Chatham County voters easily approved a malt beverage referendum, allowing the “on-premises” sales of malt beverages at places like tap rooms and craft beer breweries with tasting rooms in unincorporated areas, and narrowly passed a local quarter-cent sales tax in Tuesday’s primary election.
The malt beverage issue passed by a wide margin, with about 74 percent of those casting ballots in Chatham voting “for” it. But the controversial sales tax issue — with those voting early favoring by a comfortable margin — was extraordinarily close, passing by just over 600 votes.
A total of 51.33 percent (11,859) voters cast ballots “for” the quarter-cent sales tax, while 48.67 percent (11,244) voted against it.
The sales tax
The Chatham County Board of Commissioners voted unanimously in October 2019 to put the “Article 46” issue on the March primary ballot. In the 2007 state budget, the N.C. General Assembly enacted a number of stipulations, including giving counties the option to “levy a local sales and use tax at a rate of one-quarter percent.” Article 46 is the section in state law where the rules for this tax are outlined.
No county in North Carolina is required to have an Article 46 tax. The state statute says boards of county commissioners “may, by resolution and after 10 days’ public notice,” put this tax into effect. Prior to Tuesday’s election, 42 of North Carolina’s 100 counties had this levy in effect.
During the November 2018 election, 20 counties had an Article 46 referendum on the ballot. Just four passed: Graham (62.4 percent for), Moore (58.8 percent for), Stanly (50.8 percent for, passed by 368 votes) and Swain (54.3 percent, passed by 445 votes) counties.
The local option sales tax applies to anything normal sales tax applies to except for unprepared food like groceries or gas purchases. With the tax in effect, anyone going through a drive-thru for a cheeseburger would pay the tax, as would someone who went to Lowe’s Hardware to pick up a hammer and some nails. But on a trip to Piggly Wiggly for your weekly grocery trip, or stop by a BP to fill your car’s gas tank, the tax wouldn’t be charged.
The State of North Carolina has a 4.75 percent sales tax effective statewide. Counties can enact additional sales taxes to generate additional revenue. Currently, Chatham has 2 percent in additional sales tax. With its passage, that 2 percent sales tax simply increases to 2.25 percent.
Prior to Tuesday’s vote, Chatham’s 6.75 percent sales tax rate was tied for the lowest in North Carolina, along with a majority of North Carolina’s 100 counties. Alamance County is the only neighboring county with a similar rate.
Lee, Moore and Randolph counties have all enacted Article 46 and have 7 percent sales tax rates. Wake County has not enacted Article 46, but has a 7.25 percent rate. Durham and Orange counties, which both have the Article 46 option, have sales tax rates of 7.5 percent.
The Chatham commissioners passed a resolution in October stating they would like the funds to be used for education, agriculture/land banking, affordable housing and parks and recreation purposes. This is by far the most diverse of surrounding counties. Most included school construction or education debt in their resolutions. Orange County allocates half of its revenue for economic development incentives and the other half for public schools capital projects.
A report from the N.C. Department of Revenue stated that Chatham could have received an additional $1.6 million in 2017 if the tax had been in place that calendar year.
Malt beverage vote
Prior to Tuesday’s vote, restaurants, hotels, breweries and other establishments were allowed to sell beer and other malt beverages like lager, ale, porter and other brewed or fermented beverage for on-premises consumption within the Towns of Pittsboro and Siler City. But in the county’s unincorporated areas, the rules are a bit different — current regulations allow sale at hotels and motels, restaurants, private clubs, community theaters and convention centers. So places like Town Hall Burger & Beer in Briar Chapel, if they have a Malt Beverage Permit, can sell beer.
With its passage, the referendum expands those rights to places like craft breweries and tasting rooms. Examples of those include House of Hops and Fair Game Beverage Company in Pittsboro. But those types of establishments could not exist in unincorporated areas as of now.
The Town of Pittsboro has allowed these types of sales since 1971, and the Town of Siler City authorized on- and off-premises sales of both malt beverages and unfortified wine this past November. But those votes were not sure things — 53 percent of Siler City residents voted yes for malt beverages and 54 percent voted in favor of the unfortified wine referendum.
After the Siler City referenda, Oasis Open Air Market Owner Jackie Adams said she felt the change would “put Siler City on par to make headway in social and economic endeavors as other small successful N.C. towns have done already.” North Carolina ranks 7th nationally for the number of breweries that brew and sell craft beer in the state with craft beer sales creating an economic impact of $2 billion annually, according to the Brewers Association. The industry also creates about 12,000 jobs and $300 million in annual wages in the state. It’s seen a boom in recent years, going from 45 such breweries in 2010 to 260 in 2018.
Asked about the countywide referendum prior to Tuesday’s vote, Chatham Economic Development Corporation President Alyssa Byrd said not only would the referendum create “consistent” rules across the county, it would improve quality of life in the area.
“Bottle shops and craft breweries are most often locally-owned small businesses, and frequently serve as community gathering spaces,” she said. “This is a good opportunity for the expansion of both new and existing businesses.”
Reporter Zachary Horner can be reached at zhorner@chathamnr.com or on Twitter at @ZachHornerCNR.