The local distribution of sales tax revenue has driven a wedge between Cumberland County Commissioners and the Fayetteville City Council. In the next few days commissioners will begin discussion of changing the method by which sales tax proceeds are divided between the county and the nine municipalities. If that happens, Mayor Nat Robertson has said he will cut city services to offset up to $4 million in lost revenue. Town governments are accusing the City of Fayetteville of looking after its own interest to the detriment of the small towns. Fayetteville Mayor Nat Robertson concedes the point, saying he has the obligation “to protect the interests of city taxpayers.”
For the last 13 years, the city and county have used a distribution method that shares sales tax revenues by population with a caveat. The city agreed to divide proceeds in a large area that it annexed. As the city’s population grew, the unincorporated area of the county shrank. Negotiators agreed it was only fair for the city to rebate the county one half of the new money it collected in those annexed areas. The towns got smaller shares of sales tax proceeds depending on their populations. The agreement between Cumberland County and Fayetteville has been renewed a couple of times and expires at the end of the current fiscal year.
Fayetteville Mayor Nat Robertson and City Manager Ted Voorhees have proposed phasing out the 50/50 sharing of revenue taken in from annexed areas. The county is opposed because it would lose millions over the five-year phase out period. Robertson and Voorhees believe it’s the city’s money to keep because roughly 90 percent of sales tax revenue is generated inside the city.
The county is considering changing the method by which tax money is distributed to the ad valorem system or tax districts. The money would be divided, not by population, but by territories that each government unit covers. Cumberland County’s tax district is the entire county, which means it would get the lion’s share of tax collections. The city and towns would get much less money than which they’ve been accustomed to.
Commissioners have given the city until the end of this month to agree to a continuation of the current tax-sharing arrangement. City Manager Voorhees says Fayetteville “is prepared to extend the current agreement,” with a caveat: The city and the Town of Spring Lake want to claim all tax money available under the current formula in areas of Fort Bragg annexed by Fayetteville and Spring Lake.
Commissioners have refused to negotiate a compromise with City Council, and have threatened in no uncertain terms to change the tax distribution formula on July 1. “Commissioners are not willing to serve on a sales tax negotiating team because the compromise has been on the table since 2013,” says County Commission Chairman Marshall Faircloth. “Further negotiation opens the door to the city’s desired phase-out of the agreement, putting county services at risk,” he added. The towns of Hope Mills, Wade, Falcon, Godwin, Stedman, Vander and Eastover would also suffer pro rata revenue losses. Hope Mills Mayor Jackie Warner accused Fayetteville of bullying, saying “We can’t fight the big dog…we have no voice.”