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HomeMy WebLinkAboutAgenda - 08-17-2010 - 6dORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: August 17, 2010 Action Ager~a~ Item No. SUBJECT: Public Hearing to Consider Proposed Uses of Funds from a November 2, 2010 Special Advisory Referendum Concerning the Levy of aOne-Quarter Cent (1/4¢) County Sales and Use Tax DEPARTMENT: Manager & Financial Services PUBLIC HEARING: (Y/N) Yes ATTACHMENT(S): Attachment 1: 6/15/10 Resolution Calling a Special Advisory Referendum Concerning the Levy of aOne-Quarter Cent County Sales and Use Tax Attachment 2: North Carolina General Statute -Article 46 One- Quarter Cent County Sales and Use Tax Attachment 3: General Assembly of North Carolina Session Law 2010-95 An Act to Make Technical, Clarifying, and Administrative Changes to The Tax and Related Laws INFORMATION CONTACT: Frank Clifton, County Manager, 245-2300 Clarence Grier, Financial Services, (919) 245-2453 Michael Talbert, Financial Services, (919) 245-2153 PURPOSE: To hold a public hearing on potential uses for aOne-Quarter Cent (1/4¢) County additional 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 2 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 brought the total to 15 out of 100 counties that have approved the Article 46 one quarter cent (1/4¢) county sales and use tax. At least 10 counties will a hold referendum on the quarter-cent sales tax this year. The Board held a public hearing on June 1, 2010 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. The two speakers encouraged more opportunities .for public input and for the Board to consider additional funding for Human Services considering the current economic conditions. After the public hearing the Board discussed several different options for the potential new revenue source including Economic Development, County Capital needs, Schools needs, older schools, Libraries and Debt Service. The Board discussed the potential referendum and requested that staff schedule a decision item on a possible November referendum at the Board's June 15, 2010 regular meeting. At the June 15, 2010 Board meeting, the Board considered a resolution regarding a possible November 2, 2010 Special Advisory Referendum concerning the Levy of aOne-Quarter Cent (1/4¢) County Sales and Use Tax. Three speakers encouraged the Board to consider using the possible additional funding for Human Services, Debt Service, and Economic Development, a permanent meeting place for the Board, Schools and the immediate needs of the County. None of the three speakers were opposed to the additional one-quarter cent sales tax and supported the proposed sales tax in lieu of a property tax increase. The Board discussed several different options for the potential new revenue source including Economic Development, County Capital needs, Schools needs, older schools, Libraries and Debt Service. The Board approved the attached resolution calling for a November 2, 2010 Special Advisory Referendum concerning the Levy of aOne-Quarter Cent (1/4¢) County Sales and Use Tax. Staff was instructed to schedule a Public Hearing for August 17, 2010 to solicit comments from the public on potential uses for aOne-Quarter Cent (1/4¢) County additional Sales and Use Tax. The Board may want to consider discussing at this meeting or a future meeting the public education options 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 Board approved an amount not to exceed $40,000 for a public education campaign for the November 2, 2010 referendum. If 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. On July 17, Senate Bill 1177 was approved and signed into law. This bill amended GS 105-466 Levy of Tax (c) Collection of tax to read as follows: "Collection of the tax, and liability therefore, must begin and continue only on and after the first day of a calendar quarter, as set by the Board of County Commissioners in the resolution levying the tax. In no event may the tax be imposed, or the tax rate changed, earlier than the first day of the second succeeding calendar month after the date of the adoption of the resolution. The County must give the Secretary at least 90 days advance notice of a new tax levy or rate change." If the voters of Orange County approve the Special Advisory Referendum on November 2, 2010 and the Board approves a resolution to levy the tax before December 31, 2010, the new One- Quarter Cent (1/4¢) County Sales and Use Tax could begin on April 1, 2011. After hearing public comments, the Board will further discuss proposed uses for the One- Quarter Cent sales tax revenues at a work session on August 19, 2010. After