HomeMy WebLinkAboutAgenda - 04-06-2010 - 7a ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: April 0, 2010
Action Agenda
Item No. 7—a
SUBJECT: Sales Tax Distribution Method for Fiscal Year 2010-2011
DEPARTMENT: Financial Services PUBLIC HEARING: (YIN) No
ATTACHMENTS): INFORMATION CONTACT:
Attachment 1. Property Tax Levies for Clarence Grier, (919) 245-2453
201 0-2011 (Preliminary Michael Talbert (919) 245-2153
Orange County Levies)
Attachment 2. Orange County Sales Tax
Distribution Options 2009-
2410
Attachment 3. Property Tax Rate Impact
by Local Government of
Change in Sales Tax
Distribution
PURPOSE: To review Sales Tax Distribution Options and to confirm that the Orange County
distribution of local option sales tax will remain based on Population for Fiscal Year 201 0-2011.
BACKGROUND: The Board of County Commissioners was first granted the option of a 1 cent
Local Government Sales and Use tax by the General Assembly in 1971. Article 39, which allows
the County to levy the tax, also spells out two different options for the County to select for
distribution of the funds between the County and municipalities. This distribution option not only
applies to the original 1 cent sales and use tax, but to all local government sales and use tax
,levied in Orange County.
The first option is to distribute the sales tax collected based on population. The formula takes
the County's population and adds all individual municipal populations. The percent of each
individual municipalities population divided by that grand total is used to allocate the sales tax
revenue. This method has been used by Orange County for at least the last 20 years.
The second option is to distribute the sales tax collected based on the Ad Valorem Property Tax
Levied by each taxing unit of local government. Attachment 1 lists the 2009-2010 Property Tax
Levies by taxing unit of local government and is furnished by the North Carolina Department of
Revenue. Orange County is the taxing unit of local government for not only Orange County, but
for all special tax districts located in Orange County. Attachment 2 provides an estimate of sales
tax revenues distributed within Orange County by municipality. Under option one, only the
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County and Cities and Towns receive sales tax revenue. Under option two, in addition to the
County, Cities & Towns, and all special tax districts also receive Sales tax revenues.
The Board of Commissioners has two different methods available to distribute sales tax
revenue and each has distinct advantages and disadvantages to the County. There are no new
revenues created. The two options are different methods to distribute existing sales tax
revenues.
CURRENT SITUTATION: orange county has used the Population Method for the distribution
of sales tax revenues for at least the last 20 years. If the Board wishes to change the method of
distribution, the Board of County commissioners shall adopt by resolution during the month of
April the method of distribution of sales tax revenues that shall be in effect for the next fiscal
year. if the Board fails to adopt a resolution changing the method of distribution, the method of
distribution currently in effect shall continue for the following fiscal year.
FINANCIAL IMPACT: Attachment 3 estimates the property tax rate impact on local
governments of a change from a Population based distribution to the Property Tax Levy
method. If the Board of county commissioners were to adopt the Ad Valorem Property Tax
Levy distribution option for local option sales tax, it would have a negative material impact on all
Cities and Towns. The County and all special taxing districts would benefit from the change at
the expense of the Cities and Towns.
Estimated amounts of revenues gained by the County & Special Taxing Districts:
o orange County $ 981,597
o Chapel Hill Carrboro City Schools $2,439,525
o All Fire Districts $ 413,579
o Chapel Hill Downtown Service District $ 21,579
Estimated amounts of revenues lost by the Cities & Towns:
o Carrboro $ 999,095
a Chapel Hill $2$5439115
o Durham $ 17042
o Hillsborough $ 235,105
o Mebane $ 879122
RECOMMENDATION(S): No change a to the current sales tax distribution methodology is
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recommended at this time.
The Manager recommends the Board confirm the selection of the 'Population' option for
distributing local option sales taxes within orange county for Fiscal Year 2010 - 2011.
A change to the 'Ad Valorem' option increases sales tax revenues to the County, but does so to
the financial detriment of the Towns. The disparity of revenues-between the two methods is
substantial and continuation of the 'Population' option highlights a positive financial impact to
the Towns. While not highlighted in the past, this is a commitment by the Board of
Commissioners deserving of an acknowledgement.
