New sales tax could help county

By Nicholas Elmes -

“It is a lot better than nothing.”

That was the response of County Manager Rick Morris after looking over increases in sales tax revenues that will be coming to the county as a result of the state budget signed by Gov. Pat McCrory last Friday.

The final budget includes a statewide expansion of sales taxes which now taxes installations and repairs on appliances and motor vehicles. The resulting funds will be used to help provide more funding for rural counties.

The final budget differed from previous proposals that would have changed the way all sales taxes were distributed by returning it to a historical formula where 50 percent was allocated based on the county where a sale takes place and 50 percent is based on population.

Such a change would have resulted in a dramatic change in revenue for Stokes County over a five year period with the county receiving an additional $3,710,004 in sales tax revenue per year once the original plan was fully phase in.

The passed budget instead maintained the existing 75-25 formula, but instead expanded what would be subject to sales taxes to create funding for rural counties.

“It is not what we had hoped for,” said Morris, noting that under the passed budget Stokes County would only receive an additional $1,533,000 in sales taxes each year starting in fiscal year 2016-17. “I liked the original plan. This does not solve all of our problems, but it is a big step toward helping us. It is not as much as the hold harmless we were getting, so we will still be short of the old harmless we were getting. “

The final state budget is also expected to provide additional sales tax revenue for municipalities in the county with Danbury expected to receive an additional $2,000, Walnut Cove expected to receive an additional $25,000 and King expected to receive an additional $128,000.

The additional funding also comes with a caveat — it must be used for economic development, public education or community college purposes.

“I don’t think those limitations will cause any problems,” said Morris. “Those are all areas we have to fund.”

This year’s county budget, approved by the Board of Commissioners at the end of June while the state legislature was still debating the state budget, was based on the assumption that the sales tax distributions would be changed.

As a result the county budget called for an additional $377,942 in sales tax revenue that it hoped to get from the change. Morris said he expects the county to only receive an additional $43,000 as a result of the changes in the final state budget, but said he does not expect that to be a problem.

“We do budget execution reviews once a quarter,” he explained. “We always recoup money each year from the fund balance and there will be enough in there to cover this.”

Sen. Shirley Randleman, who had fought for adjusting the sales tax distribution model, said the Stokes County Board of Commissioners had done everything they could to see that plan become a reality.

“They were outstanding in advocating on behalf of rural counties in North Carolina,” she said. “They put a lot of effort to try to get additional allocations for stokes county. They were here in Raleigh every time we needed them.”

Nicholas Elmes may be reached at 336-591-8191 or on Twitter @NicholasElmes.

By Nicholas Elmes

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