County watching sales tax proposal

By: Erin Smith -

ELIZABETHTOWN — Local governments are closely watching what happens with a proposed bill that calls for changes to how sales taxes are distributed throughout the state.

The bill, called the N.C. Competes Act, recently failed in the N.C. House and is currently being debated in a conference committee made up of members of the Senate and House. The hope is that lawmakers can hash out differences over how sales taxes are distributed in North Carolina in the future.

According to the Daily Tar Heel, the bill is largely an economic development bill but the Senate added provisions that would “shift sales tax revenues to lagging, largely rural counties.”

According to research performed by the Fiscal Research Division of the General Assembly, the proposed plan would call for sales tax revenue to be calculated and distributed using a formula that would see funds distributed on a 50-percent per capita, 50-percent point of sale formula. The proposal, if adopted, would see Bladen County gain revenue while counties such as Cumberland, Brunswick, Dare and New Hanover would see some potential loss in revenue.

Under the proposal, Bladen County would stand to gain about 13 percent in revenue while Brunswick County would lose about 6 percent, Dare County would lose about 24 percent, Mecklenberg County would lose 5 percent, Wake County would lose about 4 percent and New Hanover County would lose about 10 percent, according to the Fiscal Research Divison’s report.

Bladen County Manager Greg Martin said that the proposal, if it is adopted, would be a benefit to Bladen County.

“They’re negotiating right now,” said Martin of the legislature.

The current plan the state uses calls for a sales tax distribution based on point of collection rather than the per capita distribution that is proposed in the General Assembly. Martin said the current law uses an 80-percent, 20-percent split.

“Right now, it’s divided, the bulk of it (sales taxes) goes to the county based on the point of delivery,” said Martin.

He said, for example, if you go to Wilmington and make a purchase and have it delivered to your home in Bladen County, then Bladen County gets a portion of those sales taxes. If a customer makes a purchase in Wilmington and picks the item up in Wilmington and then drives home, Wilmington would get the sales taxes.

In fiscal year 2014-15, under the current formula based on point of sale, Bladen County received $4,883,873. By comparison, in fiscal year 2015-16, under the current formula based on point of sale, Bladen County would receive $5,098,686.

Martin said there is also some discussion about including provisions that some of the revenue would go towards community colleges and schools. Martin said it is unclear how the education piece fits into the proposed bill.

Martin added the bill also faces strong opposition in the House and Gov. Pat McCrory has also spoken out against the proposal.

Erin Smith can be reached by calling 910-862-4163.


Erin Smith