N.C. House budget plan bad news for county

The budget passed by the N.C. House Thursday night may spell bad news for Rowan County commissioners, merchants and many residents.

To balance the state budget, the House proposes to repeal reimbursements to local governments and allow counties to enact a half-cent sales tax.

Commissioners who backed out of a deal on school funding to avoid a property tax hike will now have to raise the sales tax rate to 6.5 cents, if the House budget stands.

“It’s the worst-case scenario,” said County Manager Tim Russell. “It puts the blame for a tax increase on the locals, not the state.”

He blamed much of the budget mess and the plan to shift taxing responsibility on ineffective leadership in the General Assembly.

The double whammy for Rowan is that while Rowan will have to enact the new tax, some neighboring counties may not.

“In our case, it would be mandatory, we have no choice,” said the county manager.

The county has nearly $4 million in state reimbursements figured into the current budget. The $4 million is equivalent to about 6 cents on the current property tax rate.

Russell said Iredell and Cabarrus commissioners have said they will not enact the extra half-cent on the sales tax.

If that happens, those counties could attract more Rowan shoppers wanting to save a few dollars on big-ticket items.

The county’s 10 municipalities also will have a big stake in the county’s decision. All get money from the state reimbursements and would stand to lose if commissioners don’t enact the half-cent sales tax.

Regardless of how much sales tax a county collects, under the House budget, all counties would be guaranteed to receive 105 percent of the reimbursements.

Rowan would be guaranteed of $4.1 million in sales tax revenue, regardless of what the tax generates.

Counties with high growth sales would retain the extra dollars.

Russell said the final version of the budget may be significantly different.

House and Senate committees will now work on reaching agreement. Russell predicted that negotiators may need two or three weeks before reaching a final agreement.

Contact Jessie Burchette at 704-797-4254 or jburchette@salisburypost.com .