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ORANGE COUNTY
ASSEMBLY OF GOVERNMENTS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: September 16, 2010
Action Agenda
Item No. 1
SUBJECT: November 2, 2010 Referendum on Article 46 One-Quarter Cent (1/4¢) County
Sales and Use Tax
DEPARTMENT: Manager & Financial Services PUBLIC HEARING: (Y/N) No
ATTACHMENT(S): INFORMATION CONTACT:
Attachment 1: 6/15/10 Resolution Calling Frank Clifton, County Manager,
for a November 2, 2010 245-2300
Special Advisory Clarence Grier, Financial Services,
Referendum Concerning (919) 245-2453
the Levy of aOne-Quarter Michael Talbert, Financial Services,
Cent (1/4¢) County Sales (919) 245-2153
and Use Tax
Attachment 2: 9/2/10 Resolution
Regarding Uses of
Potential Revenues from
a One-Quarter Cent
(1/4¢) County Sales and
Use Tax
PURPOSE: To discuss the November 2, 2010 Referendum on the Article 46 One-Quarter Cent
(1/4¢) County Sales and Use Tax and the intended uses of the potential revenues if approved
by voters.
BACKGROUND: 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.
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At its June 15, 2010 meeting, the Board approved a resolution calling for a November 2, 2010
Special Advisory Referendum concerning the Levy of a One-Quarter Cent (114¢) County Sales
and Use Tax. The approved resolution, which includes the ballot language, is provided at
Attachment 1. The Board also instructed staff to schedule a Public Hearing for the Board's
August 17, 2010 meeting to solicit comments from the public on potential uses for a One-
Quarter Cent (114¢) 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 '/2 cent sales tax instead of 1/4 cent (which is not authorized by current law).
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.
On September 2, 2010 the Board approved the resolution provided at Attachment 2 to
document the intended uses of the revenues from a prospective One-Quarter Cent (114¢)
County additional Sales and Use Tax. Outlined in the resolution is the Board's 5 year
commitment to allocate funds to specific uses.
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.
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 (114¢) County Sales and Use Tax could begin on April 1, 2011.
FINANCIAL IMPACT: There is no financial impact associated with discussing the referendum
on a One-Quarter cent (114¢) County additional Sales and Use Tax. Approval and
implementation of the sales tax and receipt and allocation of resulting funds would have
financial impacts.
If a majority of voters approve the sales tax and the Board of Commissioners implements the
sales tax on April 1, 2011, the Article 45 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 County Manager recommends the Assembly of Governments'
meeting attendees discuss the November 2, 2010 Referendum on the Article 46 one-Quarter
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Cent (1/4¢) County Sales and Use Tax and the intended uses of the potential revenues if
approved by voters. County Commissioners may seek input from the towns on how best to use
the 42.5% of funds proposed to be allocated towards economic development if voters approve
the One-Quarter Cent (1/4¢) County Sales and Use Tax.
h men n A-fta c -f-
ORANGE COUNTY BOARD OF COMMISSIONERS
RESOLUTION CALLING FOR A NOVEMBER 2, 2010 SPECIAL ADVISORY
REFERENDUM CONCERNING THE LEVY OF AONE-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 (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 4-010000XX , 2010.
A n
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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 economic development efforts including
funding infrastructure improvements needed to recruit new businesses and expand
existing businesses; funding for business loans and grants to grow businesses in
Orange County; targeted business recruitment, retention, and expansion efforts; and
community branding and marketing;
c. 15% of the funding will be allocated equally to improve Library and Emergency
Medical Services over afive-year period.
WHEREAS, if additional funding does not come from the one-quarter cent 114
� ¢) 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 ard of Commissioners
t]1
hereby states its intent to use the revenues from the Article 46 one-quarter cent (1/40)
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 (114¢) 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 2nd day of September, 2010.
Valerie Foushee, Chair
Orange County Board of Commissioners