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HomeMy WebLinkAboutAgenda - 06-20-2002 - 2 Rose MEMORANDUM To: Orange County Board of Commissioners From: John Link, County Manager Date: June 18, 2002 Re: Board of Commissioners' Public Hearing on The Third One-Half Cent Local Government Sales and Use Tax Authorized by Section 34.14 (a)of Session Law 2001-424 and Codified as Article 44 of the General Statutes of North Carolina Please find attached to this memorandum information regarding the Article 44 one-half cent local government sales and use tax. I am providing it to you in preparation for the Board of Commissioners' public hearing,which is scheduled for 7:30 p.m. on June 20, 2002 at the Southern Human Services Center. (A copy of the public hearing notice is the first attachment to this memorandum.) The information provided with this memorandum includes a Summary of Procedures for Implementing the Third One-Half Cent Local Option Sales Tax,which was provided by the North Carolina Association of County Commissioners (NCACC). A short summary of the Article 44 Sales Tax from NCACC as well as a listing of projected revenues for Orange County and the three municipalities if the sales tax is implemented is also attached. After the public hearing,the Board will need to review and consider approval as necessary of the DRAFT resolution,which is the last attachment. This consideration could occur either at the June 20th or June 24th work sessions, during the June 27th regular meeting, or as the Board decides. If further information is needed,please advise. Attachments 1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: June 6, 2002 Action Agenda Item No. SUBJECT: NOTICE OF PUBLIC HEARING FOR ARTICLE 44 DEPARTMENT: Board of County PUBLIC HEARING: (Y/N) No Commissioners ATTACHMENT(S): INFORMATION CONTACT: Yes — Public Hearing Notice TELEPHONE NUMBERS: Hillsborough 732-8181 Chapel Hill 968-4501 Durham 688-7331 Mebane 336-227-2031 PURPOSE: To provide notice of a public hearing setting the date, time and place for a public hearing on an additional one half cent (1/2¢) Local Government Sales and Use Tax. BACKGROUND: The Board of County Commissioners will hold a public hearing on Thursday, June 20, 2002 at 7:30 p.m. at the Southern Human Services Center in Chapel Hill, North Carolina. The purpose of this public hearing will be to receive public comments on a third one- half cent (1/2¢) Local Government Sales and Use Tax authorized by Section 34.14(a) of Session Law 2001-424 and codified as Article 44 of Chapter 105 of the General Statutes of North Carolina. The notice is worded as required by law. The Board of County Commissioners has not prejudged whether it will or will not adopt a resolution levying this tax. FINANCIAL IMPACT: NONE RECOMMENDATION(S): Direct the County Manager, on behalf of the Board of County Commissioners, to publish a notice of the Board's intent to adopt a resolution levying %% local sales and use tax in addition to any other state and local sales and use taxes levied pursuant by law. ORANGE COUNTY BOARD OF COMMISSIONERS PUBLIC HEARING NOTICE FOR THURSDAY, JUNE 20, 2002 A public hearing will be held on the Orange County Board of Commissioners' intent* to adopt the following resolution. NOW, THEREFORE, BE IT RESOLVED by the Orange County Board of Commissioners: (1) There is hereby imposed and levied within Orange County The Third one-half cent (1/2¢) Local Government Sales and Use Tax authorized by Section 34.14(a) of Session Law 2001-424 and codified as Article 44 of Chapter 105 of the General Statutes of North Carolina. The tax hereby imposed and levied shall apply to the same extent and be subject to the same limitations as are set forth in and Session Law 2001-424. (2) Collection of the tax by the North Carolina Secretary of Revenue, and liability therefore, shall begin and continue on and after the first day of July, 2003, or sooner, if allowed by law. (3) The net proceeds of the tax levied herein shall be distributed by the Secretary of Revenue on