Agenda - 03-06-1991 - Laserfiche WebLink

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THE FACTS ON State Reimbursements to Local Governments Whst are reimbursements? 0 Funds to replace certain local taxes that the General Assembly eliminated: • The property tax on business inventories; • Some of the intangibles tax (gone are taxes on cash on de- posit in banks or insurance companies and cash on hand); • The homestead exemption — Some low - income older or dis- abled residents have a partial property tax exemption; and • Sales taxes on food stamp pur- chases -•- Purchases made with food stamps are exempt from local sales taxes. How much money is involved? 0 In 1990 -91, Tar Heel cities and towns will get $75 million in re- imburseamsts. Counties will get about $163 million. Together local goverranatts will receive about WS m2iion in reimbursements. 0 EMImates are that municipalities would get $765 million in rdm- bu:sements in FY914Z and coun- ties would get $165.5 million in FY914Z Why does the General Assembly pro- vide reimbursements 1 When the General Assembly re- paled the business inventory tax and eliminated part of the intangibles tax, it committed to replacing those reve- nues. Why? Because these were local revenues that the General Assembly chose to repeal to help businesses, and individuals. Local governments still needed the revenues these taxes brought in, so legislators provided re- imbursements. For the same reason, there are par- tial reimbursements for the homestead exemption and replacement of reve- nues lost because sales taxes are not charged on food stamp purchases. Can the General Assembly cut reirn- burwments T Yea The General Assembly must vote each year to appropriate the reim, bursements for local governments. In 1990 there were proposals to cut reim- bursements because of a tight state budget. This year, the state's gap be- tween revenues and expected spend- ing is even wider. Some are already talking of cutting reimbursements. Are there alternatives? Local officials believe that munici- palities and counties need a stable al- ternative to the reimbursements. Mu- nicipal legislative goals call for an additional local option sales tax to re- place the reimbursements — provided that every local government gets 'at least as much revenue from this source as from the reimbursements. Lord of- ficials are willing to consider other al- ternatives. Governor James G. Martin has pro- posed an additional one -half cent local option sales tax to replace reimburse- ments. What can local officials do? Look closely at the listing of reim- bursement amount and property tax replacement impact for each munici- pality. The League maiM this infor- mation out to all cities and towns on Feb. 7. Talk with legislators. Let them know how much reimbursements your city or town gets and what would hap- pen --- in tens of increases in your tax rate — if reimbunsements were cut. Support an additional local option sales tax. Prepared by the North Carolina League of Municipalities; P.Q. Box 3069, Raleigh, NC 27602 --- (919) 834 - 1311.2191