Committee starts sales tax distribution review

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By Brian Slattery

The first review of sales tax distribution in Brunswick County since 1989 drew a lot of interest in the middle of the day Sept. 18.

The first meeting of the sales tax distribution committee was mostly an organizational exercise, but the numbers presented showed what’s at stake for Brunswick County’s 19 municipalities if a change is made to the distribution process.

The committee members designated Ocean Isle Beach Mayor Debbie Smith as their chairwoman. They also decided their next meeting will be at 2 p.m. Wednesday, Nov. 6.


Sales tax history

Assistant county manager Steve Stone explained state statute allows county commissioners to chose to distribute sales taxes using per capita — by the population of the county and municipalities, or ad valorem — based on the tax levy.

Stone said it is the levy not the tax base that is used for ad valorem, so if the municipalities changed their tax rates it would change the levy and the amount of the distribution they receive.


Fiscal year 2013 sales tax distribution examples

County staff presented numbers based on the current per capita distribution, including the differences the county and towns would see if ad valorem sales tax distribution were used.

The largest recipient of per capita sales tax is the county which received $17.3 million in fiscal year 2013 because of its population of 110,000, but Hardy pointed out the county shares the revenue it receives with the schools by law.

Leland, with a population of just fewer than 14,000, received a little more than $3 million in sales tax revenue in 2013.

Bald Head Island has the smallest population at 160 and received about $34,500 in 2013.

Based on the 2013 numbers, if the county switched to 100 percent ad valorem sales tax distribution it would cut the revenue Leland receives to $1.12 million while Bald Head Island would receive $1.56 million.

The switch would cut sales tax revenues for 14 of the 19 towns in Brunswick County. The recipients of increased revenues would be Bald Head Island, Caswell Beach, Holden Beach, Oak Island and Ocean Isle Beach as well as the county.

County finance staff also provided estimates of sales tax distribution at 50 percent ad valorem/50 percent per capita, 60/40 and 70/30 splits.

At 50/50, Leland would still lose almost $950,000, which is about the same amount Bald Head Island would gain.

In any of the hybrid estimates in which ad valorem made up 50 percent or more of the distributed revenues, the five towns and the county were the only beneficiaries of the change.

If the county decided to choose a per capita/ad valorem hybrid, administrators anticipated special legislation would have to be approved by the General Assembly.


Sales tax representatives

County Commissioners selected a representative from each of their districts to review the sales tax distribution: Andy Sayer, mayor of Bald Head Island, represents Bald Head Island; John Tait, Leland commissioner, represents District 5; Patty Miller, retired finance officer for Southport, represents District 3; Alan Holden, mayor of Holden Beach, represents District 2; Jeff Repp, Boiling Spring Lakes city manager, represents District 4; Debbie Smith represents District 1. Commissioner Pat Sykes serves as an ex officio member.

The committee has to provide a recommendation to county commissioners to vote upon before the state needs notification of the county’s distribution method in April.

Holden asked if any requirements or comments have been received from any municipalities.

Hardy said the county met with a concerned citizen from Bald Head Island — former Mayor Larry Lambert — but has not received any official positions from any towns.

“We need to distribute all information to all the towns and as they go through the (review) process. I’m sure we will hear from the towns,” Smith said.

Sykes reminded the six committee members they are not there to represent their towns but the districts to which they were appointed, and they should get input from all the municipalities in their district.

“Now that the committee has started, we’ll get information from each town. They can get in touch with you or you can have a sit down with them,” she said. “Until you get their information it will be hard for you to do anything.”

Repp asked if they only want input from towns or a resolution supporting one method of sales tax distribution.

“We want all the municipalities to give us input — good, bad or indifferent,” Smith said.

“We encourage all the municipalities to send their thoughts to the county, to me and all the board members.”


First response

Leland officials were the first town to begin sales tax talks because of the regular town meeting scheduled for Thursday, Sept. 19.

Leland town manager David Hollis explained to his board the switch to ad valorem would cost the town more than $1.5 million.

“We would have to increase taxes or remove entire departments,” he said.

Hollis said North Brunswick towns Navassa, Belville, Northwest, and Sandy Creek would all lose money. He said Oak Island officials indicated they like the way sales tax is distributed despite being one of the municipalities that could see an increase in sales tax money.

“It’s a good group of municipalities in favor of keeping (per capita distribution),” Hollis said.

If Leland increased its taxes, that would increase the amount of ad valorem sales tax the town could receive, but that runs counter to what town officials are trying to do, Hollis said.

“Using ad valorem (for sales tax) and our same tax rate punishes us for our low tax rate,” he said.

“People move here because it is a value option (compared) to Wilmington. Increasing taxes would severely impact that,” Tait said.

Hollis said sales tax generated in Leland is more than it receives through the current distribution.

Commissioner Pat Batleman added the Leland Walmart generates significant sales tax.

Tait recommended the town prepare a resolution to maintain per capita sales tax distribution to vote for approval at the Oct. 17 town meeting. That way, he said, it can sent it to the county before the sales tax committee meets again.


Brian Slattery is a staff writer for the Beacon. Reach him at 754-6890 or bslattery@brunswickbeacon.com.