SALES TAX REFERENDUM: How might new tax revenue be used?

BY ZACHARY HORNER, News + Record Staff
Posted 2/14/20

North Carolina counties which enact the Article 46 sales tax — a local option levy of an additional quarter cent on all retail items except for unprepared food and gasoline — have the option of also writing a resolution saying how the funds will be used. It’s not required, but the Chatham County Commissioners, like many county boards before it, have set aside four potential uses for any revenues from the tax, which will be decided on by Chatham voters during the 2020 primary vote in March.

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SALES TAX REFERENDUM: How might new tax revenue be used?

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Posted

Editor’s note: This is the second of a three-part series examining the proposed local sales tax option on Chatham County’s March 3 ballot. You can find Part 1 here.

North Carolina counties which enact the Article 46 sales tax — a local option levy of an additional quarter cent on all retail items except for unprepared food and gasoline — have the option of also writing a resolution saying how the funds will be used.

It’s not required, but the Chatham County Commissioners, like many county boards before it, have set aside four potential uses for any revenues from the tax, which will be decided on by Chatham voters during the 2020 primary vote in March.

Chatham’s resolution states that the board of commissioners “recognizes the need for revenue to support and enhance the County’s efforts in the areas of: Affordable Housing, Education, Parks & Recreation and Agricultural Preservation & Enhancement,” specifying that any revenue from the tax would be dedicated to those efforts. 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.

As part of the News + Record’s coverage of this referendum — which was placed on the ballot by a unanimous vote by the commissioners — we will examine the four areas listed, why they’re listed and what the funds might be used for.

Affordable Housing

More than a third of Chatham residents pay more than 30 percent of their income for housing, a statistic usually utilized to measure the need for affordable housing. The topic has been of significant interest to both the county and the Town of Pittsboro, which each have advisory committees dedicated to the topic.

Susan Levy, the chairman of the county’s committee, said the county’s Affordable Housing Advisory Committee was “really grateful” to see the item listed on the resolution.

“That could be a really significant amount and could really help us move the needle for affordable housing,” Levy said. “Without a real significant injection of funds at some point, it’s going to keep falling further and further behind the need.”

The county currently operates an Affordable Housing Trust Fund, administered by AHAC and approved by the commissioners, which distributes money to companies and firms producing affordable housing options. The first $209,000 was approved last month to three separate projects across the county to three different agencies — the Farm at Penny Lane, Rebuilding Together of the Triangle and Wallick Communities.

Levy argued that it was affordable housing’s inclusion on the referendum that convinced her to vote for it.

“It does cost something to residents, but what it costs compared to what it could should make it worthwhile,” she said. “I think it’s important for people to realize that it’s not just a sales tax increase for the sake of raising taxes. We are in favor of, if it does pass, a significant amount of it being allocated to affordable housing.”

Education

Both Chatham County Board of Education Chairman Gary Leonard and Chatham County Schools as a whole refrained from taking a position on the referendum, but both cited needs that could be addressed with funding.

A growing county needs schools, and per state law, county governments are responsible for paying for construction of and at least some operating costs for those schools. Chatham will see a new elementary school begin operation later this year and a new high school up and running next year.

“According to our...consultants, there will be continued growth in the county which will undoubtedly result in the need for more schools,” Leonard said. “With new schools opening, there will be additional operating costs.”

The school board recently voted to freeze supplement pay to teachers — not to eliminate the payments, but to keep them at their current levels instead of a planned increase. Counties across the state use these supplements to pad state-paid salaries as part of recruitment efforts.

“Our emphasis is always on recruiting and retaining quality employees across all areas in order to ensure smooth operations in the classrooms and all of the many areas that help support our students in some way,” Chatham County Schools said in a statement.

Parks & Recreation

The board of commissioners approved a comprehensive plan for the county’s parks and recreation system last February. The document, citing gaps in the county’s offerings and matches with county health priorities, calls for an additional 85.3 miles of greenways and nature trails over the next 10 years, as well as improvements for current parks and plans for future parks.

