HomeMy WebLinkAboutAgenda - 04-19-2011 - 4d1
ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: April 19, 2011
Action Agenda
Item No. ~{- - C~
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: (YIN) 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 outlining 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 8, 2011.
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.
Between November 7, 2007 and December 31, 2010, 77 referendums on the quarter-cent sales
tax have been held in 53 counties. Of those 77, 18 were approved and 59 failed. This year one
referendum has been held to date and the quarter-cent sales tax was approved in Halifax
County on February 1, 2011. There are three referendums scheduled for the remainder of
2011 - Cabarrus County is scheduled for May 17, 2011 and both Buncombe County and
Orange County are scheduled for November 8, 2011.
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A Special Advisory Referendum Concerning the Levy of aOne-Quarter Cent (1/4¢) County
Sales and Use Tax was held in Orange County on November 2, 2010. The election results
were 20,896 votes cast FOR and 21,953 votes AGAINST an additional one-quarter cent (1/4¢)
county sales and use tax. The first possible date the Board can consider for a Special Advisory
Referendum Concerning the Levy of aOne-Quarter Cent (1/4¢) County Sales and Use Tax
referendum, is November 8, 2011. North Carolina General Statutes 105-465 states that "The
county board of elections shall fix the date of the special election, except that the special
election shall not be held on the date or within 60 days of any biennial election of county
officers, nor within one year from the date from the date last preceding special election under
the section."
Although a public hearing is not required by the North Carolina General Statutes, the Board
held a public hearing on March 15, 2011 to solicit comments from the public on a possible
November 8, 2011 Special Advisory Referendum Concerning the Levy of aOne-Quarter cent
(1/4¢) County Sales and Use Tax. The Board discussed the potential referendum and
approved a Resolution Calling for a Special Advisory Referendum Concerning the Levy of a
One-Quarter cent (1/4¢) County Sales and Use Tax on the April 5, 2011.
The Board held a public hearing on April 5, 2011 and received public comments on the possible
uses for the potential proceeds from the additional sales tax if approved by voters. Over the
past few months the Board has discussed both Education and Economic Development as
having a high priority when considering potential uses for revenues generated from the One-
Quarter cent (1/4¢) County Sales and Use Tax. Along-term commitment of ten years has also
been discussed.
An extensive Board discussion on the possible uses for the potential proceeds from aOne-
Quarter cent (1/4¢) County Sales and Use Tax occurred at the April 7, 2011 work session.
Economic Development Director Gary Shope presented possible Economic Development
initiatives for the Board to consider including: expanding the Small Business Loan Program,
funding Innovation Centers for new businesses, funding for Agricultural Economic
Development, and Business Development Grants. The Board discussed these Economic
Development initiatives without finalizing a funding formula and discussed a 50% allocation of
potential proceeds from the additional sales tax to allocate towards Economic Development.
The Board also discussed allocating 50% of potential proceeds from the additional sales tax to
Education. There was consensus on an equitable allocation between both school systems, with
capital improvements of older schools and the procurement of technology having the highest
priorities. The Board discussed making a request that each school system furnish a detailed list
of prioritized projects that could be completed over the next ten years for Board of
Commissioners' consideration.
If 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 8, 2011 referendum would be April 1, 2012.
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Pending approval of the attached resolution concerning the proposed uses from aOne-Quarter
Cent (1/4) County Sales and Use Tax, the Board may also want to consider discussing 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. The County did undertake a public education
effort for the previous November 2010 sales tax referendum.
FINANCIAL IMPACT: There is no financial impact associated with considering the resolution
regarding the potential uses for funds from aOne-Quarter Cent (1/4¢) County additional Sales
and Use Tax. Approval and implementation of the sales tax, resulting in the receipt and
allocation of funds, would have financial impacts.
If a majority of voters approve the sales tax, and the Board of Commissioners implements the
sales tax as soon after the November 8, 2011 referendum as possible, it could have an
effective date of April 1, 2012. Approximately $625,000 would be generated during the
remainder/last quarter of FY 2011-12. As an additional revenue source in the following years,
the sales and use tax would generate approximately $2,500,000 annually for the County.
RECOMMENDATION(S): The Manager recommends that, if it is the Board's desire to move
forward with the referendum, the Board approve 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 RES - 2011 - 033 Attachment 1 4
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 $2,500,000
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, the Board of Commissioners establishes aten-year commitment to allocate
Article 46 one-quarter cent (1/4¢) County sales and use tax proceeds as follows:
a. 50% 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
and the procurement of technology. The Board requests that each school system
furnish the Board of Commissioners with a detailed list of prioritized projects that could
be completed with anticipated funding over the next ten years. The Board will
evaluate the projects and approve aten-year plan which will be incorporated into the
County's Capital Investment Plan. As part of the Capital Investment Plan annual
review, progress will be evaluated annually and adjustments made according to needs
agreed upon by the School Boards and Board of County Commissioners;
b. 50% of the funding will be allocated to Economic Development initiatives including but
not limited to: funding utility infrastructure needed to recruit and locate new
businesses, small business loans to help existing businesses expand, innovation
centers to provide space for new start-up businesses, funding support for the County's
agricultural businesses, and Business Investment Grants. The Board of
Commissioners will approve aten-year Economic Development Plan as part of the
County's Capital Investment Plan; and
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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
and economic development initiatives; and
WHEREAS, to distinguish and separate the revenues produced through 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 ten-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 and public school capital needs for a period of ten
years, with a scheduled implementation date of April 1, 2012.
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 19th day of April, 2011.
Bernadette Pelissier, Chair
Orange County Board of Commissioners