Urban and rural NC officials fight over tax distribution

YANCEYVILLE, N.C. (AP) – A handful of storefronts remain open in downtown Yanceyville, where half of a former clothing store has been turned into a law office and an old barber shop is now vacant.

Down the road, Caswell County’s closest thing to a big-box store is the Walmart Express, a miniature-sized version of the superstore. And with Yanceyville’s theater closed around a half-century ago, movie-goers drive thirty minutes across county lines to the nearest cinema, where associated sales tax dollars stay behind when they leave.

North Carolina (with flag)

Such represents the tough economic luck for Caswell, sitting along the Virginia line and halfway between Durham and Greensboro.

“We got missed by the railroad, we got missed by the interstate, God knows we can’t get missed again,” George Daniel, a local lawyer and a former powerful state senator, said last week in Yanceyville.

But a proposal at the General Assembly to redistribute more sales tax dollars to commercially poor counties such as Caswell could be a fortunate blessing to build infrastructure, improve schools and attract new business.

Over a five-year period, the Senate budget calls for a shift from distributing sales tax dollars earmarked for local governments based mostly on where the money is spent to a system that divides most of the revenue between counties based on population.

Caswell County is one of several rural counties projected to benefit the most. Their local sales tax revenue would grow from $2.4 million today to at least $5.5 million in 2020, according to the General Assembly’s nonpartisan research staff.

However, powerhouse counties Mecklenburg and Wake could see no growth or a slight decline in local sales tax revenue. Vacation-oriented Dare County could lose 47 percent of its sales tax income, according to projections. The Senate budget would allow most counties to hold referenda to raise their sales tax rate, partially to help make up for lost revenues.

The proposal’s sponsor, Sen. Harry Brown, R-Onslow, said the bill helps fix the gap between “two North Carolinas” – one rich and urban, the other poor and rural. But officials from districts that fall along those lines accuse those on the other side of wanting to take an unfair split of tax revenue.

“It pits two of my constituencies against each other philosophically,” said Sen. Mike Woodard, a Democrat who represents both Caswell and more populated Durham County. Woodard doesn’t support the change, and said money intended for rural education and development should come from the state’s general fund.

House Republicans also have been cool to the idea, which will be debated as budget negotiations get renewed this coming week in Raleigh.

Republican Gov. Pat McCrory also opposes the shift and argues any forced change will lead to many local governments having to raising taxes on millions of residents. He would be asked to sign any budget bill into law and doesn’t have a line-item veto.

Just outside Yanceyville, Ace Home and Building Center co-owner Korey Thompson said competing with larger name-brand stores in nearby cities – and thus keeping more sales taxes in Caswell – is “a constant battle.”

More revenues would mean more county construction and repair projects, probably leading to more sales for his supply business. Better schools would bring in more people to Caswell, too, he said.

“Any influx in income is going to be eventually passed on to us,” Thompson said.

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