By Susan Dickson
Staff Writer
The Board of County Commissioners said on Tuesday that they need more time before deciding to put a land transfer tax or a sales tax increase on the ballot for this fall’s election.
In this year’s state budget, the Legislature gave counties the option of a 0.4 percent land transfer tax or a quarter-cent sales tax increase to help compensate for money taken away from counties in a deal to turn responsibility for paying for Medicaid over to the state.
As part of a complex phase in the new system, counties lost state-supplied school construction money this year and will lose some sales tax revenue in coming years as a result of the budget deal.
Orange County will lose about $500,000 this year through the changes in funding, county budget director Donna Coffey said.
Most of the commissioners have indicated support for the land transfer tax over the sales tax. According to Coffey, the land transfer tax would yield a little more than $4 million in revenue annually, while the sales tax increase would yield just over $3 million.
Because Orange County’s sales tax base is not as large as that of other counties, the revenue from a sales tax increase is unlikely to grow as much as funds from the land transfer tax, Coffey said.
“Our sales tax base has been pretty much stagnant since 9/11,†she said.
Commissioners have the option to present either or both taxes to voters on the November ballot or in next May’s primary elections. Commissioner Mike Nelson indicated he would support putting a referendum on the May ballot.
“My big concern with November is it’s a low turnout election overall,†Nelson said, adding that the older population has a strong turnout in municipal elections and tends to be more cautious.
Commissioner Barry Jacobs stressed the need for further discussion before a decision could be made.
“It seems to me that there are so many things going on here that it’s difficult to have this conversation,†he said. “My inclination is that we need to educate ourselves and the public.â€
According to County Manager Laura Blackmon, most North Carolina counties have yet to make a decision regarding the tax option. Before giving voters either option, the county needs to provide residents with information, she said.
“We will need to undertake an educational campaign to let the voters know what the issues will be,†Blackmon said.
If approved by voters on the November ballot, the land transfer tax would go into effect January 1, 2008. The sales tax would not take effect until April 1, 2008.
The board will consider the tax options again at a work session on August 30.