City of Fayetteville officials have come to an agreement with Cumberland County Commissioners on the short-term distribution of local sales tax revenues. A lot of money is at stake —$192,897,697 during fiscal year 2018 alone. City Council and county commissioners and their senior management staffs worked cooperatively to agree on a formula that will be in place for at least the next four years.
The city preferred a longer-term agreement, but the county pointed to the upcoming 2020 U.S. census, which could change everything by altering population figures that guide the sales tax apportionment. State law gives county governments the responsibility of divvying up sales tax receipts either by population or tax districts. Since 2003, the population formula has been in force locally.
The so-called “Big Bang” annexation by Fayetteville of 40,000 residents 10 years ago came into play. The county won an agreement in which the city would sacrifice 50 percent of the tax revenues in annexed areas for which the county agreed to continue the population dispersion method.
A modified payback fund by which the city reimburses the county for annexed areas remains in effect. The revised plan continues the current 50-50 split of sales tax money from the annexations during year one. In the following three years, the municipalities would receive 60 percent of any new revenue. The county would get 40 percent.
The county had cautioned the city that, if the two entities couldn’t come to terms on the population distribution plan, commissioners would consider switching to the tax district formula. That would have cost the city of Fayetteville an estimated $5 million a year. And, the smaller towns would have suffered as well.
While county government had the advantage, commissioners had to consider that most voters live inside the municipalities. “I think this is the best deal for the citizens of Fayetteville,” said Mayor Mitch Colvin.
Councilwoman Kathy Jensen noted that local governments will have to go back to the drawing board in a couple of years to negotiate a new agreement.
Others pointed out that a significant deployment of Fort Bragg troops, unlikely as that might be, would reduce Fayetteville’s population. Residential areas of the Army post are in the city. The current agreement expires at the end of this fiscal year. But County Manager Amy Cannon gave the city until the end of this month to agree on the revised distribution formula. City Council did so Jan. 14 — by unanimous vote.