Parks and Recreation Director Tracy Burnett told the News + Record last July that the plan was “important to satisfy the desire for recreation needs and wants of the public, protect natural resources, preserve the rural character of the county and to plan for future growth.”

Two improvement plans — one each for Earl Thompson Park in Bynum and Southwest District Park in Bear Creek — were already approved by commissioners, with an estimated price tag of $7.9 million. Funds could be used for those improvements, as well as construction of a new park in Moncure.

Agricultural Preservation & Enhancement

Originally suggested as an option by Commissioner Andy Wilkie, on recommendation from the county’s Agricultural Advisory Board, farmland preservation has been a topic of discussion among commissioners in recent months. The 2010 Chatham County Farmland Preservation Plan stated that the agriculture sector in Chatham is “undergoing significant structural change” in the county’s shift from a “rural, resource and manufacturing based economy to a more suburban, service driven economy.”

The challenge, in response, is finding a way to provide protections for existing farmland and keeping agriculture viable in Chatham. Board Vice Chairman Diana Hales suggested in January allocating some funding specifically for a “farmland preservation fund.”

“This is an accessible way to put that land under conservation,” she said. “If we want to conserve our ag, and we want to conserve our open space, time is changing. So why not just make a commitment there?”

Hales’ comments echoed a request made by a joint committee of members from the Agriculture Advisory Board and Chatham Community Food Council. The request, made to the commissioners last October, said the county needed to make financial investments to help preserve farmland and rural character, two of the “top goals” of the Chatham County Comprehensive Plan.

“We are asking the board of commissioners to consider allocating recurring funds to establish a Farmland Preservation Program,” the statement said. “Working in partnership with existing agencies and non-profits, a Chatham County program would leverage existing resources while demonstrating commitment and providing a vehicle for future investment in some of the county’s most valuable long-term assets, its farmland and farmers.”

Other options for Article 46 revenue in this area include upgrades and new additions to the Chatham County Agriculture & Conference Center in Pittsboro.

Next week: In the third part of this series, we will report on what people are saying about this referendum, including efforts by a local political party to sway voters to say “no.”

Reporter Zachary Horner can be reached at zhorner@chathamnr.com or on Twitter at @ZachHornerCNR.

Comments

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Ed Block

ZACHARY:

The information you've included In this and your previous article regarding the

proposed Chatham County Sales Tax incense is highly misleading. First and foremost, this sales tax is a REGRESSIVE TAX,:meaning that it unfairly impacts low income families. This tax increase hits hardest the less fortunate people living in Chatham County Many of whom are unable to make ends meet and cannot afford to pay even the current sales tax. The sales tax increase is waived for purchases of food and gas, but families will still pay more for children's clothing, books and all other necessities.

Secondly, as you discuss, Chatham's resolution cites four worthy “potential uses” of revenue from the sales tax increase. However, there is nothing in the resolution guaranteeing the funds be spent for the purposes cited. In fact, once the referendum is passed, the additional revenue can be spent for “ANY ALLOWABLE USE BY COUNTIES.” And the Chatham Commissioners are “NOT required to implement even if approved by voters.” In other words, once the referendum passes, no matter what they tell voters beforehand, sales tax increase revenues go into the general fund and Commissioners are allowed to spend the money on anything.

Finally, promotional materials issued by sales tax advocates highlight the fact that Chatham County has the lowest tax rate among neighboring counties as a way to justify the sales tax increase. This is backward thinking. Voters in Chatham should take pride in the fact our county has a lower sales tax rate and soundly reject this attempt to increase it. I believe it is no coincidence that the Commissioners put this resolution on the primary ballot when far fewer voters will go to the polls than on the general election ballot in the fall when it would be much more difficult for a sales tax increase to gain passage. Do not be fooled by this tactic and vote NO to the Article 46 sales tax referendum.

Saturday, February 15
Ricky

If you're referencing pieces and it's a series, you should provide a link to the other articles.

Thursday, February 20