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Commissioners Retain Ad Valorem Method

Commissioner Perry Yates, Chair Nathan Miller and Commissioner David Blust (left to right) listen to Boone Mayor Andy Ball speak. Photo by Jesse Wood
Commissioner Perry Yates, Chair Nathan Miller and Commissioner David Blust (left to right) listen to Boone Mayor Andy Ball speak. Photo by Jesse Wood

By Jesse Wood

April 16, 2014. Speaking before the board at last night’s meeting, Boone Mayor Andy Ball couldn’t sway the three GOP Watauga County Board of Commissioners to revert the county’s sales tax distribution to a per capita basis for the upcoming fiscal year.

The county has distributed sales tax on a per capita basis since 1987, but last year, the Watauga County Board of Commissioners voted 3-2 to distribute those revenues on an ad valorem basis. This caused the Town of Boone to lose roughly $1.7 million in revenues and was done with the hope of gaining leverage on regulations connected to the old Watauga High School, which has been on the market for several years.

Ball read a resolution that the Boone Town Council passed in March urging the Watauga County Board of Commissioners to change the method of distribution back to per capita. He also reiterated that the Town of Boone collects more than 60 percent of the sales tax funds in the county and only receives 12 percent of county’s sales tax through the ad valorem method.

“We are talking basic fairness,” Ball said.

Boone Mayor Andy Ball speaks before the Watauga County Board of Commissioners. Photo by Jesse Wood
Boone Mayor Andy Ball speaks before the Watauga County Board of Commissioners. Photo by Jesse Wood

“This has forced us to make very difficult decisions,” Ball said, adding that the town put capital needs, greenway and sidewalk improvements and cost of living adjustments for town employees on the backburner for the current fiscal year because of the distribution change.

“We view a property tax increase as a last resort,” Ball said.

Once Ball ended his presentation, it didn’t take long before Chair Nathan Miller jumped in and expressed his discontent of the “horrible” section of the town’s Unified Development Ordinance (UDO) that is the Supplementary Standards for Multi-Family Housing Development, which was adopted by the Boone Town Council after developer Phil Templeton and his Templeton Properties offered nearly $19 million for the 74-acre old WHS.

Then the same old song began to play – one that was a broken record last year at this time with a back-and-forth whiplash of letters – with Miller, citing developers, stating that those regulations killed the sale and Ball stating that staff at the town’s planning department disagreed.

Commissioner Perry Yates added that the county was going to pay off debt with the proceeds from the sale of the old Watauga High School and since that sale never occurred, the county is paying hundreds of thousands of dollars in interest that could have been avoided if the property was sold and funds put to debt service.

“We went from $19 million to nothing, to no offers,” Yates said.

Ball said he wanted to separate the issues because it has turned into “one big puzzle,” where the housing ordinance, Templeton’s offer for debt service and sales tax distribution are all interlinked.

“[But] it is all tied together. The whole reason the sales tax issue passed with help of the other towns was because you killed the offer and we had to make up for loss revenue on interest payments,” Miller said.

When Ball mentioned again the loss of the revenue hindering town services and the Town of Boone taking a “conservative approach” with its funds, Ball once again pointed out the disparity between collected and received funds. He also pointed out that he wanted to look toward the future for a solution and not back to the past.

“I don’t think that is fundamentally fair and to tie it to something else is off base,” Ball said. “I am really trying to look forward, be solution focused. We have a new council, new mayor.”

Yates, who is a resident of the Town of Boone, then responded that a “tax hike is the easy way out.”

“My challenge is to go to the rest of the towns and counties, sit down and have a meeting. The easy way out is having a tax increase. Let’s look at working together and let’s look at putting this on the table and say we can cut here and cut there,” Yates said. “Yes, the county may have made some mistakes, the town may have made some mistakes, but for the betterment of the citizens, pull this thing together and let’s do it.”

When Ball suggested meeting as bodies to come to a solution both parties can agree upon, Miller rehashed the point that the commissioners agreed to meet in open session last year to negotiate a solution, while the Boone Town Council favored a mediator in closed session.

Ball mentioned that the town would be receptive to an intergovernmental retreat with the county and other municipalities involved if that is what it takes.

While the Town of Boone and Watauga County lost a significant amount of revenue with the switch, the other towns received more revenue, so Miller brokered a deal with representatives of the other towns so the county wouldn’t be in the red with this redistribution.

Beech Mountain, Seven Devils and Blowing Rock all 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 last year, agreeing to return funds to the county.

When this was all discussed before becoming official spring 2013, Watauga County Finance Director Margaret Pierce noted that Beech Mountain would receive an extra $470,000; Blowing Rock an extra $334,000; and Seven Devils would receive an extra $73,000 – after the percentage split.

At last night’s meeting, Ball questioned the legality of this “hybrid solution,” as Miller initially described the percentage split last spring, and Commissioner John Welch reiterated that the resolutions that the other towns re-adopted in the past few weeks weren’t binding.

Miller said he wasn’t concerned that the resolutions weren’t binding because, so far, Blowing Rock, Beech Mountain and Seven Devils have all “adhered” to the agreement.

Representatives from Blowing Rock, Beech Mountain and Seven Devils also spoke before the board after Ball had a chance to speak. All spoke about the benefits the increased revenue would have on their town.

In the end, Miller said he wouldn’t be able to meet with the Boone Town Council and other municipalities before April 30 – which is the deadline from the state to change the sales tax method.

Welch made a motion to change the sales tax distribution method back to per capita and Commissioner Billy Kennedy seconded that motion. However, the three GOP commissioners didn’t vote for that change. With no vote needed to keep the sales tax distribution method the same, the commissioners went on to the next agenda item.

The sales tax in Watauga County will remain distributed on the ad valorem method – at least until the summer of 2015.

For more background about the sales tax matter and connected issues, click here.

Listen to audio of last night’s meeting here: