City wants share of local sales tax

Published 12:00 am Wednesday, May 18, 2011

By Emily Ford
SALISBURY — The city would expect Rowan County to share the revenue if commissioners manage to keep the one-cent sales tax due to expire next month, Salisbury officials said.
The penny tax would raise about $10.7 million, Assistant City Manager Doug Paris told City Council on Tuesday. According to state law, Salisbury’s cut should be $1.7 million, Paris said.
The county would keep $7.4 million, and other Rowan municipalities would divide the remaining $1.6 million, Paris said.
“Our expectation, if this moves forward, is that it would be split,” Paris said.
The Rowan County Board of Commissioners on Monday agreed to ask legislators for a local option for a referendum to keep the penny tax, which the Republican-controlled General Assembly wants to let it expire. The penny tax proceeds now go to the state, but revenue would shift to the county under the proposed scenario.
Commissioners didn’t mention distributing the revenue among Rowan municipalities, Paris said. But he spoke to County Manager Gary Page, who is aware of the state law, Paris said.
If the measure is approved by commissioners and then by voters in November, Rowan would begin collecting the tax in the middle of 2012.
That won’t help the current budget crisis for Salisbury, which faces a $2.7 million shortfall. In addition, the city’s tax base plummeted by $200 million after Rowan County’s revaluation.
City Manager David Treme has recommended a 5.2 cent property tax rate increase to make up for the loss due to revaluation. Treme said revaluation “added insult to injury” in an already tough budget year.
Proceeds from the penny sales tax in 2012 would make up for the decrease in the city’s tax base.
“This could offset the damage of moving foward with revaluation,” Paris said.
The proposed 5.2 cent tax increase would generate $1.4 million, just under the $1.7 million the city would receive from the penny sales tax.
Two residents spoke against the property tax increase during a public hearing Tuesday on the budget.
Bill Wagoner said Council should pass a 60-cent tax rate because people have less disposable income. Salisbury residents are generally older, more likely to be out of work and less educated than people in surrounding communities, Wagoner said.
The incomes of Salisbury residents “will recover slower than any other community around us,” he said.
Over the past 10 years, property values have risen 45 percent in Salisbury, while revenue from taxes has grown 55.1 percent, he said.
“That is not sustainable,” Wagoner said.
Jerry Shelby said the city should not raise water-sewer fees again. Treme has proposed increasing the rates by an average 2.86 percent, the smallest hike in eight years.
Shelby said eight years of increases is too many.
The city wants people to recycle, but that fee is going up 58 cents, he said.
“The city charges me more to haul away the empty containers than what I paid for the product,” he said.
When he only generates enough trash to fill a grocery bag each week, Shelby said he should not pay as much for garbage service as neighbors with overflowing trash cans.
“Poor people…and widows on Social Security are subsidizing the bigger users,” Shelby said. “They are the people least able to pay.”
While the county’s idea to keep the one cent sales tax eventually could help Salisbury cut its own taxes and fees, Councilman Brian Miller expressed skepticism that it will come to pass.
The state has its own budget crisis and likely won’t let go of a source of revenue, he said. Or, the county may object to sharing the revenue with Salisbury and other municipalities, he said.
“Most of the money is collected by the businesses in the cities,” Councilman Paul Woodson said. “They should share in it.”
City Council will hold a budget workshop open to the public at 10 a.m. June 9 in City Hall. If needed, members will hold another workshop at 10 a.m. June 10.
Contact reporter Emily Ford at 704-797-4264.
Spending plan
Salisbury’s proposed 2011-12 budget

• $69.6 million total
• 5.2 cent property tax rate increase. Rate is “revenue neutral,” meaning even though it’s higher, the city will generate the same amount of property tax revenue as last year.
• Cut 36 full-time and 11 part-time positions. Most of the jobs were vacant due to a hiring freeze that began last year.
• Continue rolling freeze. Only essential positions would be filled.
• Increase water and sewer rates by an average 2.86 percent.
• Realign and consolidate several divisions into functional units to increase efficiency.
• No merit or cost of living increases for third year.
• Cut funding to nonprofit groups by 10 percent.
• No increase in Fibrant rates.