a monthly basis to Orange County as prescribed by N.C.G.S. 105-520. The amount distributed to Orange County shall be divided among the county and the municipalities herein in accordance with the method by which the one percent(1%) sales and use taxes levied in Orange County pursuant to Article 39 of General Statutes Chapter 105 as distributed. (4) This Resolution is effective upon its adoption, and a certified copy hereof shall be forwarded to the North Carolina Secretary of Revenue. The Orange County Board of Commissioners welcomes all comments. This notice is worded as required by law. The Board of County Commissioners has not prejudged whether it will or will not adopt this resolution. The meeting is open to the public and will be held at the Southern Human Services Center in Chapel Hill beginning at 7:30 p.m. If you need additional information please call Greg Wilder at 245-2314. *This notice is worded as required by law. The Board of County Commissioners has not prejudged whether it will or will not adopt this resolution. ORANGE COUNTY BOARD OF COMMISSIONERS PUBLIC HEARING NOTICE FOR THURSDAY, JUNE 20, 2002 A public hearing will be held on the Orange County Board of Commissioners' intent* to adopt the following resolution. NOW, THEREFORE, BE IT RESOLVED by the Orange County Board of Commissioners: (1) There is hereby imposed and levied within Orange County The Third one-half cent (1/2¢) Local Government Sales and Use Tax authorized by Section 34.14(a) of Session Law 2001-424 and codified as Article 44 of Chapter 105 of the General Statutes of North Carolina. The tax hereby imposed and levied shall apply to the same extent and be subject to the same limitations as are set forth in and Session Law 2001-424. (2) Collection of the tax by the North Carolina Secretary of Revenue, and liability therefore, shall begin and continue on and after the first day of July, 2003, or sooner, if allowed by law. (3) The net proceeds of the tax levied herein shall be distributed by the Secretary of Revenue on a monthly basis to Orange County as prescribed by N.C.G.S. 105-520. The amount distributed to Orange County shall be divided among the county and the municipalities herein in accordance with the method by which the one percent(1%) sales and use taxes levied in Orange County pursuant to Article 39 of General Statutes Chapter 105 as distributed. (4) This Resolution is effective upon its adoption, and a certified copy hereof shall be forwarded to the North Carolina Secretary of Revenue. The Orange County Board of Commissioners welcomes all comments. This notice is worded as required by law. The Board of County Commissioners has not prejudged whether it will or will not adopt this resolution. The meeting is open to the public and will be held at the Southern Human Services Center in Chapel Hill beginning at 7:30 p.m. If you need additional information please call Greg Wilder at 245-2314. *This notice is worded as required by law. The Board of County Commissioners has not prejudged whether it will or will not adopt this resolution. Summary of Procedures for Implementing the Third 1/2¢ Local Option Sales Tax (By Resolution of the Board of County Commissioners)_ (Note: Identical procedures were used for 1983 and 1986 sales taxes.) 1. Set Date of Public Hearing In order to have an official record in the minutes, the Board of County Commissioners should officially instruct the county manager to have a notice of public hearing published. 2. Give Public Notice of the Hearing State statute requires not less than 10 days public notice of public hearing to be held on the question of adoption of the local option sales tax(ref G.S. 105-517(b). The 10 days required notice is calculated as follows: • Date of publication of notice is not counted, • Next 10 calendar days are counted, and • If the 10'day is a Saturday, Sunday,or legal holiday, it is not counted as satisfying the notice requirement. You must count to the end of the next day that is not a Saturday, Sunday, or legal holiday. (G.S. 1A-1,Rule 6) Example: Notice of public hearing is published on Thursday, July 11. The count begins on Friday, July 12. Since the 10'calendar day would be Sunday, July 21, it is not counted. The period of notice would run through the end of Monday, July 22. 