Proposed Sales Tax Would Aid Towns

In late July, the N.C. House adopted a half-cent sales tax option for local governments. This provision, designed to fill up budget gaps, appeared as good news to Chapel Hill and Carrboro town governments, but the bodies already had passed their town budgets.

Now local officials might have to wait several months before they can implement the sales tax increase, assuming the option also is passed by the state Senate.

Jack Vogt, a professor in UNC's Institute of Government, said that upon approval by the General Assembly the tax hike could technically go into effect on Oct. 1.

But Vogt said it will probably take longer for details to be resolved regarding the tax increase.

"January 1 might be the earliest feasible date," he said.

Vogt said local county commissioners have the final say on whether individual counties will enact the sales tax option.

"We're expecting most counties, but not all (to authorize the increase)," he said.

Orange County Commissioner Margaret Brown said the Board of Commissioners submitted a letter to legislators earlier in the year supporting the tax option.

She said the potential revenue is desperately needed. "The state took away $300 million from us," she said. "That's a considerable sum of money."

Vogt said the additional revenue generated by a half-cent sales tax increase would replace local reimbursements held by the state.

But Vogt said that because reimbursements are frozen at a set rate, taxes will create more funds for the local governments.

"In the long term, the additional sales tax will provide more revenue for local governments than the reimbursements will," he said.

Vogt said some officials have argued that the tax can be made retroactive, but questions of legality have headed off most of this movement.

"The consensus of opinion over in the General Assembly is that the sales tax enactment should occur on or after the date of enactment rather than be made retroactive," he said.

Bill Stockard, assistant to Chapel Hill's town manager, said the town would consider using additional revenue to reduce the tax rate, raise town employee salaries, and implement some capital improvement projects.

Carrboro Assistant Town Manager Bing Roenigk said that if the tax option is approved, the town will reconsider several projects that were placed on hold due to budget limitations.

"Should it come in, we have a list of needs we think really need to be funded," Roenigk said.

Among those projects are a market study to evaluate salaries for town employees, the replacement of athletic field lights and a tennis court fence at Anderson Park and capital purchases like dump trucks, she said.

Roenigk said that if the sales tax is enacted, the funds won't go to waste.

"We'll take the money and use it effectively."

The City Editor can be reached at citydesk@unc.edu.