Chowan Again Mulls Sales Tax Hike

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Chowan again mulls sales tax hike
By Ritchie E. STARNES
Chowan Herald
Saturday, March 13, 2010
EDENTON — Nearly a year and a half after Chowan voters shot down a referendum to increase the county’ sales tax, county commissioners are considering putting a similar tax hike back on the ballot again this November.
Chowan commissioners will discuss Monday night whether to let voters decide to increase the local sales tax from 7.75 cents to 8 cents.
Commissioners are again considering the measure, which voters rejected in November 2008, because they see it as a way to add desperately needed revenue to the county’s coffers.


“My personal opinion is that a sales tax in the most fair tax,” Commissioner Emmett Winborne said during a meeting of the commission board’s finance committee last week.
If voters approved the referendum, the county stood to collect $150,000 more in revenue a year, according to Lisa Jones, county finance director.
During Thursday’s finance committee meeting, commissioners appeared to signal that they don’t want to raise property taxes for a third year in a row.
They adopted three budget recommendations aimed at keeping the tax rate the same as the current year’s rate — 68.5 cents per $100 of property valuation — returning full-time employees to a 40-hour work week, and designating land transfer tax proceeds for the schools.
Despite those recommendations, keeping the tax rate stable next year will be extremely difficult, officials said.
“It’s clear to me what revenues that I have to work with,” County Manager Peter Rascoe said during Thursday’s meeting. “There are some substantial changes that will have to be made to balance revenue to expenses.”
There appeared to be some confusion among commissioners about whether their vote meant there could be no tax increase.
“I just want to make sure that we’re not shooting ourselves in the foot by cutting something out that might mean a 3 percent tax increase,” said Commissioner Jimmy Alligood.
Commissioner Keith Nixon said he preferred any tax increase be deferred at least another year, since the county continues to be saddled with high unemployment and a lingering recession.
A final decision on a tax increase won’t come until after Rascoe returns with a draft of next year’s county budget — a spending plan likely to include a reduction of services.
One feature of this year’s budget that won’t be in next year’s budget is already clear: employee furloughs won’t continue. Commissioners approved returning employees to a 40-hour work week. All non-public safety employees have been working 37.5-hour weeks since fiscal year 2008-09.
Despite the county’s continued financial woes, there have been signs of improvement.
Revenue from sales taxes have been better than forecast, albeit still down overall because of the economy. Property tax audits have identified another $24 million that will be added to the tax base. And the county has rid its books of some debt by selling off property.
Still, there are concerns.
“Right now, we’re hanging out there naked,” said Eddy Goodwin, Board of Commissioners chairman. “We can’t borrow any money.”
Next year’s revenues should be about the same as last year, Rascoe said. New jail costs also lie ahead, and the county is obligated to pay a greater contribution toward employee retirement.
“We (also) know we got the note coming due on this (Public Safety) building,” Commissioner Keith Nixon said.
Commissioners also adopted a policy to designate funds from the county land transfer tax to the Edenton-Chowan Schools for use on capital projects.
“If Dr. (Allan) Smith needs a new gym floor, there will be a pot of money there,” Kenny Goodwin said. “If both boards (county and school) are responsible with the money, it can build up over time.”
Land transfer tax revenues have been flat due to the sagging real estate market. This year’s county budget projects collection of about $200,000 in transfer tax revenue, roughly the same as forecast for next year.
Commissioners plan to revisit budget issues at the board’s March 25 retreat to be held at the Northern Community Center.