The URL can be used to link to this page

Home My WebLink AboutAgenda - 06-01-2010 - 6bORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: June 1, 2010 Action Agenda Item No. 6 -b SUBJECT: Public Hearing on Possible November 2, 2010 Special Advisory Referendum Concerning the Levy of a One - Quarter Cent (1/4¢) County Sales and Use Tax DEPARTMENT: Manager & Financial Services PUBLIC HEARING: (Y /N) Yes ATTACHMENT(S): Draft Resolution Scheduling a Special Advisory Referendum Concerning the Levy of a One - Quarter Cent (1/4¢) County Sales and Use Tax (For Information Purposes Only) North Carolina General Statute - One - Quarter Cent (1/4¢) County Sales and Use Tax INFORMATION CONTACT: Frank Clifton, County Manager, 245 -2300 Clarence Grier, Financial Services Director, 245 -2453 Michael Talbert, Financial Services, 245- 2153 PURPOSE: To conduct a public hearing to solicit comments from the public on a possible November 2, 2010 Special Advisory Referendum Concerning the Levy of a One - Quarter Cent (1/4¢) County Sales and Use Tax. BACKGROUND: Local governments in North Carolina have historically relied heavily upon ad valorem property taxes as their major source of revenue. For a number of years, the Orange County Board of County Commissioners, the North Carolina Association of County Commissioners and many other local governing boards across the state lobbied the North Carolina General Assembly for legislative authority to expand counties' revenue options, thereby lessening counties' reliance on property taxes. During the 2007 legislative session, the North Carolina General Assembly granted county boards of commissioners the authority to levy, subject to voter approval, an additional one - quarter cent (1/4¢) county sales and use tax. As authorized by the General Assembly, the new sales tax cannot apply to consumer food purchases. There is also no legislative requirement, or mechanism, for counties to share the additional one - quarter cent sales tax with municipalities. On May 4, 2010 voters in Duplin, New Hanover and Onslow counties approved the additional one quarter cent (1/4¢) county sales and use tax. This brings the total to 15 out of 100 counties that have approved the one quarter cent (1/4¢) county sales and use tax. Pa The Manager has suggested as part of the FY2010 -11 budget process that the Board consider scheduling a November 2, 2010 Special Advisory Referendum Concerning the Levy of a One - Quarter Cent (1/4¢) County Sales and Use Tax. Although a public hearing is not required by the North Carolina General Statutes or any other provisions, the Board Chair and Vice Chair determined that hearing from the public would provide the Board with additional perspectives and assist the Board in the decision - making process. After the public hearing, the Board can discuss the potential referendum as necessary during the June budget work sessions and be in a better position to make a decision on a possible November referendum at the Board's June 15, 2010 regular meeting (the last meeting before the summer break). It should be noted that, according to Board of Elections Director Tracy Reams, the Board of Commissioners needs to make a decision on or before August 6, 2010 regarding a possible November 2, 2010 one - quarter cent (1/4¢) county sales and use tax referendum in order to provide the necessary time to fully prepare for the November election. This timeframe allows for the coding and programming to include the referendum and appropriate time to print and receive ballots. The Board of Elections is required to have absentee ballots on site and ready to mail by September 3, 2010. If circumstances demand otherwise, Ms. Reams has indicated that, although it creates some difficulties in planning, the Board could delay making a decision until August 13, 2010. Attached as information only is a draft resolution calling for a special advisory referendum on the November 2, 2010 ballot on the question of whether to levy the one - quarter percent county sales and use tax in Orange County. The draft resolution is provided for reference purposes only and the Board is not being asked to consider the resolution at this meeting_ As detailed in the draft resolution, the November 2, 2010 ballot question would ask Orange County voters to vote for or against a local sales and use tax at the rate of one - quarter cent in addition to all other state and local sales and use tax. It should be noted that the ballot question cannot include language regarding proposed uses of the funds from the one - quarter cent tax. A "sunset clause" can also not be included on the ballot question. Any action to subsequently sunset an implemented sales and use tax would require additional Board action. A November 2, 2010 ballot question would appear as follows: [ ] FOR [ ] AGAINST County Sales and Use Tax Local sales and use tax at the rate of one - quarter percent (0.25 %) in addition to all other State and local sales and use taxes. The attached draft resolution in its current form does not include language regarding the use of the funds. If the Board does at a subsequent meeting (possibly June 15, 2010) approve the resolution, the Board could at that time choose to incorporate language into the resolution regarding the use of the potential funds. Alternatively, the Board could discuss and make a decision on the potential uses of the additional sales tax funds at a future meeting. Pending possible approval of the attached referendum resolution at a future meeting, the Board may then also want to consider discussing any public education efforts to ensure voters are knowledgeable regarding the ballot question. The North Carolina Association of County 3 Commissioners recommends that counties undertake a public education campaign to educate voters. County staff envisions any education initiative to be similar to those the County has undertaken for past voter approved bond referenda. If the Board of Commissioners does decide to move forward with a referendum and a majority of voters approve the sales tax referendum, the