O.C. OKs 1/2-Cent Hike in Sales Tax

The Orange County Board of Commissioners unanimously approved a resolution Tuesday night to raise the county's sales tax to 7 percent beginning Dec. 1 and extending through the end of June 2003.

County Manager John Link recommended the resolution to the commissioners.

"We don't have a choice, given the state has taken ($3.2 million) from us," Link said.

On Feb. 5, Gov. Mike Easley declared a state of fiscal emergency to deal with a projected shortfall for 2001-02, leading to a revenue loss of more than $700,000 for Orange County.

In total, the county has lost about $3.2 million in reimbursement funds county officials expected to receive.

"It has to be done because the state won't raise taxes," said Commissioner Margaret Brown.

About 50 or more counties have decided to enact the tax, Link said, because the state government has left the decision to individual counties.

The tax will be on consumer goods and prepared food, but unprepared food from supermarkets will not be taxed.

"This is not a sales tax on food," said Barry Jacobs, chairman of the Board of Commissioners.

Link said the board will further discuss the distribution of the projected $1.8 million revenue that will be generated from the increased sales tax.

"We have had to freeze positions, stop capital expenditures, and these are the areas we will be looking at," Link said.

Though the expected revenue for the receipts of a seven-month period are projected at only half the amount lost when Easley withheld funds, Jacobs said it would take Orange County more than three years to replace the full $3.1 million because the county is less industrial than others.

Commissioner Moses Carey said that he dislikes the tax as much as any consumer but that it is necessary to continue to provide services in Orange County for the benefit of its residents.

"I hate that we have to do it, but we must because of the money the state took from us," Carey said.

The board has not officially decided where the revenue will be distributed, but Carey said it will replace the money Orange County has had to take from the budgets of various services.

Link said historically speaking, the sales tax should not affect individual profit for businesses.

"The consumer pays the extra penny," Link said.

He also said businesses will not be asked or expected to increase production or decrease prices.

Link said the new legislation will benefit Orange County because it will ensure the county will not receive less funding from the new sales tax than it would have received normally from reimbursements taken by the state.

Link said the one-half cent sales tax increase, also known among local officials as the "pass-the-buck sales tax," is the best option for the board to enact for the services of the county.

Commissioner Alice Gordon quipped, "Pass-the-buck sales tax is probably as good as any."

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