3. Public Hearing The hearing may be held after the 10-day notice period. 4. Adoption of Resolution The Board of County Commissioners may meet and adopt the resolution to levy the tax immediately after conclusion of the public hearing. 5. Effective Date of the Tax The tax cannot become effective any earlier than the first day of any calendar month beginning on or after July 1,2003. The Board has the option of setting a later effective date starting with the first day of the month. 6. Notice to the Department of Revenue A certified copy of the adopted resolution should be sent immediately to the Secretary of the Department of Revenue. (G.S. 105-466) NC Association of County Commissioners January 30, 2002 The Third 1/2c;r- Local Option Sales Tax (Article 44) Introduction The General Assembly increased the state sales tax by 1/2(Z(to 4.5a)until July 1, 2003 as part of the biennial budget act(SB 1005). The law authorizes counties to enact a 1/2(Z local option sales tax when the state tax sunsets to replace state reimbursements which will be eliminated in state Fiscal Year 2003-04. Following is a summary of the statutory provisions of the new local sales tax. Effective Date: Not earlier than July 1, 2003 and any time thereafter. However, counties may enact the tax prior to that date. Method of Enactment: Counties may enact the new tax by: 1)resolution of the board of county commissioners enacted after a public hearing, or 2)by conducting a local referendum. Allocation of Proceeds: The tax proceeds will be allocated among participating counties as follows: 50% on the basis of population 50%on the basis of point or origin Distribution Between Counties and Municipalities: The distribution method will be the same as the method chosen by the county for the distribution of the other local option sales taxes. Coverage of the Tax: Food purchased for home consumption is exempt from the Article 44 Sales Tax. Hold Harmless Provision: The new tax is intended to replace the existing state reimbursements,which are repealed effective July 1, 2003. In order to assure that no local government gets less than the amount received from the reimbursements, the new law contains a 100% "Hold Harmless" requirement. i Ashared\efthirdsalestax.doc North Carolina Association of County Commissioners North Carolina League of Municipalities ° of Total Local Governments Reimbursements Sales Tax 2002-03 Aug 1 Effective ONE= 2004-05 Sale Tax '8rtt .. i Conway 17,048 0.005% 14 558 (2,490) 17,924 877 18,839 1,791 Ga sbur 9,452 0.007% 20,175 10,724 24,841 15,389 26,108 16,656 Gaston 10,666 0.007% 20,325 9,659 25,025 14,359 26,301 15,635 Jackson 6,158 0.003% 10 508 4,350 12,938 6,780 13,598 7,439 Lasker 892 0.001% 2,837 1,945 3,493 2,601 3,671 2,779 Rich Square 11,316 0.007% 20,157 8,841 24,818 13,502 26,084 14,768 Seaboard 12,676 0.005% 15,080 2,405 18,568 5,892 19,515 6,839 Severn 21,293 0.002% 4,741 16,552 5,837 15,456 6,135 15,158 Woodland 8,134 0.004% 13,867 5,733 17,074 8,940 17,945 9,810 Onslow 1,650,487 1.057% 3,267,258 1,616,771 4 022 851 2,372,364 4 228 017 2,577 530 Holly Ride 21,215 0.006% 17,671 (3,544) 21,758 542 22,867 1,652, Jacksonville 514,329 0.528% 1,630 214 1,115,8851 2,007,221 1 492 892 21109,589 1,595,261 North Topsail Beach 42,466 0.008% 25,096 17,370 30,900 11,566 32,476 9,990 Richlands 13,412 0.009% 27,982 14,570 34,454 21,042 36,211 22,799 Swansboro 20,921 0.011% 33,248 12,328 40,937 20,017 43,025 22,105 Orange 3,183,344 0.872% 2,695,339 488,005 3,318,669 135,325 3,487,921 304,577 Carrboro 246,322 0.127% 393,251 146,929 484,195 237,873 508,889 262,567 Chapel Hill 729,467 0.355% 1,096,513 367,046 1,350 095 620,628 1,418,950 689,483 Hillsborough 103,392 0.043% 132,156 28,764 162,719 59,327 171,018 67,626 Pamlico 249,962 0.107% 332,018 82,056 