, a strategic plan for the kind of industries we want to recruit and attract, all working together and signing off on it, it’s hard to determine what funding requirements we have and need,” Lee said.

A sales tax increase has advantages, some officials say.

“Sales tax is more fairly distributed, and everyone participates in it equally,” White said. “Because we live in a high tourist area, it also means that others are paying for our needs and not only our citizens.”

And the idea of not taking on any more debt, after voters approved a measure to issue $160 million in bonds for New Hanover County schools and $44 million in bonds for city of Wilmington transportation improvements this year, is also appealing to some.

“I’ve actually heard some people talk about a potential quarter-cent increase to pay off the school bond early,” said Jody Wainio, president of the Wilmington Regional Association of Realtors.
But the WRAR has not has a discussion about the suggestion of a quarter-cent sales tax for economic development. 

“I think as a concept, in general, it’s very positive. Without jobs, we can’t grow,” Wainio said.
“And we know we’re not getting any money from the federal government or the state,” she said. “We’ve got to get it from somewhere.

She said in her opinion, the sales tax increase is preferential to adding to property taxes.

“I think the sales tax idea puts it on the entire community,” she said, “not just on the backs of
homeowners.”