discussing potential uses, it is the intent of the Board to formulate language for a resolution addressing the potential uses for consideration at the Board's September 2, 2010 regular meeting. FINANCIAL IMPACT: There is no financial impact associated with holding a public hearing on potential uses for aOne-Quarter Cent (1/4¢) County additional Sales and Use Tax. If a majority of voters approve the sales tax and the Board of Commissioners implements the sales tax on April 1, 2011, the Article 46 sales and use tax would generate approximately $2,300,000 annually for the County. The sales tax would generate approximately $575,000 during the remainder/last quarter of FY 2010-11. RECOMMENDATION(S): The Manager recommends the Board: 1) Hold the public hearing on potential uses for aOne-Quarter Cent (1/4¢) County additional Sales and Use Tax; 2) Review and discuss proposed uses of the potential sales tax revenues; 3) Provide any direction to staff in preparation for the Board's further discussion of potential uses at the Board's August 19, 2010 work session; and 4) Provide direction to staff on next steps relating to any public education efforts to ensure voters are knowledgeable regarding the ballot question in the resolution. _ to ~ - ------ -- -- -.-- ~-I~AN~E-~.O-I~-N-~Y-BOARD-O~F ~OMM-ISS-I~O-N~RS ,, ' ~ RESOLUTION CALLING FOR A NOVEMBER 2, 2010 SPECIAL ADVISORY REFERENDUM CONCERNING THE LEVY OF AONE-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," Aiticle 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. I Section 2: The Orange County Board of Elections shall conduct ~ said -~ Refe.rendum. 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 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)(Sa). 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.) 5 SL2010-0095 ~Tf~GC1~~~~" 2 Page 1 of 3 J 6 GENERAL ASSEMBLY OF NORTH CAROLINA SESSION 2009 SESSION LAW 2010-95 SENATE BILL 1177 AN ACT TO MAKE TECHNICAL, CLARIFYING, AND ADMINISTRATIVE CHANGES TO THE TAX AND RELATED LAWS. The General Assembly of North Carolina enacts: SECTION 1. The introductory language to G.S. 105 -113.40A reads as rewritten: "The Secretary must credit the net proceeds of the tax collected under this z~iele-Part as follows:". SECTION 2. G.S. 105 -129.16D(b 1) reads as rewritten: "(bl) Alternative. Production Credit. - In lieu of the credit allowed under subsection (b) of this section, a taxpayer that constructs and places in service in this State three or more commercial facilities for processing renewable fuel and that invests a total amount of at least four hundred million dollars ($400,000,000) in the facilities is allowed a credit equal to thirty-five percent (35%) of the cost to the taxpayer of constructing and equipping the facilities. In order to claim the credit, the taxpayer must obtain a written determination from the Secretary of Commerce that the taxpayer is expected to invest within afive-year period a total amount of at least four hundred million dollars ($400,000,000) in three or more facilities. The credit must be taken in seven equal annual installments beginning with the taxable year in which the first facility is placed in service. If, in one of the years in which the installment of credit accrues, a facility with respect to which the credit was claimed is disposed of or taken out of service and the investment requirements of this subsection are no longer satisfied, the credit expires and the taxpayer may take any remaining installment of the credit only to the extent allowed under subsection (b) of this section. The taxpayer may, however, take the portion of an installment under this subsection that accrued in a previous year and was carried forward to the extent permitted under G.S. 105-129.17. Notwithstanding the provisions of G.S. 105-129.17, a taxpayer may carry forward unused portions of the credit allowed under this subsection for the succeeding 10 years. If a taxpayer that claimed a credit under this subsection fails to meet the requirements of this subsection but meets the requirements of subsection (b) of this section, the taxpayer forfeits the difference between the alternative credit claimed under this subsection and the credit allowed under subsection (b) of this section. A taxpayer tkat forfeits part of the alternative credit under this subsection is liable for the additional taxes avoided plus interest at the rate established under 6~-~$~j; G.S. 105-241.21, computed from the date the additional taxes would have been due if the credit had not been allowed. The additional taxes and interest are due 30 days after the date the credit is forfeited. A taxpayer that fails