Board will be required to give ten (10) days public notice of the Board's intent to levy the tax. The Board would then hold a required public hearing and consider a new resolution to actually levy the tax. The Board must adopt that additional resolution in order for the tax to take effect. Based on election certification timeframes, the Board of Commissioners' regular meeting schedule, and timing and other requirements associated with the North Carolina Department of Revenue and North Carolina General Statute 105 -466, the earliest date the additional sales tax could become effective following a November 2, 2010 referendum would be April 1, 2011. FINANCIAL IMPACT: There is no financial impact associated with conducting a public hearing to solicit comments from the public on a possible November 2, 2010 Special Advisory Referendum Concerning the Levy of a One - Quarter Cent (1/4¢) County Sales and Use Tax. If a majority of voters approved the sales tax and the Board of Commissioners implemented the sales tax as soon after the November 2, 2010 referendum as possible, it could have an effective date of April 1, 2011. Approximately $575,000 would be generated during the remainder /last quarter of FY 2010 -11. As an additional revenue source in the following years, the sales and use tax would generate approximately $2,300,000 annually for the County. RECOMMENDATION(S): The Manager recommends the Board conduct a public hearing to solicit comments from the public on a possible November 2, 2010 Special Advisory Referendum Concerning the Levy of a One - Quarter Cent (1/4¢) County Sales and Use Tax, provide any comments and questions to staff, and provide any direction on next steps. DRAFT KES - a010_ x'47 ORANGE COUNTY BOARD OF COMMISSIONERS RESOLUTION CALLING FOR A SPECIAL ADVISORY REFERENDUM CONCERNING THE LEVY OF A ONE - QUARTER CENT (1/4¢) COUNTY SALES AND USE TAX WHEREAS, the North Carolina General Assembly has enacted the "One- Quarter Cent (1/4¢) County Sales and Use Tax Act," Article 46 of Chapter 105 of the North Carolina General Statutes (Session Law 2007 -323), which authorizes counties to levy a local sales and use tax; and WHEREAS, in order to levy the local sales and use tax, the County of Orange must conduct an advisory referendum in accordance with the provisions of the North Carolina General Statutes Section 163 -287; NOW, THEREFORE, BE IT RESOLVED by the Orange County Board of Commissioners that: Section 1: In accordance with the North Carolina General Statutes, a special advisory referendum is hereby called to be held between the normal time the polls are open on Tuesday, November 2, 2010, at which there shall be submitted to the qualified voters of the County of Orange the question set forth in Section 3 of this Resolution. Section 2: The Orange County Board of Elections shall conduct said Referendum. Section 3: The ballot question shall be in the following form: [ ] FOR [ ] AGAINST Local sales and use tax at the rate of one - quarter percent (.25 %) in addition to all other State and local sales and use taxes.' Section 4: The Clerk to the Board of Commissioners is authorized and directed to transmit a certified copy of this Resolution to the Orange County Board of Elections within three (3) days after the passage hereof. Section 5: The Board of Elections shall publish legal notice of the special advisory referendum in accordance with North Carolina General Statutes Section 163 -287. Section 6: This Resolution shall take effect upon its passage. ADOPTED this the day of , 2010. 4 5 Article 46. One - Quarter Cent (1/4¢) County Sales and Use Tax. § 105 -535. Short title. This Article is the One - Quarter Cent (1/4¢) County Sales and Use Tax Act. (2007 -323, s. 31.17(b).) § 105 -536. Limitations. This Article applies only to counties that levy the first one -cent (1¢) sales and use tax under Article 39 of this Chapter or under Chapter 1096 of the 1967 Session Laws, the first one -half cent (1/2¢) local sales and use tax under Article 40 of this Chapter, and the second one -half cent (1/2¢) local sales and use tax under Article 42 of this Chapter. (2007 -323, s. 31.17(b).) § 105 -537. Levy. (a) Authority. — If the majority of those voting in a referendum held pursuant to this Article vote for the levy of the tax, the board of county commissioners may, by resolution and after 10 days' public notice, levy a local sales and use tax at a rate of one - quarter percent (0.25 %). (b) Vote. — The board of county commissioners may direct the county board of elections to conduct an advisory referendum on the question of whether to levy a local sales and use tax in the county as provided in this Article. The election shall be held on a date jointly agreed upon by the board of county commissioners and the board of elections and shall be held in accordance with the. procedures of G.S. 163 -287. (c) Ballot Question. — The form of the question to be presented on a ballot for a special election concerning the levy of the tax authorized by this Article shall be: "[ ] FOR [ ] AGAINST Local sales and use tax at the rate of one - quarter percent (0.25 %) in addition to all other State and local sales and.use taxes." (d) Limitation. — A tax levied under this Article may not be in effect in a county at the same time as a tax levied under Article 60 of this Chapter. (2007 -323, s. 31.17(b).) § 105 -538. Administration of taxes. Except as provided in this Article, the adoption, levy, collection, administration, and repeal of these additional taxes must be in accordance with Article 39 of this Chapter. G.S. 105 -468.1 is an administrative provision that applies to this Article. A tax levied under this Article does not apply to the sales price of food that is exempt from tax pursuant to G.S. 105- 164.13B or to the sales price of a bundled transaction taxable pursuant to G.S. 105- 467(a)(5a). The Secretary shall not divide the amount allocated to a county between the county and the municipalities within the county. (2007 -323, s. 31.17(b); 2007 -345, s. 14.5(a); 2008 -134, s. 75; 2009 -445, s. 18.)