News: CJ Exclusives

Primary ballots will include sales tax increases

Voters in at least a dozen counties will have tax on ballot; referendums have not fared well since option allowed in 2007

Voters in numerous North Carolina counties will vote for more than candidates in their districts. Twelve counties feature ballots in the May 8 primary with an option to approve a one-quarter percent sales tax hike.

Bertie, Clay, Gaston, Jones, Lenoir, Lincoln, Pasquotank, Person, Rockingham, Rutherford, Washington, and Watauga counties are asking voters to choose whether to raise the sales tax. More counties could add a similar measure to their ballots in the next few weeks.

In 2007, the General Assembly passed legislation allowing counties to propose an additional one-quarter percent sales tax. Voters are asked to approve the taxes in a referendum, and while the counties can use the revenue for whatever they choose, they’re prohibited by law to say on the ballot where that money would go.

Julie Tisdale, the John Locke Foundation’s city and county policy analyst, said most counties plan to use the sales tax increase to fund education.

Thirty-one counties have already introduced the tax since the law passed. Tisdale said most sales tax referendums have failed on their first attempts, including in the 12 counties now holding a sales tax referendum for the upcoming election.

“This particular tax increase fails on the ballot far more often than it succeeds, so I expect a lot of them will fail,” Tisdale said. “This is not a popular tax.”

Tisdale said research suggests that when local taxes are raised and are higher than nearby counties, people will cross county lines to shop. Small decreases in employment and payroll, particular in retail and manufacturing jobs, are also a possible consequence of sales tax hikes.

While the effects are most profound when the taxes are first implemented, Tisdale said they do tend to equalize a bit over time. Still, she recommends counties exercise caution before hiking sales tax because the negative effects may outweigh the increased revenue.

Sara Mogilski, chief communications officer at the N.C. Association of County Commissioners, said it is up to each county and its voters to decide whether to increase resources to meet the demand for services.

“The association promotes strengthening local decision-making to respond to local needs, including paying for state-mandated services they provide,” Mogilski said. “Supporting efforts to preserve and expand the existing local revenue base of counties is one of NCACC’s long-standing goals, as determined by our members.”

The one-quarter percent sales tax increase isn’t the only item on upcoming ballots. Some other ballot amendments include:

  • Dare County: Allow Hatteras Village Community Center District to expand the use of ad valorem taxes to include funding the construction and maintenance of multi-use pathways.
  • Gaston: Authorize $250 million in school bonds to fund school construction needs.
  • Greene: To permit the sale of mixed drinks in hotels, restaurants, private clubs, community theaters, and convention centers.
  • Jones: Authorize a tax for fire protection in the Maysville Fire Protection District.
  • Moore: Approve a $103 million school bond.
  • Rowan: Approve the lease by the city of Salisbury of its Fibrant Communications system to Hotwire Communications Ltd.