Orange County NC Website
Browse       Search
13 <br /> Commissioner Bedford asked if staff would come back to the Board if there is a need for <br /> additional funding for the new position. <br /> Kirk Vaughn said any reclassification of the position would happen administratively. <br /> VOTE: UNANIMOUS <br /> b. Update to Interlocal Agreements between County and Towns on Tax Collection <br /> The Board: <br /> 1) Received information on the current interlocal agreement (ILA) between Orange <br /> County, Chapel Hill, Carrboro and Hillsborough for municipal tax collection charges <br /> and the potential need for an update to the agreement; <br /> 2) Considered authorizing the Tax Administrator and Budget Director to begin <br /> discussions with Chapel Hill, Carrboro and Hillsborough on the current ILA and <br /> potential actions to meet the County's costs related to billing and collecting taxes for <br /> the municipalities; and <br /> 3) Considered authorizing the Tax Administrator and Budget Director to initiate <br /> discussions with the cities of Durham and Mebane based on pending expiration of <br /> those respective tax collections agreements <br /> BACKGROUND: In 1979 the County entered into an agreement with Chapel Hill, Carrboro, and <br /> Hillsborough whereby the Orange County Tax Collector would, on behalf of the Towns, bill and <br /> collect their tax levies in accordance with North Carolina General Statute 160A-461. <br /> In 2006 the agreement was updated, and the municipal tax collection rate was set at 0.5% of the <br /> annual amount collected for each of the towns. The expiration was set not to exceed 99 years <br /> from July 1, 2006. The agreement requires unanimous agreement from all three towns to make <br /> amendments and requires a one-year notice for termination. <br /> In 2009, an addendum was approved by all parties that, in addition to the 0.5%tax collection rate, <br /> updated the agreement to add an agreed-upon annual surcharge for new software installed for <br /> the purpose of tax ownership, billing, and collection. However, the annual surcharge addendum <br /> has not been utilized to supplement revenue for the County. <br /> Research by Tax Office staff indicates that the current 0.5% municipal tax collection rate is below <br /> the state average and does not sufficiently sustain the costs incurred by the County to bill and <br /> collect municipal taxes, including software costs. <br /> The Tax Office proposes the following plan to the realize the revenue originally envisioned by the <br /> annual software surcharge: <br /> 1) Meet with the towns staffs to discuss the current ILA and potential actions to meet the <br /> County's costs related to billing and collecting taxes for the towns. <br /> 2) Discussion would include the possibility of an amendment to the current ILA to for a <br /> proposed increase of the fee as of July 1, 2026 and the possibility of replacing the current <br /> joint ILA with separate ILAs that follow a shorter expiration schedule. <br /> The County separately has agreements with the cities of Durham and Mebane that are both <br /> scheduled to expire on June 30, 2026. The Tax Office proposes to initiate discussions with both <br /> jurisdictions to address the pending expirations and also in order to potentially standardize the <br /> fee schedule and expiration schedule between all of the municipal collection ILAs. <br />