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By the end of April each year, the County at its sole discretion has the option to select the
method of sales tax revenue distribution for the following fiscal year. The County should
evaluate its options annually so it may analyze the impacts a change in distribution formulas
would generate.
At a future time it may be appropriate to consider the alternative option available.
Orange99 March 3, 2014
Attachment 1
2009-10 PROPERTY TAX LEVIES FOR 2010-2011 FISCAL YEAR AD VALOREM DISTRIBUTIONS
PRELIMINARY ORANGE COUNTY LEVIES
School Special Total Percent of
Levy Districts Districts Levy Total Levy
$ $ [$1
Grange county 133,251,046 18,73'1,250 31175,422 155,157,718 75.8092
Carrboro 11,337,433 0 0 11,337,433 5.5394
Chapel Hill:
In Grange county 32,322971 0 0 1651681, 321488,391 15.8735
Durham:
In Grange County 40,606 0 0 40,606 .0198
Hillisborough 41686,896 0 0 4,686,896 2.2900
Mebane:
In Orange county 957,733 0 0 957,733 .4679
Total $182,5969424 $18,7311250 $393419103 $204,668,777 100.0000
Note: Figures shown are preliminary and subject to change.
Final reports will be available July, 2010.
Attachment 2
Option 2 -Based on
Ad Valorem Tax Levy
Sales Tax
Ad Valorem Estimated Increase
Tax Levy 2009/2010 Percent Bud et 2009/2010 (Decrease)
Orange $ 13312517046 65.1057% 17,355,102 981,697
C H CCS $ 18,731,250 9.1520% 214393626 25439,626
Fire Districts $ 31175,422 1.5515% 413,579 4139579
Carrboro $ 11,337,433 5.5394% 114761629 (990,096)
Chapel Hill $ 3213221710 15.7927% 41209,827 (2,543,115)
Chapel Hill Downtown Dist $ 165,681 0.0810% 211579 21,579
Durham $ 401606 0.0198% 51289 (19042)
Hillsborough $ 41686,896 2.2900% 6107438 (235,105)
Mebane $ 9571733 0.4679% 1241739 (879122)
$2041668,777 26,656,807
100.0000%
Option 1 -Based on Population
Existing 2009/2010 Sales Tax Distribution
Orange 129,295 61.42298% 16,373,405
Carrboro 191479 9.25364% 2,466,725
Chapel Hill 531326 25.33290% 61752,942
Durham 50 0.02375% 61331
Hillsborough 69677 3.17196% 845,543
Mebane 11673 0.79477% 2111860
2101499 100.0000% 26,656,807
Orange County Budget 161373,405
Estimated Total County& Municipal Distribution 261656,807
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Attachment 3
Property Tax Rate
Impact by Local Government 2009/2010
of Change in 2009/2010 Property Tax Property Tax Rate Increase Adjusted
Sales Tax Distribution Property Tax Revenue From (Decrease) Likely Property Tax
Rate in Cents one Cent For Distribution Change Rate in Cents
In Cents
Orange County 85.80000 1,505,359 (0.6521) 86.45213
CHCCS 18.84000 993,725 (2.4550) 21.29503
Fire Districts
Cedar Grove 6.36000 26,993 (0.8273) 7.18729
Chapel Hill 2.16000 414 (0.1589) 2.31891
Damascus 5.00000 91113 (0.6670) 5.66703
Southern Triangle 5.00000 33,222 (0.6645) 5.66450
Efland 4.66000 65,071 (0.6147) 5.27470
Eno 4.99000 82,313 (0.6589) 5.64892
Little River 4.06000 411118 (0.5314) 4.59144
New Hope 5.70000 56,222 (0.7416) 6.44158
Grange Grove 3.58000 751934 (0.4628) 4.04276
Orange Rural 5.36000 1191009 (0.7116) 6.07157
South Orange 7.85000 541461 (1.0314) 8.88141
White Cross 6.00000 377064 (0.7892) 6.78922
Carrboro 58.94000 1847320 5.3716 64.31162
Chapel Hill 49.40000 685,000 3.7126 53.11258
Chapel Hill Downtown Dist 7.10000 23,000 (0.9382) 8.03821
Durham 70.81000 216101187 0.0004 70.81040
Hillsborough 62.00000 681426 3.4359 65.43590
Mebane 47.00000 20,377 4.2754 51.27543
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