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HomeMy WebLinkAboutAgenda - 09-19-2007-6hORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: September 19, 2007 Action Agenda. Item No. ~ej_~ _ SUBJECT: Decision Points, Steps and Timelines Regarding a Possible May 6, 2008 Local Revenue Options Referendum DEPARTMENT: Budget PUBLIC HEARING: (Y/N) No ATTACHMENT(S): INFORMATION CONTACT: Donna Coffey, (919) 245-2151 PURPOSE: To consider decision points, steps and timelines regarding a possible May 6; 2008 Local Revenue Options Referendum. 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 Boards across the state, have lobbied the General Assembly for legislative authority to expand counties'' revenue options and lessen counties' reliance on properly taxes. During the 2007 legislative session, the General Assembly granted counties the ability to enact new revenue options. The new revenue options available for counties include a .4% land transfer tax and an additional ~/a-cent sales tax. There, are several important factors related to the new options: Counties must have voter approval in order to enact either of these taxes The ballot can include referenda for both the land transfer tax and the '/a-cent sales tax There are no restrictions on the use of either of the new local revenues -~ Should the Board choose to voluntarily designate the uses of the new revenue(s) (for ,example for capital infrastructure or to retire debt), the ballot language cannot stipulate uses of the new revenues ~k Counties cannot enact both revenues -should Commissioners include both referenda on the ballot and voters agree to both of them, Commissioners would have to choose which local revenue to authorize The NC Association of County Commissioners recommends "that counties undertake extensive public education campaigns prior to the election to inform voters about the new revenues According to information included on the NC Association of County Commissioners website (http://www.ncacc.org/revenueoptions 083107.html), as of September 4, 2007: Twenty-six counties across the state have decided to include the local revenue options question on the November 2007 ballot o Eleven counties (Brunswick, Chatham, Gates, Henderson, Hoke, Macon, Moore, Pender, Polk, Swain and Union) have decided to pursue the 0.4 percent land transfer tax option o Eleven counties (Catawba, Columbus, Cumberland, Greene, Hertford, Lenoir, Martin, Pitt, Robeson, Sampson and Surry) have decided to pursue the sales tax option o Five counties (Davie, Graham, Harnett, Johnston and Rutherford) have decided to put both options in front of voters Six counties (Caswell, Duplin, Edgecombe, Lee, Onslow and Pamlico) have announced plans to pursue one of the options in the May 2008 primary election. Commissioners directed staff during the August 30, 2007 work session to provide, at the September 19, 2007 meeting, information on tentative decision points, steps and timelines including a public education component that would be required in order to include the local revenue options referendum on the May 6, 2008 ballot. Decision Points Whether to Seek Authority for the Local Revenue Option(s) -While the Board has discussed a variety of topics related to the two new local revenue options (public education, timing, etc.), Commissioners have not made a formal decision on whether. they wish to ask for voter approval of the new revenues. Whether To Include the Local Revenue Option(s) Referendum on the May 6, 2008 Ballot - As stated earlier, the Board has discussed a number of matters regarding the newly authorized legislation and revenue options. The next scheduled election date during the current fiscal year is the May 6, 2008 primary followed by November 5, 2008 in the following fiscal year 2008-09 (there is only one scheduled election date during fiscal year 2008-09). Whether to Appoint a Community Advisory Task Force -The Board .may wish to seek input from community partners regarding which tax(es) to include on the ballot and best ways to use the revenues. The function of the advisory group would be similar to past bond education committees who provided a valuable link between the County, the community and the use of voter approved bonds. ,Q Use of New Revenues -While counties are not restricted with regard to the use of the new local revenues and the ballot language cannot stipulate uses of the new revenues, the Board may wish to state their intent to designate the proceeds from the new revenues. for specific. purposes. Which Tax(es) to Include on the Ballot - As stated earlier in this agenda abstract, the Board has the discretion to put the land transfer tax, the ~/a-cent sales tax or both of the new revenue referenda on the ballot. Major Steps and Timelines Per information from the Orange County Board of Elections, the deadline for Commissioners to notify the Board of Elections of their intent to seek voter approval of the local revenue options is February 29, 2008. The chart below provides a general sense of major steps and timelines that need to occur should the Board choose to seek voter approval of the new local revenue option(s) on May 6, 2008. BOCC'Decision Point - Commissioners state their intent to either seek or not seek authority for the local September 19, 2007 revenue option(s) BOCC Decision Point -Commissioners state their intent to either include or not include local revenue September 19, 2007 option(s) referendum on