By Susan Dickson, Staff Writer
County residents told the Orange County Board of Commissioners on Tuesday that they would like to see funds from a possible quarter-cent sales tax go toward economic development, if such a tax is approved by voters in November.
The board voted unanimously in June to put the sales-tax option on the November ballot but delayed a decision on how the money would be allocated in order to give the public a chance to weigh in.
Aaron Nelson, president of the Chapel Hill-Carrboro Chamber of Commerce, said the chamber would likely support the sales tax.
“That support is only possible, however, if a significant portion of those funds are dedicated for economic development,†he said. “I think it only passes in this climate with the support of our organization.â€
Nelson said the county should focus on business retention, recruitment and business services, in addition to increasing within-county spending by residents.
“Finding ways to make more of that happen in our community will be good for all of us,†he said.
If voters approve the sales-tax increase, the Orange County sales-tax rate, which would apply to all goods and services except food and medicine, will increase from 7.75 percent to 8 percent. According to County Manager Frank Clifton, the tax could generate $2.3 million annually, though revenues for fiscal year 2010-11 would be minimal due to the timing of the tax’s implementation.
In its 2007 budget, the legislature gave counties the option of a quarter-cent sales-tax increase or a 0.4 percent land-transfer tax to help compensate for money taken away from counties when the responsibility for paying for Medicaid was turned over to the state. As a result of that budget, counties lost state-supplied school-construction money and some sales-tax revenue.
Orange County voters overwhelmingly rejected a transfer-tax referendum in May 2008.
Some residents said they would like to see the tax used to fund schools.
Desiree Goldman, legislative affairs director for the Greater Chapel Hill Association of Realtors, said the funds should go toward schools as well as economic development.
“We think the schools are absolutely critical to the vitality … of our county,†she said.
Tony McKnight, chair of the Orange County Schools Board of Education, asked commissioners to dedicate all of the tax proceeds to schools, citing nearly $7 million in lost OCS funding over the past two years.
Bill Whitmore, president of the Greater Chapel Hill Association of Realtors, said that while his organization is not generally in favor of any more taxes, it would support the quarter-cent sales tax.
“The cost burden will be equally distributed, it is non-regressive by design and a portion of it will be paid by the kind visitors who pass through the county,†he said. “We must change the dependence on real property owners.â€
County officials are eager to explore new revenue sources for Orange County, as property tax makes up more than 75 percent of the county’s total revenue. Board members have listed economic development, schools, debt service and libraries as possible priorities for funding by the sales-tax revenue increase.
Commissioner Steve Yuhasz said he was ready to allocate at least some of the funding toward economic development.
“I think the only question that remains, at least in my mind, is how much of the tax will go toward economic development,†he said.
Board members also said they would like to look at putting time limits on funding specific items.
“I don’t want to see us make an indefinite commitment,†Commissioner Bernadette Pelissier said.
The board will discuss how to allocate the possible funds at a work session today (Thursday) at 7 p.m. at the Southern Human Services Center on Homestead Road.