A bill before the General Assembly would boost how much most Johnston County towns receive in sales-tax revenue.
However, despite the projected windfall, not all town leaders here are fans of the measure.
The bill, sponsored by Senate Majority Leader Harry Brown of Onslow County, would base sales-tax distribution on county and town populations, not on where goods are sold.
Projections show that formula would bring more sales-tax dollars to towns like Archer Lodge, Clayton, Smithfield and Wilson’s Mills while stripping millions from larger cities like Raleigh and Charlotte.
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Wilson’s Mills Town Manager Zach Ollis said getting more money sounds good but not if it’s at the expense of larger municipalities.
“You look at the size of some of the towns that could gain, and even if they are going to get double what they would usually, is that really a drop in the bucket?” Ollis said.
Brown says his bill, which has the support of the Senate’s Republican leadership, would address the problem of “two North Carolinas – one that is booming and one that is busting.”
Under the plan, Johnston County could expect to see a 43-percent increase in sales-tax revenue when the change took effect in 2019.
One projection shows Wilson’s Mills’ sales-tax revenue growing by $259,915, or nearly 100 percent.
When Brown introduced the redistribution bill in March, it included a chart showing that 90 of the state’s 100 counties would gain revenue under the change.
However, after learning that the bill would cost major cities and towns, he decided to tweak his plan. Brown says the revised bill will ensure that cities and towns see revenue changes that largely mirror that of the counties they are a part of.
Ollis, the town manager, said all Wilson’s Mills can do is plan around what lawmakers decide.
“We don’t care what they do; we just want to know what they do as soon as possible,” he said.
Towns like Wilson’s Mills have until the end of June to approve their budgets for the next fiscal year. While the proposed change wouldn’t take effect until 2019, uncertainty now could make long-term planning more difficult.
Archer Lodge, where sales-tax revenue would triple under the current plan, says it could put any extra dollars to use.
Mayor Mike Gordon said the windfall would help the town pay for projects that would benefit residents. Those projects include a park and police station.
While Archer Lodge has no businesses that collect sales taxes, Gordon said an increase in revenue could help the town attract stores.
“That may give us an opportunity to work with some more folks and figure out a way to initiate some business,” he said.
The state currently divvies up sales-tax revenue to counties based largely on where goods are sold. Those counties then decide how to allocate money to their towns, typically using either a town’s property-tax base or population.
Johnston County allocates money to towns based on property-tax base. The current version of Brown’s bill would make Johnston divide the money based on each town’s population. That’s one reason the county’s growing towns are projected to gain revenue.
Clayton’s sales-tax revenue would grow by nearly $400,000, or 12 percent, in 2019, according to current projections. Clayton Mayor Jody McLeod said the plan might look good on paper, but it’s likely too good to be true.
“It’s hard to believe that all of these cities in urban areas can afford to give up the money to other places in the state,” said McLeod, who serves on the board of the N.C. League of Municipalities.
“Any mayor would tell you that kind of money coming in would be phenomenal,” McLeod said. “The reality is that everybody is uncertain it could work.”
Staff writer Colin Campbell contributed to this report.
Dunn: 919-553-7234, Ext. 104