BRUNSWICK COUNTY – A bill that would tax prepared food in order to fund beach renourishment is being protested by the state’s hospitality association.
The bipartisan House Bill 398, filed by Republican Frank Iler and Democrat Deb Butler, responds specifically to a request from Southport officials for increased funding to protect beaches and inlets from erosion and sedimentation.
The bill is not itself a tax. It gives the Brunswick county commissioners the option to apply a half-cent tax on prepared food sold at restaurants (and in some cases, grocery stores – the bill does not apply to most groceries); individual municipalities could also apply the tax.
For Butler, the real issue is decreasing federal funding for these projects, which she says are necessary as global warming drives weather patterns that are increasingly damaging to the county’s beaches. (Several beaches in New Hanover County will receive federal aid under the WIIN act, signed last year; Brunswick County was not so lucky.)
“Those of us who believe in science know that global warming is creating increasingly intense storms,” Butler said. “Our current administration doesn’t seem to see it that way, and we can’t expect federal funding for issues like nourishment to last much longer.”
Federal funding for beach and waterway maintenance has traditionally accounting for about 50 percent of project costs, with the state and intra-local county-municipal budgets making up the other half. Butler said the meals tax was “not a perfect solution,” and predicted that making up for decreases in state and federal funding would take “something a bit more ambitious.”
The bill authorizes an additional half-cent tax on food, or five cents on a 10-dollar meal. Those half-cents add up without stinging customers too badly, Butler said. She pointed out that revenue from the tax could not fully fund necessary projects, but said the county had to take some measures to prepare themselves.
“We’re looking at a conservative estimate of $17 million just to secure the deep-water channels at Moorehead and Wilmington. That’s the most conservative estimate, and that’s just the major ports, and even taking that, there was still no money for it in the 2016 [state] budget,” Butler said.
What Butler called a “necessary but interim stopgap” for impending funding shortfalls, Lynn Minges called “the last straw for a region that’s already stressed with a high cost of living and rising property taxes.”
Minges, president and CEO of the North Carolina Restaurant and Lodging Association, said the organization understood the dire need to provide funding for beach and waterway maintenance. However, Minges added that NCRLA “firmly opposes any kind of meals tax,” because they inequitably burden both restaurants and their customers.
“We get that the community needs tax revenue, whether it’s for beach renourishment or to maintain inlets, but these are things that the general public benefits from, and it needs to be an equitable tax,” Lynn said. “This tax is unfair to people who eat out as part of their job. For example, take a construction worker who is eating fast food every day because that’s just the nature of the beast.”
Part of the bill’s desired effect, according to Butler, is to defray the cost of beach maintenance across the state.
“Our fundamental belief, to put this bill in context, is that the reset of the state expects us – the coastal counties – to pay for the beaches. They want to come an enjoy it, they have houses here, they vacation here, but they are loathe to pay for it,” said Butler.
Butler said the meals tax would effectively pull extra revenue from vacationers dining out, but Minges said she disagreed.
“It’s not really a tourist tax, it doesn’t work that way,” Minges said. “These restaurants certainly do a brisk high-season business, but then they are also open the rest of the year, so that burden falls back on the locals and the restaurants. Especially these days, with higher labor costs, and higher food costs, restaurants operate on very thin margins.”
Minges said the NCRLA would prefer a referendum over the bill (a municipal referendum is one way residents could, under the bill, actually request the tax).
“We haven’t had a meals tax in almost 25 years, and – in the places they’ve tried – they’ve been soundly defeated. We say ask the people, and you’ll hear that they don’t want this bill,” Minges said.
HB 398 heads next to the House finance committee.