A Fayetteville City Council committee met late last month in response to a plea from County Commission Chairman Larry Lancaster. He had sent the city details of commissioners’ sales tax distribution proposal 10 months ago. County Manager Amy Cannon told the board’s finance committee last week that when Lancaster didn’t hear back from the city, he sent them a reminder in early October.
Cannon gave committee members details of the city’s counteroffer, which was received last week. As Up & Coming Weekly has reported, it would renew the sales tax agreement with the county and small towns for 10 years. It would cap future reimbursements from the city to the county at the FY2018 level of 7.3 million for those 10 years. Cannon also explained that the city’s counterproposal would phase out reimbursements to the county and towns over a 5-year period.
She reiterated that the county’s current agreement with local municipalities expires June 30, 2019. Cannon noted that time is running out. She stressed that any change in the agreement or sales tax distribution method would have to take place no later than April, 2019, to be effective with the 2019-20 fiscal year.
“It’s time for you to do what you need to do and not prolong the situation,” Falcon Mayor Cliff Turpin told commissioners. He is chairman of the coalition of Cumberland County mayors.
Except to acknowledge the county manager’s report, the finance committee took no action and gave no indication of when they will. Commissioner Marshall Faircloth did say he would like to hear the details and options available to all concerned.
“This has been a lingering issue,” Fayetteville Mayor Mitch Colvin said during the recent city council committee meeting.
Tax revenue reimbursements of $86 million have been made by the city to the county and small towns since 2004. Colvin pointed out that the greatest percentage of retail sales and taxes raised occur in the city limits of Fayetteville. Proponents of the city’s position on tax revenue distribution say privately that county commissioners know that two thirds of community voters live in the city.
The amount of sales tax revenue collected in Cumberland County is staggering. Last fiscal year it amounted to $192,897,697, said Cumberland County Finance Director Vicki Evans. When divided among county government and the eight municipalities, sales tax receipts represent a significant source of funding for local government operations.
North Carolina law provides that the governing boards of each of the state’s 100 counties determine how to distribute sales tax receipts. They can select one of two methods – population or property values. Cumberland County Commissioners and many others have traditionally used the population method, which benefits the municipalities.