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Commissioners to consider plan for tax revenue distribution with towns

Board could approve changing formula for sharing of money collected

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The Cumberland County Board of Commissioners on Monday is scheduled to consider an agreement between the county and all its municipalities on how they will share sales tax revenue for the next two years.

Former County Manager Amy Cannon late last year warned the commissioners that the deadline to submit a request to the N.C. General Assembly to change the way tax revenue is distributed would be in April. County administrators presented the board an option of moving to the ad valorem method, which means distribution based on the proportion of the total tax levy each entity accounts for. That method would provide more revenue for the county.

The county currently distributes sales tax revenue on a per capita basis, but it has an interlocal agreement with the municipalities to share the growth in tax revenue on a 40%-60% basis, with the county receiving 40% of the growth revenue.

The issue is on the board’s consent agenda for its meeting scheduled at 6:45 p.m. Monday in Room 118 of the Cumberland County Courthouse. The item was not on the agenda at a meeting earlier this month when topics are considered for future board meetings. Items on the consent agenda of regular board meetings typically bypass discussion or debate. However, one commissioner may ask to have an item taken off the consent agenda for discussion. That request is voted on by the full board.

The distribution method among the county and its municipalities was discussed Feb. 3 by members of the Cumberland County Mayors Coalition, according to Brian Haney, assistant county manager and spokesman for Cumberland County.

“During this meeting, members of the Mayors Coalition expressed their concerns regarding the Cumberland County Board of Commissioners potentially voting to change the sales tax distribution method from per capita to ad valorem,” Haney wrote in an email to explain how the decision came about.

CityView requested a copy of the minutes of the coalition’s meeting from the town of Eastover, whose staff was responsible for the minutes of that meeting. The Eastover town clerk has not responded to that request.

According to Cumberland County’s website, the coalition consists of the mayors of Eastover, Falcon, Fayetteville, Godwin, Hope Mills, Linden, Spring Lake, Stedman and Wade. The chair of the county commissioners also is a coalition member. The coalition meets quarterly at varying locations.

The current sales tax agreement was agreed upon and signed by all coalition members in 2003 and expires on June 30. If no agreement is reached and the county changes to the ad valorem distribution method, it could mean significant loss of sales tax revenue for the municipalities.

The county had offered an agreement that delays the change to ad valorem taxation until June 2025, but Cumberland County would receive 100% of any growth revenue. The agreement had to be approved by all municipalities before March 15 or the county would have proceeded with the move to the ad valorem formula.

On Feb. 3, Chairwoman Toni Stewart, a member of the coalition, and Vice Chairman Glenn Adams, along with county administrators, attended the Mayors Coalition meeting. Stewart was presented with an initial agreement proposing the renewal of the existing agreement for five years under the same terms.

“This renewal had been approved by all municipal boards but was done without consultation or discussion with the Board of Commissioners or county staff,” according to Haney.

Stewart and Adams met with the chair and vice chair of the Mayors Coalition and asked that they provide an alternative proposal to the five-year extension, according to Haney.

On Feb. 17, the county board received a letter from the Mayors Coalition stating that the “request to continue the current agreement for five years is negotiable” and that the municipalities “will support continuing current dollar amounts with the county receiving all the growth for a shorter amount of time to allow the municipalities to prepare for the loss of revenue,” according to Haney.

Stewart on Feb. 24 sent a letter to Mayors Coalition Chair Jackie Warner with a proposed amendment to the distribution agreement that addresses concerns raised by the Mayors Coalition while also taking into account the county’s needs. Haney said.

The amendment provides a transition period for implementing the ad valorem distribution of revenue, extending the agreement through June 30, 2025, with 100% of growth revenue during this period going to the county. The chairwoman requested that all municipalities adopt the agreement by March 15 since the Board of Commissioners must vote on any changes to the sales tax distribution method in April, according to Haney.

Since the agreement was adopted by all municipalities, the county will delay changing to the ad valorem distribution method until July 1, 2025. This would coincide with the implementation of the 2025 property reappraisal. Had the new agreement not been adopted, the commissioners would have voted on the ad valorem distribution method in 2023.

“At the direction of the Board of Commissioners, the county attorney drafted a new sales tax agreement with a two-year term and a provision that the county would receive 100% of sales tax growth,” according to a memo to the board from then-interim County Manager Renee Paschal.

“The agreement also puts the municipalities on notice that the Board of Commissioners intends to adopt the ad valorem distribution method effective July 1, 2025. The agreement was sent to all municipalities in Cumberland County with a due date of March 15, 2023. All municipalities have approved the attached agreement,” Paschal states in her memorandum to the board.

She recommended that the board vote to approve the interlocal sales tax agreement effective July 1 this year through June 30, 2025.

Other consent agenda items

Also slated for approval are the fiscal 2024 health insurance plan changes and a request for $350,000 for restoration of the historic Orange Street School.

Presentation

The board will hear a presentation on the fiscal 2022 compliance audit by a representative of Cherry Bekaert LLP, the county’s external auditor.

April Adams, a partner with Cherry Bekaert, is scheduled to present results of the audit, which was completed on March 9. The separate financial audit results were presented at the board’s Jan. 17 meeting, when the commissioners approved an audit contract extension through March 31 to allow time to complete the compliance audit.

There were two findings reported related to the Emergency Rental Assistance Program:

  • The county could not provide supporting documentation of the quality reviews for 54 of the 60 case files selected.
  • In one out of 60 cases audited, the supporting documentation of the rent payment in arrears did not properly support the amount of payment made.

In other business, the board will consider a proposed schedule for fiscal year 2024 budget work sessions and public hearing.

Cumberland County, Board of Commissioners, tax revenue

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