408,801 158,839 429,650 179,688 Alliance 0.000% - Arapahoe 1,044 0.000% 243 801 299 745 314 730 Ba boro 4,727 0.001% 3556 1172 4,378 349 4,601 126 Grantsboro 1,319 0.000% 655 664 807 513 848 472 Mesic 1,424 0.000% 894 530 1,101 323 1,157 267 MinnesottBeach 2,503 0.001% 2,789 286 3,434 931 3,609 1,106 Oriental 12,538 0.004% 12,7 1 203 15,688 3,150 16,488 3,950 Stonewall 1,170 0.000% 778 392 958 212 1,007 163 Vandemere 1,766 0.000% 1340 426 1,650 116 1,734 32 Pas uotank 800,342 0.328% 1,015,000 214,658 1,249,731 449 389 1313468 513,126 Elizabeth City 294,253 0.118% 364,529 70,276 448,830 154,577 471,721 177,468 Pender 608,771 0.314% 969,849 361,078 11194138 585,367 1,255,039 646,268 Atkinson 2,456 0.003% 8,287 5,831 10,204, 7,748 10,724 8,268 Bur aw 36,821 0.030% 92,8761 56,055 114,355 77,534 120,1871 83,366 Saint Helena 1,855 0.003% 9,183 7,328 11,307 9,452 11,8831 10,028 Surf City 36,737 0.009% 29,195 7,542 35,947 790 37,780 1,044 Topsail Beach 17,994 0.004% 11,398 6,596 14,034 3,960 14,750 3,245 Watha 531 0.001% 4,355 3,824 5,362 4,831 5 636 5,105 Per uimans 187,613 0.078% 239,657 52,044 295,081 107,468 310,130 122,517 Hertford 18,578 0.017% 51,163 32,586 62,995 44,418 66,208 47,630 Winfall 3,991 0.003% 10,338 6,347 12.729 8,738 13,379 9,387 Person 764,084 0.305% 943,810 179,726 1,162,078 397,994 1,221,344 457,260 Roxboro 212,482 0.057% 174,702 37,779 215,104 2,623 226,075 13,593 Pitt 2 968158 1.054% 3,256,97 9 288,821 4,010 195 1,042,037 4,214 714 1,246 556 A den 37,102 0.036% 111,249 74,147 136,977 99,875 143,963 106,860 Bethel 16,991 0.014% 43,400 26,408 53.436 36,445 56,161 39,170 Falkland 688 0.001% 3,005 2,318 3,700 3,013 3,889 3,201 Farmville 149,829 0.037% 115,376 34,453 142,057 7,771 149,302 526 Fountain 5,910 0.003% 9,347 3,438 11,509 5,599 12,096 6,186 Greenville 931,830 0.481% 1,486 308 554,478 1,830,034 898,204 1.923,366 991,536 Grifton 21,312 0.020% 62,511 41,199 76,968 55,656 80,893 59,581 Grimesland 3,309 0.004% 12,047 8,738 14,833 11,524 15,590 1 12,281 6112/0210:11 AM Page 9 DRAFT The County of Orange The State of North Carolina RESOLUTION LEVYING THE THIRD ONE-HALF CENT(1/2¢) LOCAL GOVERNMENT SALES AND USE TAX AND PRESCRIBING THE METHOD OF DISTRIBUTION OF THE PROCEEDS WITHIN ORANGE COUNTY WHEREAS,The General Assembly has authorized the Orange County Board of Commissioners to levy a one- half percent(1/2%)local sales and use tax by enacting N.C.G.S. 105-517(b)in Section 34.14(a)of Session Law 2001424;and, WHEREAS,The Orange County Board of Commissioners held the public hearing on the issue of adopting this resolution on June 20,2002,as required by N.C.G.S. 105-517(b)and proper public notice of the Board's intent to consider this resolution was provided as required by N.C.G.S. 105-517(b);and, WHEREAS,The General Assembly levied a one half percent(1/2%)state sales tax effective October 16,2001 by enacting Section 34.14(a)of Session Law 2001-424,and this tax expires July 1,2003;and, WHEREAS,Orange County anticipates losing approximately$3.1 million in funds made available by the State of North Carolina to replace revenue lost because of legislative action:(1)to repeal sales taxes imposed on purchases made with Food Stamps;(2)to repeal property taxes imposed on inventories held by manufacturers,retailers and wholesalers;(3)to repeal taxes on intangible personal property;and,(4)to reduce taxes levied on residential property owned by low-income elderly taxpayers;and, WHEREAS,The Orange County Board of Commissioners hereby finds that,particularly in light of the circumstances cited herein,the levy of The Third One-Half Cent(1/2¢)Local Government Sales and Use Tax is necessary to adequately finance the operations of the county and the cities and towns herein. NOW,THEREFORE,BE IT RESOLVED by the Orange County Board of Commissioners: (1) There is hereby imposed and levied within Orange County The Third one-half cent(1/2¢)Local Government Sales and Use Tax authorized by Section 34.14(a)of Session Law 2001-424 and codified as Article 44 of Chapter 105 of the General