to pay the additional taxes and interest by the due date is subject to penalties provided in G.S. 105-236." SECTION 3. G.S. 105-159.1(x) reads as rewritten: "(a) Every individual whose income tax liability for the taxable year is three dollars ($3.00) or more may designate on his or her income tax return that three dollars ($3.00) of the tax shall be credited to the North Carolina Political Parties Financing Fund for the use of the political parry designated by the taxpayer. In the case of a married couple filing a joint return whose income tax liability for the taxable year is six dollars ($6.00) or more, each spouse may designate on the income tax return that three dollars ($3.00) of the tax shall be credited to the North Carolina Political Parties Financing Fund for the use of the political party designated by the taxpayer. Amounts credited to the Fund shall be allocated among the political parties according to the designation of the taxpayer. Where any taxpayer elects to designate but does not specify a particular political party, those funds shall be distributed among the political parties on a pro rata basis according to their respective party voter registrations as determined by the most recent certification of the State Board of Elections. As used in this section, the term "political party" has the same meaning as defined in G.S. 163-96. http://www.ncga.state.nc.us/Sessions/2009/Bills/Senate/HTML/S 1177v6.htm1 7/28/2010 SL2010-0095 Page 2 of 3 7 eleet~rs- {~} SECTION 4.(a) G.S. 105-164.14(c} is amended by adding a new subdivision to read: " 23 A public librarycreated pursuant to an act of the General Assembles" SECTION 4.(b) This section becomes effective July 1, 2008, and applies to purchases made on or after that date. SECTION 5. G.S. 105-187.3 reads as rewritten: (b) Retail Value. -The retail value of a motor vehicle for which a certificate of title is issued because of a sale of the motor vehicle by a retailer is the sales price of the motor vehicle, including all accessories attached to the vehicle when it is delivered to the purchaser, less the amount of any allowance given by the retailer for a motor vehicle taken in trade as a full or partial payment for the purchased motor vehicle. Tire The retail value of a motor vehicle for which a certificate of title is issued because of a sale of the motor vehicle by a seller who is not a retailer is the market value of the vehicle, less the amount of any allowance given by the seller for a motor vehicle taken in trade as a full or partial payment for the purchased motor vehicle. A transaction in which two parties exchange motor vehicles is considered a sale regardless of whether either party gives additional consideration as part of the transaction. The The retail value of a motor vehicle for which a certificate of title is issued because of a reason other than the sale of the motor vehicle is the market value of the vehicle. The market value of a vehicle is presumed to be the value of the vehicle set in a schedule of values adopted by the Commissioner. (~} The retail value of a vehicle for which a certificate of title is issued because of a transfer by a State agency that assists the United States Department of Defense with purchasing, transferring, or titling a vehicle to another State agency, a unit of local government, a volunteer fire department, or a volunteer rescue squad is the sales price paid by the State agency, unit of local government, volunteer fire department, or volunteer rescue squad. ' SECTION 6. G.S. 105-187.6(a) is amended by adding a new subdivision to read: "(a) Full Exemptions. -The tax imposed by this Article does not apply when a certificate of title is issued as the result of a transfer of a motor vehicle: 11 To a revocable trust from an owner who is the sole beneficiary of the trust." SECTION 7. Reserved. SECTION 8.(a) G.S. 105-241.9(c) is amended by adding a new subdivision to read: "(c) Notice. -The Secretary must give a taxpayer written notice of a proposed assessment. The notice of a proposed assessment must contain the following information: (1) The basis for the proposed assessment. The statement of the basis for the proposed assessment does not limit the Department from changing the basis. (2) The amount of tax, interest, and penalties included in the proposed assessment. The amount for each of these must be stated separately. ~, The date a failure to pay Renalty will apply to the proposed assessment if the proposed assessment is not paid by that date and the amount of the penalty. If the notice. (3) The ciurcumstances under which the proposed assessment will become final and collectible." SECTION 8.