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ORANGE COUNTY <br />BOARD OF COMMISSIONERS <br />ACTION AGENDA ITEM ABSTRACT <br />Meeting Date: June 6, 2000 <br />Action Agenda <br />Item No. JC-Gt <br />SUBJECT: Resolution Implementing a Gross Receipts Tax on Rental Vehicles Exempted <br />from Pro ert Tax <br />DEPARTMENT: County Manager PUBLIC HEARING: (Y/N) No <br />ATTACHMENT(S): <br />Resolution <br />Senate Bill 1076 <br />INFORMATION CONTACT: <br />Rod Visser, ext 2300 <br />TELEPHONE NUMBERS: <br />Hillsborough 732-8181 <br />Chapel HIII 968-4501 <br />Durham 688-7331 <br />Mebane 336-227-2031 <br />PURPOSE: To consider enacting an ordinance implementing a gross receipts tax on certain <br />rental vehicles to replace the ad valorem tax on such vehicles that was recently rescinded by <br />the North Carolina General Assembly. <br />BACKGROUND: On May 17, 2000 Governor Hunt signed legislation (Senate Bill 1076) <br />enacted by the General Assembly that substituted a gross receipts tax for property taxes on <br />leased or rented motor vehicles. The law authorizes counties to levy a gross receipts tax of up <br />to 1'/Z % on short-term leases or rentals, and repeals the property tax on vehicles subject to <br />such. lease or rental. Municipalities have been granted authority to levy the same amount of <br />tax, in addition to any levied by counties. The law provides that permission to levy the gross <br />receipts tax takes effect on July 1, 2000. <br />In order to substitute the new gross receipts tax for the repealed property tax on rental vehicles, <br />local governments are required to take action to levy the tax. The North Carolina Association of <br />County Commissioners has developed a model resolution to carry out this action. That <br />resolution has been modified to apply to Orange County and is attached for the Board's <br />consideration. In view of the newness of this law, the logistic and administrative details of how <br />the tax will be collected and receipts disbursed are still being worked out. <br />FINANCIAL IMPACT: An Orange County ordinance must be in place before July 1, 2000 if <br />the County wishes to collect all the revenue available to it to replace that which will be lost by <br />the exemption of rental motor vehicles from ad valorem property taxes. No definitive <br />assessment has been developed regarding the financial impact of the new law because it was <br />so recently enacted. Preliminary indications are that there should be no dramatic positive or <br />negative impact on overall Orange County revenue, assuming the Board of Commissioners <br />decides to proceed with the new gross receipts tax on rental vehicles. Staff estimates that the <br />revenue that will be lost by the County because of the exemption of rental vehicles from ad <br />