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HomeMy WebLinkAboutAgenda - 06-15-2010- 7cORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: June 15, 2010 Action Agenda Item No. 7 - C SUBJECT: Resolution Calling for a 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) No ATTACHMENT(S): INFORMATION CONTACT: Resolution Calling a November 2, 2010 Frank Clifton, County Manager, 245 -2300 Special Advisory Referendum Clarence Grier, Financial Services Concerning the Levy of a One- Director, 245 -2453 Quarter Cent (1/4¢) County Sales Michael Talbert, Financial Services, 245 - and Use Tax 2153 North Carolina General Statute — Article 46 One - Quarter Cent (1/4¢) County Sales and Use Tax PURPOSE: To consider a Resolution Calling for a 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 referred to as the Article 46 sales and use tax. As authorized by the General Assembly, the Article 46 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 Article 46 one quarter cent (1/4¢) county sales and use tax. The Manager suggested as part of the FY2010 -11 budget process that the Board of Commissioners 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 not required by the North Carolina General Statutes or any other provisions, the Board held a public hearing on a potential referendum and sales and use tax at the Board's June 1, 2010 regular 2 meeting. After the public hearing, the Board discussed the potential referendum and requested that staff schedule a decision on a possible November referendum at the Board's June 15, 2010 regular meeting. 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 is a resolution for Board consideration calling for a special advisory referendum on the November 2, 2010 ballot on the question of whether to levy the Article 46 one - quarter percent county sales and use tax in Orange County. As detailed in the 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 /separate 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 resolution in its current form does not include language regarding the possible uses of any funds potentially generated if the sales and use tax is implemented. The Board could choose at this meeting to incorporate language into the resolution regarding the proposed use of the potential funds. Alternatively, the Board could discuss the potential uses of funds generated by an implemented sales and use tax at a future meeting. This future discussion could include scheduling a public hearing (although not required) to solicit comments from the public on potential uses for the funds. Pending approval of the attached referendum resolution, the Board may want to consider discussing at this meeting or a future meeting any public education efforts to ensure voters are knowledgeable regarding the ballot question. The North Carolina Association of County 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. The County expended approximately $17,000 as part of the public education campaign for the November 2001 bond referendum. As a point of information, Orange County currently has approximately 100,000 registered voters. If the Board of Commissioners does decide to move forward with a referendum and a majority of voters approve the Article 46 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. The North Carolina General Statutes currently state that the Article 46 sales and use tax can only be implemented on January 1 or July 1 of each year, meaning the Article 46 sales tax could not be implemented until July 1, 2011 at the earliest. However, legislation is currently before the 2010 North Carolina General Assembly which would allow an Article 46 sales tax to be implemented by a county at the beginning of sales tax quarters (January 1, April 1, July 1, and October 1). If this legislation is approved during 2010, and based on factors such as election certification timeframes, the Board of Commissioners' meeting schedule, and requirements associated with the North Carolina Department of Revenue and North Carolina General Statute 105 -466, the additional sales tax could potentially become effective April 1, 2011. FINANCIAL IMPACT: There is no financial impact associated with considering the Resolution Calling for a 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 approve the sales tax and the Board of Commissioners implements the sales tax on July 1, 2011, the Article 46 sales and use tax would generate approximately $2,300,000 annually for the County. As noted above, the North Carolina General Assembly is considering legislation in 2010 to allow an Article 46 sales tax to be implemented by a county at the beginning of sales tax quarters (January 1, April 1, July 1, and October 1). If this legislation is approved 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, generating approximately $575,000 during the remainder /last quarter of FY 2010 -11. RECOMMENDATION(S): The Manager recommends the Board: 1) Review, discuss, and approve the Resolution Calling for a November 2, 2010 Special Advisory Referendum Concerning the Levy of a One - Quarter Cent (1/4¢) County Sales and Use Tax, pending the possible incorporation of any language into the resolution regarding the proposed use of the potential funds; 2) Provide direction to staff on next steps related to determining the proposed use of the potential funds if an approved resolution language does not include such language; 3) Consider discussing at this meeting or a future meeting any public education efforts to ensure voters are knowledgeable regarding the ballot question in the resolution; 4) Based on #3 above, consider authorizing staff to identify and allocate $40,000 for a public education campaign; and 5) Provide any other comments and direction to staff on next steps. Alternatively, the Board could decide to not move forward with a referendum at this time and wait until some point in the future to determine that a referendum on the Article 46 sales tax is a viable option to pursue. Rr s- a©jo - 047 4 ORANGE COUNTY BOARD OF COMMISSIONERS RESOLUTION CALLING FOR A NOVEMBER 2, 2010 SPECIAL ADVISORY REFERENDUM CONCERNING THE LEVY OF A ONE - QUARTER CENT (114¢) 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 (0.25 %) 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. 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.)