Some Cary and Morrisville officials say they are giving away more than they are receiving when it comes to Wake County’s occupancy and prepared food and beverage taxes. They say it’s time to focus on other needs, particularly those outside of Raleigh.
“I am losing patience,” Cary Mayor Harold Weinbrecht said at the May 26 Town Council meeting. “We don’t have a voice. We are funding all of Raleigh’s projects, and I’m getting tired of it.”
Revenues are from the 6 percent tax on hotel room rentals and 1 percent tax on food and drinks in restaurants and other venues. They support cultural, sports, art and convention facilities in the county.
The taxes were established in the early 1990s to fund the construction, operation and maintenance of the Raleigh Convention Center and PNC Arena, said Denise Foreman, assistant to the Wake County manager.
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Nearly 25 years later, some western Wake leaders say enough money has been funneled into these projects. And while they say they’ve been frustrated for some time, an ongoing public review of the financial model has made them more vocal.
“We better start seeing some of the money coming back, or I’m going to ask that we go to the legislature and get this thing changed, because it’s ridiculous,” Weinbrecht said.
James West, chair of the Wake County commissioners, said he was only made aware of these concerns recently. He said making the formula equitable will be one of the county board’s top priorities.
“We are kind of looking at it and making sure we adjust, because Cary certainly has become a major partner and a major player in this county,” he said. “We want to make sure we are working together in a true partnership.”
More going in than coming out
Cary town staff estimate there has been a $6 million funding gap in recent years between tax revenues generated in Cary, and what comes back to the town.
Of about $22.5 million in occupancy tax revenues collected in Wake County in 2015, 58.7 percent came from Raleigh hotels, 26.3 percent from Cary and 8.39 percent from Morrisville, according to Morrisville staff.
Cary is only guaranteed 5 percent of these revenues after administrative costs are removed. In 2015, the town received about $1.36 million. The town must use this money for public relations and promotional activities for the town and for visitor-related programs and activities like festivals.
The town is not guaranteed funding from the prepared food and beverage tax revenues. Similarly, Morrisville is not guaranteed a set amount from either tax.
After initial occupancy tax dollars are doled out, including Cary’s 5 percent payment, the remaining 85 percent, including prepared food and beverage tax revenues, is dedicated to the Raleigh Convention Center with 15 percent going to other projects.
Weinbrecht wrote a letter expressing his concerns to West and Raleigh Mayor Nancy McFarlane. The letter also was published on his blog.
“While we agree that the dedication of the remaining 85 percent of the available funds to support the Convention Center was needed to fund and start the new facility, now that this has been accomplished, we believe a new model needs to be investigated in the future,” he wrote.
‘Funding for life’
Cary, Morrisville and other Wake County municipalities must apply to receive a piece of the remaining 15 percent for additional projects. The Wake County Board of Commissioners and Raleigh City Council jointly decide where the money goes.
Western Wake municipalities have benefited from the revenues in the past. The funding provided $9 million to build WakeMed Soccer Park; $10 million for improvements at the soccer park, the U.S.A. Baseball National Training Complex and Cary Tennis Park; and $3 million to build the proposed Wake Competition Center in Morrisville.
But many Cary and Morrisville officials believe now is the time to investigate a new funding model because more revenue is being generated – nearly four times the revenue from 20 years ago – with a larger chunk of dollars coming from their towns.
“The fact of the matter is that we are producing that tax money, and it would be good to get a certain share,” Morrisville Mayor Mark Stohlman said. “I know we all benefit from a good, healthy PNC Arena and a good healthy convention center, but you have to look at what’s fair for the towns that are contributing.”
Other Morrisville and Cary Town Council members share in this frustration.
“We are now funding for life the convention center,” Cary councilman Jack Smith said at the May 26 Cary meeting. “And our Cary citizens are absorbing the operational costs and the needs of the WakeMed Soccer Park. We have to make sure they know the patience is running thin.”
A possible downtown Raleigh sports venue, in particular, angers some local officials. This project is on a 10-year vision plan that Raleigh approved last year and would be eligible to receive some of the occupancy tax and prepared food and beverage tax dollars.
While City of Raleigh staff say they don’t plan to seek funding at this time, Cary officials have expressed their concerns about the project.
“When you hear neighboring cities say, let’s bring soccer to us in a location that’s absurd and inane, instead of building and improving on the success that we have here, that’s a problem,” Smith said.
“Yeah, create competition with our money,” Weinbrecht responded.
Taking further action
But City of Raleigh staff say they plan to bring up the possibility of a future convention center expansion during the review process.
At the Cary meeting in May, council members supported working with the Wake commissioners through the review process.
Phase two of the review, which will consider additional funding available for future purposes and projects, is expected to begin this summer. Cary may ask for funds to expand WakeMed Soccer Park from 10,000 to 15,000 seats/suites.
But Cary council members also support further action, if nothing changes this year
“I’m fine continuing to phase two to see that if by some miracle we get our fair share,” councilman Don Frantz said to Weinbrecht at the meeting. “If we do not receive our fair share, I would wholeheartedly ride with you in the car to the legislature and either get them to change this distribution formula or lobbying to get this tax killed altogether.”
Staff writer Henry Gargan contributed to this story.
Kathryn Trogdon: 919-460-2608: @KTrogdon