County Manager Delivers Sales Tax Resolution To State, Downtown Boone Development Association Braces Itself

Published Tuesday, April 30, 2013 at 12:52 pm

By Jesse Wood

April 30, 2013. Watauga County Manager Deron Geouque is on his way to Raleigh today to hand deliver the resolution that will change the sales tax distribution to municipalities from a per capita basis to an ad valorem basis, according to staff at the manager’s office.

In mid April, the Watauga County Board of Commissioners voted 3-2 for the switch and directed Geouque to wait until April 30 to deliver the resolution to the N.C. Department of Revenue. Today is the deadline to notify the state for the change to be effective July 1.

The last-minute delivery was intentional, giving the Town of Boone and Watauga County two extra weeks to come to a compromise regarding the potential sale of the old Watauga High School and the sales tax switch. That never happened because the two governmental bodies couldn’t overcome differences on meeting circumstances.

With a change to an ad valorem basis, the Town of Boone is expected to receive $2 million less in revenue while Seven Devils, Beech Mountain and Blowing Rock will see a significant jump in funds – even with the non-binding 60/40 split that those three municipalities with a surplus have agreed to with Watauga County.

DBDA LOgoA week after the April 16 commissioners meeting, Boone Mayor Loretta Clawson released a statement that while the Boone Town Council seeks to keep current Boone services while avoiding a tax increase, the sales tax switch would “force the town to severely cut or discontinue many programs and essential services.”

“These could include snow removal, street maintenance, police and fire protection, sidewalk maintenance and expansion, as well as other services. There would be no more greenway construction or nonprofit support,” Clawson stated.

Today, Virginia Falck, the downtown coordinator for the Town of Boone, emailed a letter drafted by the board of the Downtown Boone Development Association to downtown merchants, employees, property owners and residents, warning them that the proposed budget recently outlined (see below) at the DBDA’s annual spring retreat may need to be revised and that planned or proposed projects and events sponsored by the DBDA could be affected by the sales tax switch.

During the annual retreat on March 20, the DBDA members listed parking meters and sidewalks as the top two priorities for downtown Boone, which it planned to partner with the town to complete and fund. Staff noted that the DBDA had roughly $164,000 in undesignated Municipal Service District tax funds and that tax funds are projected to come in at $112,436 in the 2013-14 fiscal year.

The April 30 letter from the DBDA asked, “What does a $2 million budget deficit mean for the DBDA and Downtown Boone?”

“We cannot exactly say at this time, but it is highly likely that the pending streetscape plans for new sidewalks, trees and other improvements will be put on hold as well as the recently proposed improvements to Howard Street. These cuts may or may not affect our seasonal promotions and other opportunities for downtown events and festivals,” the April 30 letter stated.

The letter continued, “More so than ever this will prove to be a time for collaboration and resourcefulness so that we may continue to promote and improve downtown Boone. As of the drafting of this letter, the County and Town appear at impasse and the change in the sales tax distribution model seems imminent. The intent of this letter is to make you aware of this situation, and let you know that the proposed budget outlined at the Spring Retreat may need to be revised or amended based on this change in the budget. We will let you know about any changes or updates.” 

For more background on the sales tax switch, click here: https://www.hcpress.com/news/the-recent-letter-battles-of-the-sales-tax-switchold-whs-property-between-templeton-boone-and-watauga.html


Proposed Budget of DBDA below (as presented at retreat in March): 

CLICK TO ENLARGE
DBDA budget


April 30 Letter From DBDA Board of Directors

Dear Downtown Boone Property Owners, Residents, Business Merchants, and Employees,

As some of you may know, the Watauga County Board of Commissioners has approved a change in the sales tax distribution methodology for the 2013/2014 fiscal year. Sales tax in Watauga County currently goes in a large revenue pool that is distributed to the municipalities based on their population (i.e., per capita). The new sales tax methodology would distribute the sales tax revenue based on land mass (i.e.,
ad valorem). Therefore, Beech Mountain, Seven Devils, and Blowing Rock will all receive an increase in the amount of money they receive from the sales tax pool while Boone will face a $2 million sales tax decrease. Bottom Line: the Town of Boone will lose $2 million annually from their operating budget if this new sales tax distribution plan is not rescinded by April 30, 2013.

What does a $2 million budget deficit mean for the DBDA and Downtown Boone? We cannot exactly say at this time, but it is highly likely that the pending streetscape plans for new sidewalks, trees, and other improvements will be put on hold as well as the recently proposed improvements to Howard Street. These cuts may or may not affect our seasonal promotions and other opportunities for downtown events and festivals.

In a three-page statement on April 22nd Mayor Clawson stated, “The Council and I want to keep Boone’s services operating while avoiding a property tax increase. The Commissioners’ decision would force the Town to severely cut or discontinue many programs and essential services. These could include snow removal, street maintenance, police and fire protection, sidewalk maintenance and expansion, as well as other services. There would be no more greenway construction or nonprofit support. Meanwhile, other municipalities will see an abundance of tax revenue.”

If this sales tax resolution is not rescinded before April 30th, the $2 million budget reduction will begin in July 2013, the beginning of the 2013-2014 fiscal year. More so than ever this will prove to be a time for collaboration and resourcefulness so that we may continue to promote and improve downtown Boone. As of the drafting of this letter, the County and Town appear at impasse and the change in the sales tax distribution model seems imminent. The intent of this letter is to make you aware of this situation, and
let you know that the proposed budget outlined at the Spring Retreat may need to be revised or amended based on this change in the budget. We will let you know about any changes or updates.

Thank you,
DBDA Board of Directors

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