11SalesTaxIt’s been awhile since Cumberland County Commissioners and Fayetteville City Council members have spoken with each other regarding the future of local sales tax receipts. Mayor Nat Robertson is disappointed. “The county is 30 days in default to start a joint discussion,” said Robertson at a council committee meeting. He was referring to an agreement reached last year that both boards would meet no later than January to begin discussions on a new sales tax distribution contract. The current interlocal agreement is in effect until June 30, 2019. It virtually extended a contract that has been in effect for about 15 years. The towns of Spring Lake, Hope Mills, Stedman, Wade, Falcon, Godwin and Eastover are also parties to the arrangement.  

It provides that city and county elected officials begin negotiating a new sales tax distribution agreement no later than last month. Robertson said he hadn’t heard from Commission Chairman Glenn Adams. But in December, Adams proposed that a joint committee begin work on a new contract. City Council rejected the idea because it didn’t like the proposed membership composition. The city favors a working group of all involved so the issue can be resolved in six months. However, the four-member council committee offered no suggestion as to the working group’s makeup. Robertson, Mayor Pro Tem Mitch Colvin and councilmen Jim Arp and Kirk deViere serve on this new group put together by Robertson. 

By law, county government has the authority to use one of two methods to distribute  sales tax receipts. The method currently in use tends to favor the municipalities. But all parties agreed to it. Fayetteville took in nearly 50,000 residents in the 2005 phase V annexation better known as the ‘big bang.’ Council agreed to rebate to the county 50 percent of sales tax proceeds from the annexed areas. There was no expiration date. Robertson says it’s long past time that agreement was phased out. The council committee agreed to the mayor’s idea, noting the agreement has cost the city $60 million in lost revenue. The proposal is that refunds to the county be phased out by 10 percent annually beginning in 2021. After 2029, the city would retain all tax proceeds from the annexed areas. 

County government is considering adopting another method of revenue distribution using established tax districts. The entire county is Cumberland’s tax district. The city limit of Fayetteville is its district. However, most council members believe they have an advantage since the largest number of voters live in the city and smaller towns. And county commissioners would be reluctant to change the formula. “I’m a little disappointed that we haven’t started this conversation,” council committee member Jim Arp said. And now, complicating matters are lower property values this year, meaning all units of local government may have to adjust their property tax rates and/or cut services in order to reach revenue neutrality. Council awaits a response from the county.

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