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Sales Tax Redistribution Proposal Stalls in NC House of Representatives

A bill to redistribute sales tax revenues recently took a blow in the North Carolina House of Representatives and now sits in a House-Senate conference committee.  WHQR spoke with some representatives of local rural counties to see what’s next for this proposal and how it would affect their constituents. 

As it stands now, 75 percent of sales tax goes to the county where goods are sold.  A quarter of the tax is distributed based on population.

But during this summer session, the Senate proposed a flip, with 80 percent of revenues based on population and only 20 based on the location of sale.

That plan was met with opposition from urban counties like New Hanover. Local representatives argue that the current sales tax formula is necessary to maintain the roads and infrastructure that shoppers use.  But Trent Burroughs, Chairman of Columbus County Board of Commissioners, thinks the proposed redistribution is fair:

"Everybody needs money, and I know money is in short supply everywhere, whether it’s in the urban or the rural counties.  Rural counties have been hit disproportionately hard.  A lot of their means of resources have dried up.  While we want to support and look out for all areas, we don’t want to forget about the rural areas." 

In response to resistance from urban counties, the Senate created a new proposal to split the revenues, with half based on sale location and half based on county population.  This would return sales tax to the formula used before 2007.  The Senate attached this new plan to the North Carolina Competes Act, which addressed economic incentives.  Ken Goodman represents parts of Montgomery, Richmond, Scotland, Hoke, and Robeson in the House, and he thinks merging sales tax with economic incentives was a bad move: 

"I do support the sales tax redistribution because every county in my district would benefit from that, but I think it was a mistake to attach those two items in one bill because I think that will create a situation where those who are opposed to the incentives bill will vote no and those who are opposed to the sales tax redistribution will vote no, and I think it will make it very difficult to pass either one of those two measures."

The North Carolina Competes Act didn’t make it through the House, and now a conference committee has been appointed to work out the differences.  Representative Goodman is a member of that committee.  While state leaders from New Hanover call the sales tax redistribution dead in the water, Goodman is more optimistic:

"Well, the goal of the committee is to see if we can work out a compromise so that we can get an incentives bill that the state desperately needs.  And I hope that we can work out something so that the sales tax redistribution or some vehicle to help our rural North Carolina would be part of the same measure."

Burroughs says he’s cautiously hopeful, since the proposed redistribution would help rural areas – like his own Columbus County: 

"We struggle to have money to build schools and all the things that this funding would help.  Columbus County here, we’ve got school buildings that are 80, 90, getting close to 100 years old and they’re actually crumbling before our eyes.  We desperately need any amount of revenue that could be redirected back to our area.  It’s my understanding that under the latest proposal of putting it back to the percentages that it was prior to 2007—Columbus County, that should generate just shy of two million dollars revenue back to the county." 

Governor Pat McCrory has publicly disapproved of the proposed sales tax redistribution.