Presentation by Rebecca Troutman, intergovernmental director for the NC Association of County Commissioners.

1. Senate Local Sales Tax
Restructuring Proposals
Rebecca Troutman,
NCACC IGR Director

2. NCACC—Who We Are
• 100 counties strong
• Focus on advocacy, county services, education, & research
• Sponsor debt set off ($224 M to counties & cities) & EMS
Medicaid Enhancement ($258 M for counties)
• Offer county-centric risk management services
• Expanding research
2

3. Bill Sponsors—Who They Are
S608, Simple and Fair Formula
for Sales Tax Distribution
Sen. Bob Rucho, (Mecklenburg)
Senate Finance Chair
S369, Sales Tax Fairness Act
Sen. Harry Brown, (Jones, Onslow)
Senate Approps. Chair & Majority
Leader
Why? Sincere desire to help struggling counties

4. Local Sales Tax – Summary
G.S. & Year Amount Referendum?
Allocation—Pt.
Delivery or Per
Capita?
Restricted Use?
Applies
to Food?
Art. 39; 1971 1 penny Optional PD No Yes
Art. 40; 1983 ½ penny Optional
PC w/ adj.
factor
30% for school
capital
Yes
Art. 42; 1986 ½ penny Optional
PD
(Originally PC)
60% for school
capital
Yes; PC w/
adj. factor
Art. 44; 2001
2007-ceded to
state via Medicaid
swap
½ penny Optional ½ PD; ½ PC
No, but replaced
repealed
reimbursements
No
Art. 43; 2007 for
all counties
½ or ¼
penny
Required PD
Yes—public transit
only
No
Art. 46; 2007 ¼ penny Required PD No, & no city share No
Statute now contains Medicaid Hold Harmless

5. S369—Mechanics of Sales Tax Restructuring
• Repeals 2 cent county-levied sales tax & converts
& adds to state sales tax
– Phased in over 3 yrs; starts Jan. 1, 2016
– Subjects to annual appropriations process
• Sets statutory percentage to allocate proceeds
• Distributes comparable percent of state tax to
locals via per capita
– Eliminates ad valorem intra-county option
– Phases out per capita adjustment factors
• Drafting error applies adj. factors to entirety before phase
out

6. S369—Mechanics of Sales Tax Restructuring
• Retains county public school set aside
requirements
– Applies to food sales so increases requirements
• Eliminates county hold harmless to cities for
Medicaid relief swap (for now)
– County Medicaid hold harmless payment in
question
• Allows ¼ cent county-only levy to be by
resolution temporarily

7. Local Sales Tax – Summary
G.S. & Year Amount Referendum?
Allocation—Pt.
Delivery or Per
Capita?
Restricted Use?
Applies
to Food?
Art. 39; 1971 1 penny Optional PD No Yes
Art. 40; 1983 ½ penny Optional
PC w/ adj.
factor
30% for school
capital
Yes
Art. 42; 1986 ½ penny Optional
PD
(Originally PC)
60% for school
capital
Yes; PC w/
adj. factor
Art. 44; 2001
2007-ceded to
state via Medicaid
swap
½ penny Optional ½ PD; ½ PC
No, but replaced
repealed
reimbursements
No
Art. 43; 2007 for
all counties
½ or ¼
penny
Required PD
Yes—public transit
only
No
Art. 46; 2007 ¼ penny Required PD No, & no city share No

8. S608—Differences/Similarities
• Repeals 2 cent county-levied sales tax & converts
& adds to state sales tax
– Implemented fully July 1, 2016
– Subjects to annual appropriations process
• Sets statutory percentage to allocate proceeds
• Distributes comparable percent of state tax to
locals via per capita
– Creates base allocation = 2013-14 local sales tax
– Preserves ad valorem intra-county option
– Phases out per capita adjustment factors
• Drafting error applies adj. factors to entirety before phase
out

9. S608—Differences/Similarities
• Retains county public school set aside
requirements
– Applies to food sales so increases requirements
• Eliminates county hold harmless to cities for
Medicaid relief swap (for now)
– Maintains hold harmless in base allocation
– County Medicaid hold harmless payment in
question
• Keeps ¼ cent county-only levy to be by
referendum only

10. What Does This Mean to Orange County & Its Towns?
• Local revenue becomes state revenue subject to state
appropriations
– County per capita adj. factor of 115% eliminated
– No change in intra-county allocation
• Orange opted per capita
– County Medicaid hold harmless = $5 mil; city = $3.6 mil

11. Thank You!