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Madison County would see largest increase under proposal

Watauga and Buncombe counties would be among the region’s losing counties while the rest of the state’s westernmost counties would be among the winners under a new statewide sales tax plan proposed by Senate leaders earlier this week.

In a Monday press conference, Senate Majority Leader Harry Brown, R-Onslow, released a plan that would shift from a sales tax distribution formula favoring counties where items are purchased to one based solely on a per capita distribution. The bill is co-sponsored by Western North Carolina Sens. Ralph Hise, R-McDowell, and Tom Apodaca, R-Henderson.

A map distributed on the proposal shows that Madison County would see the largest increase in revenue distributions with a 109 percent gain followed by Clay (72 percent), Yancey (67 percent), Graham (64 percent), Polk (58 percent), McDowell (47 percent), Swain (33.5 percent), Cherokee (33 percent), Mitchell (32 percent), Transylvania (32 percent), Henderson (29 percent), Jackson (23 percent), Rutherford (21 percent), Haywood (10 percent), Avery (8 percent) and Macon (7 percent).

Brown said it was time the state started sharing some of the prosperity of its urban regions with those that have not participated in the economic boom.

Under the plan, Watauga County would lose more than 14 percent and Buncombe County would lose almost 11 percent of their current distributions according to the Senate’s estimates.

Both counties have come out against the plan.

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How the reconfiguration of distributions would affect each municipality in the region differs from county to county depending on how the sales taxes are distributed in the county and how many local option taxes were approved by voters. The bill also plans a 3.5 percent increase in total revenues.

Estimates show Buncombe County would lose $15.5 million in sales tax revenues by 2018. Municipalities in Buncombe County would also take a hit. Asheville would see a loss of $4.1 million and Biltmore Forest would lose about $700,000.

In Watuaga, the town of Beech Mountain would see the biggest drop losing more than $1.2 million according to the league’s estimate. But Boone would actually see an increase of 19 percent or $575,000.

As counties and towns run the numbers, reaction to the plan has started to roll in. House leaders have yet to officially comment on the plan, but Gov. Pat McCrory said Wednesday that he has serious concerns about how it would effect cities.

In a story published Thursday in the High County Press, Watauga County Manager Deron Geouque said the county would lose about $1.7 million under the plan and the county’s sales tax revenues would fall back to levels experience at the height of the recession in 2009. Geouque said the change would diminish the county’s role as an economic engine for the region.

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(For more, see this week’s stories in the Watauga Democrat, Watauga would lose revenue under sales tax plan, and in the Asheville Citizen-Times, Sales tax plan would take millions from Buncombe.)

In all, seven counties across the state would see a reduction in revenue while 93 would see an increase. Jones County would see the biggest percentage increase, with a 163 percent gain, while Dare County, which had enjoyed a special adjustment to its rate, would see the biggest cut, losing nearly 60 percent of its sales tax revenues.

The North Carolina League of Municipalities has come out strongly against many of the provisions in the bill that affect how the taxes are collected and distributed saying it eliminates the possibility of distributing taxes on an ad valorem basis, provides no money for municipalities under a 1/4 local option sales tax and backtracks on a earlier deal over Medicaid cost sharing.

The North Carolina Association of County Commissioners also raised objections because the bill would end local government sales tax authority converting all local sales taxes to state sales taxes by 2018.

Kirk Ross

Based in the Triangle, Kirk Ross is the capital bureau chief for Carolina Public Press. Contact him at kross@carolinapublicpress.org.

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