Cumberland County commissioners have agreed to a compromise for the future allocation of local sales tax funds. County Manager Amy Cannon presented the proposal to the mayors of Cumberland County’s municipalities Dec. 18. Fayetteville Mayor Mitch Colvin was absent and Mayor Pro-Tem Ted Mohn appeared in his place.
Mohn says the plan will have to be discussed by city council before the end of January, when the existing interlocal revenue sharing agreement expires. Cannon told the Mayor’s Coalition that commissioners have decided to continue apportioning sales tax proceeds by population rather than the tax district method, which most large counties use. State law mandates that county governments determine which allocation method to use. The per capita method tends to benefit cities and towns.
Cannon said the county’s proposal is valid until midnight Jan. 31. Without a new signed agreement from all nine municipalities by then, county commissioners will vote on whether to change to the ad valorem allocation method at their Feb. 4 meeting. The ad valorem method would divide the tax proceeds by tax district. County government would benefit because the entire county is its tax district.
The county is proposing a four-year agreement rather than a 10-year term preferred by Fayetteville City Manager Doug Hewett. Neither Hewett nor Mohn commented on the proposed compromise. Cannon said the four-year plan coincides with the county commissioners’ current terms of office.
“We’ve kicked the can long enough,” said Falcon Mayor Cliff Turbin. “It’s time for us to make a move.”
Cannon told the mayors the county proposes a payment adjustment based on tax revenue growth from a base established in fiscal year 2020. During the remaining three years, revenue growth would be shared between the county and the municipalities on a 40/60 percent basis.
The city proposed that its portion of revenue given to the county and towns be phased out altogether.
Turbin, serving as chairman of the mayor’s coalition, told the group he was grateful that commissioners were willing to support the population tax distribution method.
“In the spirit of continued cooperation, the county is willing to reduce our share of future sales tax growth,” Board of Commissioners Chairwoman Jeannette Council said. She reiterated Cannon’s comment, saying, “The county is willing to continue under the per capita method only if there is an agreement to avoid revenue losses for any local government.”
If the commissioners were to change to the ad valorem method, the county’s general fund could see an increase of almost $3 million in sales tax revenues. Cumberland County Schools could gain approximately $500,000; the county’s fire districts could reap $2.9 million; and the Parks and Recreation district could receive $1.3 million. Conversely, all the municipalities would lose revenues. The city of Fayetteville could lose an estimated $5.4 million; Hope Mills could lose $1.1 million; and Spring Lake over $600,000.
The board of commissioners voted in 2003 to go to the ad valorem method because of severe revenue losses that resulted from municipal annexations. They amounted to over $4 million a year, Cannon said, before the 2005 “Big Bang” annexation that cost the county even more.