Watauga County, three towns ask N.C. Supreme Court to reject Boone’s tax challenge

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  • Watauga County and three of its towns want the N.C. Supreme Court to reject a lawsuit from Boone. That town challenges Watauga's system for splitting local sales tax revenue.
  • A unanimous N.C. Appeals Court panel ruled against Boone in what's described as a "messy, local political squabble."

Watauga County and three of its towns urge the N.C. Supreme Court to reject Boone’s request to take up a dispute involving local sales taxes.

Boone is trying to drag the state’s highest court into a “messy, local political squabble,” according to a document filed Tuesday with the state’s highest court.

“This lawsuit by the Town of Boone and one of its residents alleges in sensationalistic fashion that Watauga County and the Towns of Beech Mountain, Blowing Rock, and Seven Devils engaged in an ‘illegal sales tax distribution scheme,’” according to the court filing. “The reality, however, as the complaint reveals, is that this case amounts to a local political debate going back 35 years.”

The dispute focuses on Watauga County commissioners’ decision about whether to split local sales tax revenue on a “per capita” basis focusing on population or an “ad valorem” basis focusing on local tax values. State law gives counties the choice of either option.

“As the Plaintiffs acknowledged in their complaint, Watauga County’s decision of which distribution method to adopt has been the subject of political discourse for decades,” according to the filing from Watauga County, Beech Mountain, Blowing Rock, and Seven Devils. “From 1987 until 2013, Watauga County chose the per capita method. During these years, Beech Mountain and Blowing Rock ‘petitioned the Watauga County Commissioners on several occasions to change the local sales tax distribution to the ad valorem method,’ because it would ‘greatly benefit those communities.’ But they were unsuccessful. So for 25 years, Beech Mountain and Blowing Rock lost the political debate, while Boone repeatedly emerged as the political winner.”

“In 2013, however, the County decided that it was time for other municipalities in Watauga County to enjoy the benefits that Boone had enjoyed for so long, and it changed the method of distribution to ad valorem,” the filing continued. “Significantly, the County’s decision meant that those benefits would extend to the County’s local fire districts, which do not receive sales tax allocations under the per capita method but do receive distributions under the ad valorem method — a worthy cause that the County considered in its legislative judgment. … So after 25 years of the local fire districts getting nothing, the Watauga County Commissioners in their legislative discretion decided that their local fire districts should receive some distributions, too.”

Watauga and the three towns contend Boone was “[f]rustrated that its 25-year streak as the political winner had come to an end.” After failing to reverse county commissioners’ decision, Boone took the issue to court.

“To be sure, ‘local political squabbles’ — in particular, ‘messy’ ones — are meant to be resolved at the ballot box, not in a courtroom,” according to Tuesday’s filing. “When Boone failed in its attempts at political persuasion, however, it left its ballot-box remedy behind, and, instead, sought to foist this ‘messy, local political squabble’ on the judicial branch.”

Watauga County and the three towns also accuse Boone of violating legal rules. Boone changed its arguments from the trial court level when it took its lawsuit to the N.C. Court of Appeals, according to Tuesday’s filing. A unanimous three-judge appellate panel rejected Boone’s case.

The latest court filing arrives two weeks after Boone filed paperwork asking the Supreme Court to take the case.

Boone argues that county commissioners adopted an illegal “kickback system” in 2013 that costs Boone $2 million each year.

“This case raises the question whether any town or taxpayer can question county and municipal misconduct when the violations of law are causing millions of dollars of damage,” wrote attorneys representing Boone and resident Marshall Ashcraft.

Boone contends that the system in place since 2013 amounts to neither a “per capita” nor an “ad valorem” system. Instead, Boone argues that the three other towns surrender to the county government some of the gains they would make under an “ad valorem” system. Boone contends that the arrangement violates state law.

There is no deadline for the state Supreme Court to decide whether to take the case.