By Jesse Wood
After N.C. Senate Majority Harry Brown, a Republican in Onslow County, unveiled a plan to redistribute sales tax revenue in the state from urban to rural areas, Watauga County Manager Deron Geouque reached out to local representatives, N.C. Sen. Dan Soucek and N.C. Rep. Jonathan Jordan, “strongly” opposing the proposal.
Watauga County is just one of a handful of counties in the state that would see a loss in revenues with Brown’s plan. Based on a map published by The News and Observer, Watauga County would see a negative percentage of revenues up to 14.39 percent.
“The current proposal for sales tax redistribution would impact Watauga County by approximately $1.5 million (based on the 14.39 percent reduction referenced by the map) in a reduction of revenues. The change would return Watauga County sales tax revenues to levels experienced during the economic downturn of 2009,” Geouque wrote to Jordan to Soucek.
In a press conference announcing the bill, Brown called the current system as “outdated” and “antiquated,” one that divides the state into two North Carolinas.
Brown said that folks in rural areas that neighbor urban markets like Mecklenburg or Orange counties are “subsidizing” those counties when people in rural areas drive into the big cities to spend their money shopping and dining.
“For years, a disproportionate share of tax revenue has been redistributed to urban, prosperous areas of the state, where large shopping malls and commercial centers lure their rural neighbors to drive in and spend their hard-earned sales tax dollars out of town,” Brown said.
“I think this is a bill that will fix that issue,” Brown said.
Brown’s bill projects 3.5 percent annual growth rate in sales tax revenue.
“The current formula uses a point-of-sale and population formula that also applies a “multiplier” to certain counties that magnifies what they get. The plan Brown proposed would phase out those multipliers,” The News & Observer reported.
N.C. Sen. Joel Ford of Charlotte opposed the bill, calling it “socialism.”
“It’s a redistribution of wealth,” Ford said.
The bill was filed in the N.C. Senate earlier this week, passed its first reading and was referred to the Committee on Finance.
In 2013, the redistribution of sales tax made local headlines. when the GOP-led Watauga County Board of Commissioners switched the county’s sales tax distribution method to ad valorem. The Town of Boone felt the pain of that redistribution, incurring a sales tax revenue shortfall of $1.7 million the first effective year.
See Geouque’s entire letter to Jordan and Soucek below:
Dear Representative Jordan and Senator Soucek:
Watauga County strongly opposes the proposed plan unveiled Monday for the redistribution of sales tax revenue. The current proposal for sales tax redistribution would impact Watauga County by approximately $1.5 million (based on the 14.39 percent reduction referenced by the map) in a reduction of revenues. The change would return Watauga County sales tax revenues to levels experienced during the economic downturn of 2009. Watauga County has struggled to regain the sales tax lost during that devastating period. In addition, the County recently conducted a revaluation in 2014, in which overall property values were down, something this County has not experienced in over thirty (30) years. In light of these events, sales tax revenues have been critical in maintaining the economic vitality of the County and to endure the impacts of the economic recession. Now, as the economy is slowly gaining strength and sales tax revenues are experiencing some growth the General Assembly is poised to sink Watauga County back to recessionary levels in regards to sales tax. Watauga County is the economic engine for the High Country Region and the surrounding counties derive direct and indirect benefits from this success. However, reducing sales tax revenue has the potential to cripple Watauga County’s ability to grow and expand thus reducing the overall prosperity of the region.
Watauga County supports the General Assembly in the desire to assist low-wealth counties but not at the expense of others. The current proposal is not a viable solution and is divisive, pitting counties against counties and towns against towns. Watauga County concurs with Senator Ford that a compromise is available that could be accomplished without hurting wealthier counties and benefiting low-wealth counties at the same time. The County understands that the North Carolina Association of County Commissioners has and is working on comprising legislation that would be a win-win for all one hundred (100) counties of our state.
Watauga County respectfully requests your support in defeating the proposed sales tax redistribution plan in its current form. Furthermore, the County encourages the General Assembly to work with the North Carolina Association of County Commissioners and the North Carolina League of Municipalities to find a viable solution to benefit all parties involved.
Please let me know if you have any questions or require additional information. Thank you for your consideration and support of this important request.