(b) G.S. 105-241.11 is amended by adding a new subsection to read: "~ FTP Penalty - A request for a Departmental review of a proposed assessment is considered http://www.ncga.state.nc.us/Sessions/2009Bills/Senate/HTML/S 1177v6.htm1 7/28/2010 SL2010-0095 Page 3 of 3 8 Departmental review of a failure to nay penalty that is based on the assessment " SECTION 9. G.S. 105-241.16 reads as rewritten: "§ 105-241.16. Judicial review of decision after contested case hearing. A taxpayer aggrieved by the final decision in a contested case commenced at the Office of Administrative Hearings may seek judicial review of the decision in accordance with Article 4 of Chapter 150B of the General Statutes. Notwithstanding G.S. 150B-45, a petition for judicial review must be filed in the Superior Court of Wake County and in accordance with the procedures for a mandatory business case set forth in G.S. 7A-45.4(b} through (f). Before filing a petition for judicial re~i~-review, a taxpayer must pay the amount of tax, penalties, and interest the final decision states is due. A taxpayer may appeal a decision of the Business Court to the appellate division in accordance with G.S. 150B-52." SECTION 10.(a) G.S. 105-263 reads as rewritten: "§ 105-263. .Timely filing of mailed documents and requests for extensions. ~ Mailed Document. -Section 7502 of the Code governs when a return, report payment or any other document that is mailed to the Department is timelBled. Extension. -The Secretary may extend the time in which a person must file a report or return with the Secretary. To obtain an extension of time for filing a report or return, a person must comply with any application requirement set by the Secretary. An extension of time for filing a franchise tax return or an income tax return does not extend the time for paying the tax due or the time when a penalty attaches for failure to pay the tax. An extension of time for filing a report or any return other than a franchise tax return or an income tax return extends the time for paying the tax due and the time when a penalty attaches for failure to pay the tax. When an extension of time for filing a report or return extends the time for paying the tax expected to be due with the report or return, interest, at the rate established pursuant to G.S. 105-241.21, accrues on the tax due from the original due date of the report or return to the date the tax is paid." SECTION 10.(b) G.S. 105-241.11(b) reads as rewritten: "(b) Filing. - A request for a Departmental review of a proposed denial of a refund or a proposed assessment is considered filed on the following dates: (1) For a request that is delivered in person, the date it is delivered. (2) For a request that is mailed, the date determined in accordance with G.5. 105-263. For a request elivered by another method, the date the Department receives it." SECTION 11. G.S. 105-259(b) is amended by adding a new subdivision to read: "(b) Disclosure Prohibited. - An officer, an employee, or an agent of the State who has access to tax information in the course of service to or employment by the State may not disclose the infarmation to any other person except as provided in this subsection. Standards used or to be used for the selection of returns for examination and data used or to be used for determining the standards may not be disclosed for any purpose. All other tax information may be disclosed only if the disclosure is made for one of the following purposes: To furnish a nonparticipating manufacturer, as defined in G.S. 66-292, the amount of the manufacturer's tobacco products that a taxpayer sells in this State and that the Secretary reports to the Attorney General under G.S. 105-113.4C." SECTION 12. G.S. 105-466(c) reads as rewritten: "(c) Collection of the tax, and liability therefor, must begin and continue only on and after the first day of a calendar quarter, as set by the board of county commissioners in the resolution levying the tax. In no event may the tax be imposed, or the tax rate changed, earlier than the first day of the second succeeding calendar month after the date of the adoption of the resolution. The county must give the Secretary at least 90 days advance notice of a new tax levy or tax rate change. The applicability of a new tax or a tax rate change to purchases from printed catalogs becomes effective on the first day of a calendar quarter after a minimum of 120 days from the date the Secretary notifies the seller that receives orders by means of a catalog or similar publication of the new tax or tax rate change." http://www.ncga.state.nc.us/Sessions/2009Bills/Senate/HTML/S 1177v6.htm1 7/28/2010