Changing the sales tax distribution formula has been on the General Assembly’s agenda since the start of this summer’s long session. As it winds to a close, where does this proposal stand? WHQR spoke with Representative Susi Hamilton, a Democrat from New Hanover County, about the history of sales tax distribution and its status in the North Carolina legislature.
Isabelle Shepherd: Can you tell me a little about the history of sales tax distribution in North Carolina? It used to be a fifty-fifty split – with half going to the county where goods are sold and half based on population. When and why did that formula change?
Representative Susi Hamilton: Well, in 2007, some of the more rural counties were having a very difficult time meeting their Medicaid expenditures. We were getting to a bit of a crisis point. So, the General Assembly was asked to intervene. What they did was, the state took over the responsibility for Medicaid payments for all 100 counties in North Carolina. The sales tax distribution model changed to accommodate the savings to the rural counties and the expenditures that were being passed over to the state.
IS: Why do you think sales tax redistribution is being proposed at this time? Why now?
SH: The General Assembly has recognized under the current leadership over the last five years that multiple things have been done to create hardship in the rural communities. There’s quite an extensive list of things that have been eliminated that were there for the assistance to rural counties over the last twenty or thirty years. The elimination of things such as the Rural Center for the Department of Commerce, the elimination of the capital construction program for rural counties where the state would step in and build new schools at 100% cost to the state to assist the rural, the poorer counties and their student population growth. That’s just a few examples of these programs that no longer exist in North Carolina. So this solution, if you will, is being proposed to undo what’s been undone in the rural counties.
IS: And why do you think that is? Why do you think that shift in focus of funds and programs happened?
SH: I think a lot of it is just bad politics. The supermajorities in both the House and the Senate have, you know, given, there’s a feeling of the leadership right now as being bulletproof, so they made changes where they felt like they were older programs or programs that were passed by other members of the General Assembly although in most cases, these activities that the state was performing were passed in a bipartisan way.
IS: So do you think that this sales tax redistribution is going to pass in this long session or is that pretty much dead in the water?
SH: I don’t think it will. I don’t believe it will. If it were to, much to the credit of the governor, he seems to be standing firm in his promise to veto it if it does take place.
IS: Thank you so much for speaking with me, Representative Hamilton. I really appreciate that.
SH: My pleasure.