Statutes of North Carolina. The tax hereby imposed and levied shall apply to the same extent and be subject to the same limitations as are set forth in said Session Law 2001424. (2) Collection of the tax by the North Carolina Secretary of Revenue,and liability therefore,shall begin and continue on and after the first day of July,2003,or sooner,if allowed by law. (3) The net proceeds of the tax levied herein shall be distributed by the Secretary of Revenue on a monthly basis to Orange County as prescribed by N.C.G.S. 105-520. The amount distributed to Orange County shall be divided among the county and the municipalities herein in accordance with the method by which the one percent(1%)sales and use taxes levied in Orange County pursuant to Article 39 of General Statutes Chapter 105 are distributed. (4) This Resolution is effective upon its adoption,and a certified copy hereof shall be forwarded to the North Carolina Secretary of Revenue. Adopted this day of 120 ye. ove 6/17/02 NCACC Status Report on Sales Tax& Local Revenue Securi , Bills RELIEF PROPOSED FOR COUNTIES' MEDICAID COSTS Legislation introduced last week in the House would enable counties to enact a one-half percent local option sales tax early in the upcoming fiscal year and earmark an additional one-half percent state sales tax to reduce county Medicaid costs. The bills contemplate the elimination of reimbursements to cities and counties. H1632 and H1633, both introduced by Rep. Russell Tucker (Duplin), are companion bills. H1632 removes the July 1, 2003 "sunset" on the sales tax scheduled to become a local sales tax on that date and transfers the proceeds from the half-cent tax to the Department of Health and Human Services to reduce the county share of Medicaid costs beginning in 2003-2004. H1633 would permit counties to levy a one-half percent sales tax effective August 1, 2002. It includes the hold harmless provision contained in the bill enacted in 2001 authorizing the local option tax and allows an abbreviated provision for notifying the Department of Revenue of county action to levy the tax. SENATE CONSIDERS ACCELERATED LOCAL SALES TAX OPTION The Senate last week approved a revenue package that includes authority for counties to enact a one-half percent sales tax effective in the upcoming fiscal year rather than July 1, 2003 as provided by the 2001 Budget Act. S1292 was approved by the Senate Finance Committee June 11 and debated on the Senate floor the next day. The bill would enable counties to levy a one-half percent sales tax to be effective August 1, 2002 and would provide funds to hold harmless local jurisdictions that receive less from the new %z cent sales tax than they currently receive as reimbursements for local taxes previously repealed by the General Assembly. The Senate also approved a floor amendment to the bill incorporating provisions of other bills that are designed to secure local revenues from action by the Governor when dealing with state budget shortfalls. See below for House action on local revenue security legislation. 51292 was approved by the Senate on second reading Wednesday, June 12 and on third reading on Thursday, June 13. It goes on to the House for consideration. HOUSE DEBATES LOCAL GOVERNMENT REVENUE SECURITY The House last week considered legislation to protect local revenues from action by the Governor when taking action to balance the State's budget. H1490, introduced by several members of the House, was favorably reported by the House Finance Committee on June 11 and sent to the House floor for debate on Thursday, June 13 where it was approved on second and third reading. It goes on to the Senate for consideration. The legislation would amend the Executive Budget Act and a number of other statutes to make it clear that revenues earmarked or appropriated to local governments, or taxes collected for local governments by the state, could not the "sequestered" or frozen by the Governor without legislative authorization unless all other funding sources have been exhausted.