the May 6, 2008 ballot BOCC Decision Point -Commissioners state their intent to either appoint or not appoint a Local September 19, 2007 Revenue Options Community Advisory Group BOCC Decision Points - If, on September 19, BOCC declares its intention to appoint a Local Revenue Options Community Advisory Group, the next steps would be: Adopt Resolution of Intent to Create Local October 9, 2007 Revenue Options Community Advisory Group ak Approve Advisory Group Charge ~k Determine structure of Advisory Group Advertise for Local Revenue Options Community October 10 through 24, 2007 Advisory Group volunteers BOCC Decision Point - BOCC review advisory November 5, 2007 group applications and appoint volunteers Organizational meeting of Local Revenue Options No later than November 16, Community advisory Group ~ 2007 4 Local Revenue Options Community Advisory Group Completed no later than Meetings ~ January 11, 2008 Report from Local Revenue Options Community January 29, 2008 Advisory Group to BOCC BOCC Decision Point -Final decisions Use of new revenues . No later than February 19, Which tax(es) to include on the ballot 2008 Next steps -Public Education Initiative Notify Orange County Board of Elections of Board's No later than February 29, Intent to Seek Voter Approval of [_ocal Revenue 2008 Option(s) on May 6, 2008 Public Education Initiative (examples might include informational brochures mailed to voters and February, March, April 2008 distributed at major community functions and newspaper articles by community leaders) Primary Election May 6, 2008 It is likely that staff will have additional information to share with the Board and public following a seminar sponsored by the NC Association of County Commissioners scheduled for September 19, 2007. FINANCIAL IMPACT: Should the Board receive voter approval of the new local revenue options on May 6, 2008, Orange County would not receive any proceeds in the current 2007-08 fiscal year from enacting the new funding sources. 1/4 Cent Sales Tax o October 1, 2008 is the earliest date that the sales tax would become effective if Commissioners levied the sales tax via resolution following a May 2008 referendum. o The State would distribute the new'/4-cent sales tax to counties based on point of delivery and not on a per capita basis. o As authorized, the new sales tax would not apply to food purchases. o There are no legislative requirements for counties to share the newly authorized'/4-cent sales tax with local municipalities. o Based on information received from the NC Association of County Commissioners; Orange County can expect $3,031,453 annually from the '/-cent sales tax -the equivalent of about 2.4 cents in current ad valorem property tax. The effective date of the ~/4-cent sales tax would be October 1, 2008 if the voters approved it on May 6, 2008 meaning that the County would receive 9 months of revenue collections or about 3/4 of the NCACC's annual projections of $3,031,453 during fiscal year 2008-09. o According to statistics, a family of three with a median income of $55,000 per year could expect to pay an additional $51 per year with the new ~/4- cent sales tax. ~; .4% Land Transfer Tax o Should Commissioners receive voter approval of the land transfer tax on May 6, 2008, the effective date of the tax would be July 1, 2008. o The County currently levies a .2% land transfer tax -more commonly referred to as "deed, stamps". The newly authorized land transfer tax would increase the tax by .4% bringing the total charge to .6% of the real estate sale price. ^ The Register of Deeds Office collects the current .2% deed stamp revenues at the time of real estate sales. As mandated by the State, the Register of Deeds remits 50% of the current .2% deed stamps collections to the State of NC. During fiscal year 2006-07, Orange County collected $2,056,539 in deed stamps and remitted one-half of that amount ($1,028,270) to the State as their share of the collections. ^ There are no legislative requirements for counties to share the newly authorized .4% land transfer tax with the State or with local municipalities. o Based on information received from the NC Association of County Commissioners, Orange County can expect $4,013,532 annually from the land transfer tax -the equivalent of about 3.2 cents in current ad valorem property tax. ^ Annual collections would likely vary depending on the economy and actual property sales. As a point of reference, the amount of revenue generated by the .2% deed stamps increased an average of 17% annually between fiscal years 2002-03 and 2004-05. More recent numbers (fiscal years 2005-06 and 2006-07) reflect about a 2% annual increase in revenue collections. o A .4% land transfer tax would .equate to $800 on a home sold for $200,000 and $2,000 on a home sold for $500,000. Both of these would be in addition to the .2% deed stamps currently collected by the Register of Deeds. The Register of Deeds would collect the monies at the time of sale. RECOMMENDATION(S): The Manager recommends that the Board of County Commissioners: 1. State their intent to either seek or not seek authority for the local revenue option(s); 2. State their intent to either include referendum on the May 6, 2008 ballot; 3. State their intent to either appoint or and, or not include local revenue option(s) not appoint a community advisory group; 4. Provide direction to staff on proceeding with enactment of the local revenue options.