Legislation currently being debated in the North Carolina General Assembly could take $22.4 million in Wilmington sales tax revenue along with $24 million from New Hanover County from 2017 to 2020 and redistribute it to rural counties throughout the state—potentially forcing local officials to cut some public services and raise property taxes another 5 percent.
Wilmington Mayor Bill Saffo joined representatives from the New Hanover County and Brunswick County chambers of commerce at a press conference Tuesday afternoon to challenge proposed state sales tax legislation included in House Bill 117.
According to Malissa Talbert, spokeswoman for the City of Wilmington, instead of basing each county’s share largely on where sales occur – the current system – HB 117 would change to a population-based distribution. That would likely mean shopping and tourist destinations such as New Hanover County and Wilmington would get less revenue, while rural counties would see big gains.
Mayor Bill Saffo believes the bill could bring massive losses for Wilmington and New Hanover County and is “one of the worst public policies I’ve ever seen.”
“When you have that kind of loss in revenue and where our city’s budget — almost 50 percent — is public safety including fire and police, we’re either going to have to raise revenue by raising taxes or cutting services. There is no magic formula here,” Saffo said. “We’re going to have to make some very tough choices in the very near future.”
In June, the City of Wilmington passed a $144 million 2015-2016 fiscal year budget that included a 2.5 cent increase in property tax to help offset cuts made by the NC General Assembly last year, which eliminated $2.3 million in privilege license fees local businesses paid to the city. Mayor Saffo said if the city were to make up for the lost sales tax revenue with an increase in property taxes, it would mean city officials would have to bump the rate another 5 percent.
“These are two big hits to the gut, and for the state legislature to continue to pile on — what I believe to be bad policy — it’s just wrong,” said Saffo.
Both New Hanover and Brunswick counties would also see losses in revenue. County Commissioner Chairman Jonathan Barfield Jr., said New Hanover County could end up losing almost $24 million over the next three years and Brunswick officials are reporting the county could lose almost $9 million.
Kim Hufham, President and Chief Executive Officer of the New Hanover County Tourism Development Authority, announced Tuesday that according to a county-by-county tourism economic impact study released by Visit North Carolina, the economic impact from domestic travel in the year 2014 in New Hanover County was estimated at $507.9 million, representing a 6.33 percent increase over 2013 expenditures. Hufham added travel and tourism in the county generated $43.93 million in state and local tax receipts and travel-generated state and local tax revenues saved each New Hanover County resident an estimated $202.45.
According to Mayor Saffo, these positive economic impacts from local tourism, including the benefits of economic growth for local residents, will be misappropriated if HB 117 were to become law.
“We as a community, as a city, as a county do our part in government to attract tourism to our community, including re-nourishing our beaches, building convention centers, and river-walks. We’re able to do that by generating sales tax dollars to help off-set the expenses of those projects,” said Saffo.
“Now the money we spent locally to help generate that dollar is going to be redistributed to the other areas throughout the state that don’t have to do that. We’re going to have to tell our residents that all these tourists that are coming here we’re not going to be able to benefit from them.”
According to Tony McEwan, Director of Governmental Affairs for the City of Wilmington, HB 117 will now go back to the House to be debated for a final time before going to Governor Pat McCrory’s office. McCrory has publicly stated he is against the bill.
To see what other major municipalities have opposed the legislation, check out the “Alliance for a Prosperous North Carolina” petition here.
James Mieczkowski is a news reporter for Port City Daily. He can be reached at firstname.lastname@example.org On Twitter: @mieczkowskiPCD