Agenda - 04-23-2013 - 7d - Laserfiche WebLink

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The NC General Statutes give the Board of County Commissioners the option of changing distribution methods each year as outlined in General Statutes 105- 472.b. below: "The board of county commissioners in each taxing county shall, by resolution adopted during the month of April of each year, determine which of the two foregoing methods of distribution shall be in effect in the county during the next succeeding fiscal year. In order for the resolution to be effective, a certified copy of it must be delivered to the Secretary in Raleigh within 15 calendar days after its adoption. If the board fails to adopt a resolution choosing a method of distribution not then in effect in the county, or if a certified copy of the resolution is not timely delivered to the Secretary, the method of distribution then in effect in the county shall continue in effect for the following fiscal year. The method of distribution in effect on the first of July of each fiscal year shall apply to every distribution made during that fiscal year." Attachment 2 provides an estimate of sales tax revenues distributed within Orange County by municipality. Under option one, only the County and cities and towns receive sales tax revenue. Under option two, in addition to the County, cities & towns, all special tax districts also receive Sales tax revenues. Each year population figures used in this distribution method are based on the most recent annual estimates of population as certified to the Secretary of Revenue by the Office of State Budget. Attachment 2 shows an increase in population of 1,451 for Orange County while Carrboro, Durham, and Hillsborough all show a slightly lower increase in population than the County as a whole. This change decreases slightly the County's share of property tax distributed based on population from 62.04% in fiscal year 2011/2012 to 62.01% in fiscal year 2012/2013. The Board of Commissioners has two different methods available to distribute sales tax revenue and each has distinct advantages and disadvantages to the County. There are no new revenues created. The two options are different methods to distribute existing sales tax revenues. CURRENT SITUTATION: Orange County has used the Population Method for the distribution of sales tax revenues for at least the last 21 years. If the Board wishes to change the method of distribution, the Board of County Commissioners shall adopt by resolution, during the month of April, the method of distribution of sales tax revenues that shall be in effect for the next fiscal year. If the Board fails to adopt a resolution changing the method of distribution, the method of distribution currently in effect shall continue for the following fiscal year. FINANCIAL IMPACT: Attachment 3 estimates the property tax rate impact on local governments of a change from a Population based distribution to the Property Tax Levy method. If the Board of County Commissioners were to adopt the Ad Valorem Property Tax Levy distribution option for local option sales tax, it would have a negative material impact on all cities and towns. The County and all special taxing districts would benefit from the change at the expense of the cities and towns with the exception of Durham. As of April 5, 2013, the County increase in revenues was estimated to be $605,576. If the County changed to the Ad Valorem Property Tax Levy distribution option for local option sales tax, the increase as of April 23, 2013 is $1,053,217. The increase of $447,641 from fiscal year 2011/12 to fiscal year 2012/2013 is mainly due to changes in state certified population figures shown on Attachment 2, and increased distributions received due to the recovering local economy.