News Releases

County Presents Sales Tax Proposal to Mayors

Dec 18, 2018

County Manager Amy Cannon presented a proposal to the Cumberland County Mayors’ Coalition that would continue per capita distribution of sales tax proceeds based on an interlocal agreement between the County and the nine municipalities.

The Mayors’ Coalition held a special meeting this morning to hear the County’s sales tax proposal, which is a variation of an existing agreement negotiated in 2003 using the per capita method and calling for the municipalities to evenly split any gain they received from annexations with the County. That agreement expires June 30, 2019.

The County is proposing a four-year agreement for fiscal years 2020-2023. The terms include:

  • The first year of the agreement (FY2020) will be the same as the existing agreement and serves as the base for the remaining years.
  • For the remaining three years, all growth is shared between the County (40 percent) and all municipalities (60 percent).
  • The 60-percent share of growth will be distributed to the municipalities proportionately based on the base year distribution.

If the County were to go to a straight per capita method, without an interlocal agreement, the County could lose $6.5 million in revenues, which would equate to an approximately 3-cent property tax increase or a reduction in services, such as funding for education, staff, Animal Control, the library system and other County departments.

Cannon told the mayors the County’s proposal is valid until midnight Jan. 31. Without a signed agreement from all nine municipalities, the County will hold a vote of intent to change to the ad valorem method at the Feb. 4 Board of Commissioners meeting.

Board of Commissioners Chairwoman Jeannette Council said the County is willing to continue under the per capita method only if there is an agreement to avoid revenue losses for any local government. 

This proposal is a compromise. In the spirit of continued cooperation, the County is willing to reduce our share of future sales tax growth,” she said.

If the commissioners were to change to the ad valorem method, the County’s General Fund could see an increase of almost $3 million in revenues. Cumberland County Schools could gain approximately $500,000; the County’s fire districts could reap $2.9 million and the Parks and Recreation District could receive $1.3 million.

Conversely, all the municipalities would lose revenues. The City of Fayetteville could lose an estimated $5.4 million; Hope Mills could lose $1.1 million and Spring Lake over $600,000. The chart below shows the potential net impact.

Background

The Board of Commissioners voted in 2003 to go to the ad valorem method because of severe revenue losses resulting from municipal annexations, which at that time amounted to over $4 million a year before the impending “Big Bang” annexation that was going to cost the County even more. 

The commissioners changed course after the municipalities sought a compromise to save the city and towns revenue losses under the ad valorem method, which at that time would have cost Fayetteville $4 million.

Ad Valorem

Distribution

Actual FY 18

w/Agreement

Estimated Net Impact

Cumberland

$51,283,630

$48,285,934

$2,997,696

CCSS – Schools

12,696,819

12,142,508

554,311

Fire Districts

2,931,866

0

2,931,866

Parks & Rec District

1,355,063

0

1,355,063

Fayetteville

28,445,241

33,858,063

(5,412,822)

Eastover

268,056

725,337

(457,281)

Falcon

10,382

63,045

(52,663)

Godwin

8,522

24,737

(16,215)

Hope Mills

2,149,797

3,259,639

(1,109,842)

Linden

12,283

24,886

(12,603)

Spring Lake

1,316,507

1,943,059

(626,552)

Stedman

127,044

213,588

(86,544)

Wade

43,948

108,362

(64,414)