Beech Mountain Town Council To Consider Resolution Opposing ‘Sales Tax Fairness Act’

Published Monday, April 13, 2015 at 1:03 pm

By Jesse Wood

Beech Mountain would be one of the big losers if Senate Bill 369, which was filed in the N.C. Senate in March and would change the state’s sales tax distribution formula, passes through the N.C. General Assembly.

While the bill has sat in the Senate’s Finance Committee since passing its first reading on March 24, Beech Mountain Town Council is not happy about potentially losing nearly $1.25 million in sales tax revenue.

When the Beech Mountain Town Council meets on Tuesday, April 14, at 4 p.m., the council will consider a resolution opposing Senate Bill 369. Language in the draft resolution is similar to what Watauga County Manager Deron Geouque sent to local representatives in the N.C. General Assembly, Sen. Dan Soucek and Rep. Jonathan Jordan.

“The town council of Beech Mountain … strongly opposes Senate Bill 369 due to the detrimental effect this proposed bill will have on the financial health of our residents and tourists as well as the town’s ability to provide for and protect the health and safety of our residents and tourists,” the resolution reads.

The resolution notes that N.C. General Statutes currently allows the boards of county commissioners to determine on a yearly basis whether or not to use a per capita distribution or ad valorem distribution formula. Senate Bill 369 – the Sales Tax Fairness Act – would remove that power from local officials to a state disbursement calculated solely on the per capita method.

The town also noted that tourist communities such as Beech Mountain would be “hit the hardest by this proposed legislation.”

When N.C. Senate Majority Harry Brown, a Republican in Onslow County, unveiled his sponsored bill, he said that this would redistribute sales tax revenue from urban to rural areas.

In a press conference announcing the bill, Brown called the current system as “outdated” and “antiquated,” one that divides the state into two North Carolinas.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.

Others such as Democratic Sen. Joel Ford of Charlotte called the bill “socialism.”

“It’s a redistribution of wealth,” Ford said.

This issue is similar to what happened in Watauga County in 2013 when the GOP-led Watauga County Board of Commissioners switched the county’s sales tax distribution method to ad valorem. Republicans voted for the switch in attempt to twist the arm of the Boone Town Council.

The Town of Boone felt the pain of that redistribution, incurring a sales tax revenue shortfall of $1.7 million the first effective year. Other municipalities such as Blowing Rock, Seven Devils and, yes, Beech Mountain agreed to give the county 60 percent of the additional revenues gleaned from the switch and passed non-binding resolutions supporting the ad valorem method.

When this concept was being initially explored in the spring of 2013, Watauga County Finance Director noted that Seven Devils would receive an extra $73,000, Blowing Rock an extra $334,000, and Beech Mountain an extra $470,000 – after the percentage split.

Here’s the breakdown from the legislature’s Fiscal Research Division of the impact of the bill as it is now written (with losses noted in parenthesis), according to the Carolina Public Press.

Avery County: ($318,228)

Banner Elk: ($90,265)
Beech Mountain: ($2,148)
Crossnore: ($14,380)
Elk Park: ($40,240)
Grandfather Village: ($2,236)
Newland: ($60,369)
Seven Devils: ($2,505)
Sugar Mountain: ($17,447)

Watauga County: ($1,394,220)

Beech Mountain: ($1,241,659)
Blowing Rock: ($978,447)
Boone: $575,237
Seven Devils: ($210,723)

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