01/11/09 — sales tax

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sales tax

By Steve Herring
Published in News on January 11, 2009 2:00 AM

Wayne County Commission Chairman Bud Gray says he thinks the county would "probably go for" an increase in the local sales tax should the county need more revenue.

"If we had to have more revenues, that would be the way to go rather than a property tax increase," he said. "We would do that (sales tax) before a tax increase."

Commissioners would be able to authorize such an increase by a board resolution should state lawmakers approve legislation being sought by the N.C. Association of County Commissioners.

Gray made his comments in an interview following Tuesday's commission meeting during which board members were briefed on the N.C. Association of County Commissioners' legislative goals.

In a related issue, the board appointed Commissioner Andy Anderson to serve as the county's legislative liaison to the association.

The association's primary goal is to press for legislation "to allow all counties to enact by resolution any or all revenue options from among those that have been authorized by any other county ... to preserve the existing local revenue base."

Those options could include a local option sales tax, impact taxes, real estate transfer taxes and prepared food taxes (similar to the occupancy tax levied on hotels).

That goal and other recommendation will be considered for approval when the association meets this week in Raleigh. Gray, as chairman, will represent the county at the session as a voting delegate.

Gray said he supports that goal, but for the sales tax only.

Wayne County voters by an 80 percent margin defeated a one-quarter cent increase in the local sales tax that was on the May primary ballot.

The goal's wording indicates the association is seeking the power to allow commissioners to enact those taxes without a public referendum -- which means commissioners could override last May's vote.

Gray said the county would not entertain a real estate transfer tax -- a tax that County Manager Lee Smith has called just another property tax.

If the association is successful in getting the legislation through the General Assembly, commissioners could implement a sales tax increase by resolution.

"We have, as a county, placed the sales tax before the public and got an answer on that," Smith said. "Obviously, if you have a tax base that is stagnant and you have a sales tax that is decreasing, these menu options are the things that I think are nice to have. If the revenue or revenue stream is not there, it is just an additional tax and you are not going to get that much. In a down economy, it is going to be a tough time in our opinion to place additional taxes."

"No one wants a tax increase, and they are not going to vote for one," Commissioner Jack Best said.

Smith said people he has spoken to appear to support a sales tax increase over an increase in property taxes.

County Attorney Borden Parker noted that the General Assembly had rebuffed past efforts to give local boards authority to raise taxes without having a vote of the people.

"I think the vehicle property tax is probably more important than the others (tax options)," he said.

Parker and Smith agreed that the county's overall tax collection rate is not as high as it could be because of the difficulty in collecting the vehicle property tax.

Smith said legislation that will become effective in 2010-11 should help.

"When you go to the license tag agency to register your vehicle, you pay your taxes," he said. "There are not a lot of cracks in the sidewalk to get past that, but right now there are loopholes and they can get through it. While the property tax collection rate is about 97 percent, collection on vehicles is about 86-87 percent.

"This would help counties and cities tremendously and we could get our collection rates up. But there are groups trying to stop it, and we need for it to happen in 2010."

There is a strong move across the state from automotive dealers who are "really pushing" against the change because they say it is going to hurt them, Smith said.

Smith told board members they need to talk about the issue over the next few weeks.

"About what are we willing to support of those items?" Best asked.

"Yes," Smith replied. "Just on revenue options and as a board what are you willing to consider. You don't have to enact these things. They are options counties would have available to them."

Commissioner Steve Keen noted that the association goal says "to preserve the local revenue base."

That base includes sales and property taxes, he said.

"They are looking for us, we are on our own, to design products in the county to preserve what we have here in local revenue."

Smith said it will be important for counties to see if there is money for schools and for counties to tell the state "to leave it alone."

"They are going to want the money up there," Best said.

Smith said he thinks the state will offer some things only to take away others -- similar to the Medicaid relief that cost the county sales tax revenues.

"It is hard to plan ahead because the state can change things," Commissioner Andy Anderson said.

Smith said that some legislators will ask what a county's tax rate is and, "if you respond 74 cents, they will clearly tell you that you have the authority to go to $1.50.

"I had one slam his fist on the table and say, 'When you hit a buck fifty call me.'"

City taxes have to be considered as well when talking about what people have to pay, Best said.