HomeMy WebLinkAboutAgenda - 09-02-2010 - 7aORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: September 2, 2010
Action Agenda
Item No. ~ - Gi
SUBJECT; Resolution Regarding Planned Uses of Revenues from a Potential One-
Quarter Cent (1/4¢) County Sales and Use Tax
DEPARTMENT: Manager & Financial Services PUBLIC HEARING: (Y/N) No
ATTACHMENT(S):
Attachment 1: Draft Resolution
Regarding Uses of
Potential Revenues from
a One-Quarter Cent
(1/4¢) County Sales and
Use Tax
INFORMATION CONTACT:
Frank Clifton, County Manager,
245-2300
Clarence Grier, Financial Services,
(919) 245-2453
Michael Talbert, Financial Services,
(919) 245-2153
PURPOSE: To approve a resolution specifying the intentions of the Orange County Board of
Commissioners regarding the use of the proceeds from aOne-Quarter Cent (1/4¢) County
Sales and Use Tax, if approved by voters on November 2, 2010.
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.
A total of 17 out of 100 counties 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
2
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 a 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 held a public hearing on August 17, 2010 to solicit comments from the public on the
possible uses for the One-Quarter Cent sales tax revenues. Ten speakers encouraged the
Board to consider using the possible additional funding for Economic Development, Schools,
and Public Safety. Two speakers were opposed to the additional one-quarter cent sales tax
with one speaker stating he did not want any new taxes and the other speaker encouraging the
Board to go for a'h cent sales tax instead of/4 cent.
At a work session on August 19, 2010, the Board considered potential uses and formulated
language for a resolution addressing the potential uses for consideration at the Board's
..September 2, 2010 regular meeting...Attached is a draft Resolution Regarding Uses of Potential
Revenues from aOne-Quarter Cent (1/4¢) County Sales and Use Tax for the Board to
consider.
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, 2010, 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.
FINANCIAL IMPACT: There is no financial i
regarding on potential uses for funds from a
and Use Tax. Approval and implementation
resulting funds would have financial impacts.
If a majority of voters approve the sales tax and
sales tax on April 1, 2011, the Article 46 sales
$2,300,000 annually for the County. The sales
during the remainder/last quarter of FY 2010-11.
mpact associated with considering the resolution
One-Quarter Cent (1/4¢) County additional Sales
of the sales tax and receipt and allocation of
the Board of Commissioners implements the
and use tax would generate approximately
tax would generate approximately $575,000
RECOMMENDATION(S): The Manager recommends the Board adopt and authorize the Chair
to sign the accompanying resolution, or modified version thereof, to document the Board's
intended uses of the revenues from a prospective One-Quarter Cent (1/4¢) County additional
Sales and Use Tax.
DRAFT
ORANGE COUNTY BOARD OF COMMISSIONERS
A Resolution Regarding Uses of Potential Revenues
from aOne-Quarter Cent (1/4¢) County Sales and Use Tax
WHEREAS, there are significant pressing infrastructure, economic development, school, and
other County capital needs that are precipitated by growth pressures and the new economic
reality facing Orange County; and
WHEREAS, it is important to provide Orange County taxpayers with alternatives to the
pressure to raise property taxes to address these and other County needs; and
WHEREAS, the levy of a Article 46 one-quarter cent (1/4¢) .County sales and use tax would
provide a new County revenue source and would generate approximately $2,300,000
annually for the County; and
WHEREAS, it is important for Orange County to plan for future economic development that
will enable the County to recruit, retain, grow, and generate businesses and jobs that are
desirable; and
WHEREAS, it is important that Orange County expand collaboration and cooperation of
economic development efforts and decisions between Orange County and the towns of
Chapel Hill, Carrboro and Hillsborough and the cities of Mebane and Durham; and
WHEREAS, it is important for Orange County to meet public school needs; and
WHEREAS, it is important to provide .the residents of Orange County improved Library and
Emergency Medical Services to meet the increased demand of a growing population; and
WHEREAS, the Board of Commissioners establishes a 5 year commitment to allocate Article
46 one-quarter cent (1/4¢) County sales and use tax proceeds as follows:
a. 42.5% of the funding will be allocated in an equitable manner between the County's
two school systems for the dedicated purpose of facility improvements at `older'
schools within all of Orange County and the procurement of technology. Each school
system will establish a list of prioritized needs for older schools within the County.
Funding provided by the passage of the referendum will be allocated to those
prioritized projects. Progress will be evaluated, annually and adjustments made
according to needs agreed upon by the School Boards and Board of County
Commissioners;
b. 42.5% of the funding will be allocated to fund infrastructure improvements needed for
economic development initiatives that recruit new businesses, expand existing
businesses, provides funding for small business loans to grow businesses in Orange
County; and
c. 15% of the funding will be allocated equally to improve Library and Emergency
Medical Services.
4
DRAFT
WHEREAS, if additional funding does not come from the one-quarter cent (1/4¢) County
sales and use tax, the property tax will be the primary funding source available for schools,
economic development initiatives, and library & emergency medical services; and
WHEREAS, to distinguish and separate the revenues produced by this '/ cent sales tax if
approved by Orange County voters, a Special Revenue Fund will be established to receive
and account for the sales tax revenue. These funds will remain separate from the county's
general fund to allow for more accurate tracking of revenues and expenditures in accordance
with initial five year allocation plan established as part of this resolution;
NOW, THEREFORE, BE IT RESOLVED THAT the Orange County Board of Commissioners
hereby states its intent to use the revenues from the Article 46 one-quarter cent (1/4¢)
County sales and use tax, if approved by the voters of Orange County, for currently unfunded
or underfunded economic development, public school and library & emergency medical
services for a period of five years, with a scheduled implementation date of April 1, 2011.
BE IT FURTHER RESOLVED THAT proceeds from the one-quarter cent (1/4¢) County sales
and use tax in later years will be used to address priorities as established by the Board of
Commissioners in the County's Capital Investment Plan.
This the 2"d day of September, 2010.
5
Valerie Foushee, Chair
Orange County Board of Commissioners