ROCKINGHAM — The municipalities of Richmond County have joined together to rebuke the vote taken by the Board of Commissioners April 6, made without any notice, which switched the sales tax distribution method from per capita to ad valorem and, in so doing, reduce the municipalities’ sales tax revenues levied by between 36.3% and 100% — a crippling blow to the county’s smallest towns — according to an analysis of the impacts.
Rockingham, Hamlet, Ellerbe, Dobbins Heights and Hoffman on Wednesday each approved and submitted proclamations urging the county to repeal this decision (Norman’s officials stated their support for the proclamation in an email). The proclamation says that the change to ad valorem will “result in an unjust and inequitable distribution of sales tax to the cities.”
The proclamations also cite that fact that the change was not discussed with their leadership prior to adoption despite the direct impact it would have on them, and that the vote was taken just when several municipalities were finalizing their budgets, forcing them to account for huge sales tax losses at the last minute.
Each proclamation stated that the municipality opposed the change and urged the Board of Commissioners to “continue with the per capita sales tax distribution and raise the county tax rate, rather than placing this shortfall solely on the backs of the citizens” of each municipality, calling this a “much fairer approach” to solving the county’s unbalanced budget.
“As county taxpayers, these same citizens would share this burden rather than assuming it in its entirety,” the proclamation concludes.
County holds its ground
The Daily Journal sent numerous questions to County Manager Bryan Land this week, asking whether he agreed with an analysis of the impacts of this change done by the City of Rockingham and why the municipalities weren’t notified that this was being considered. Land did not acknowledge these questions Wednesday, but forwarded an email sent to the county commissioners that provided more details on the justification for the change after weeks of pressure from municipal officials.
Addressing the commissioners, his main points were — since they have been from the start — that the county has recently added the salaries of eight dispatchers from Rockingham and Hamlet, that these two cities last year relinquished significant portions of the territory outside their city limits over which they were performing code enforcement, that the county’s tax rate has been modified much more frequently over at least the last 20 years while the municipalities have been able to keep theirs stagnant, and that for the county to increase its tax rate from its current rate of $0.83 would hurt economic growth.
For example, Rockingham hasn’t raised their taxes since 2000, Hamlet since 2002, Dobbins Heights since at least 1999 and Hoffman hasn’t increase theirs in 40 years, according to a conversation Land had with a Hoffman official. Ellerbe increased their tax rate in 2016 and 2018 after staying flat at $0.50 from at least 1999 to 2015, according to numbers provided by the county.
“There is a trend going on in government for additional cost to be shifted to the county level,” Land wrote in the email addressed to the commissioners. “We are receiving fewer and fewer reimbursement dollars from the federal and state side while cost continue to rise annually. Additionally, the County is being burdened from cost from the municipalities that are flowing upward.”
He added that the county has been “extremely generous” to the municipalities by not switching to ad valorem more than a decade ago.
“During the same timeframe taxes were raised for ALL county taxpayers on the county level while the municipalities went decades with no increase, building their cash coffers at the expense of the County,” Land said.
The county’s other option, the one the municipalities have said they would prefer, was to raise taxes. Land argues that it isn’t fair to raise taxes on county residents and industries and to do so would “stifle growth and economic development.” He added that the county “could not afford to increase again” as they did in 2018, going from $0.79 to $0.83, where they remain.
On the 9-1-1 Center and the addition of greater code enforcement responsibilities, Land stated that these two expenses have increased the county’s expenses by more than $1.7 million, which he called a “far cry” from the benefits the county would see from switching to ad valorem.
The case against ad valorem
Rockingham City Manager Monty Crump, who has been the most outspoken against the change to ad valorem, has questioned Land’s math in determining this $700,000 figure (previously projected at $675,000) in multiple emails in recent weeks. Land told the commissioners before their vote that the change to ad valorem would give the county 10% more of the share of sales tax revenues, and increase the sales taxes levied by about $675,000.
But Crump, and Rockingham Finance Director Jennifer Lambeth, using figures provided by the Department of Revenue, found that the county’s share would increase by 12.3% and their sales taxes levied would increase by $1,423,703.88.
Additionally, both Rockingham and Hamlet have cited the initial agreement on the consolidated 9-1-1 Center, which specified that the Center would be a “self-sufficient entity financed by 9-1-1 fees” — which all residents pay — “grants, and funds provided by the county.” The agreement continues to say that the county will not charge the cities any fees for taking over their call and dispatch functions.
Crump, Rockingham Mayor Steve Morris, Hamlet Mayor Bill Bayless, Hamlet City Councilwoman Abbie Covington, Hamlet Mayor Pro Tem Jesse McQueen and multiple other officials with these cities have expressed outrage that they are being punished for agreeing to this when the county aggressively lobbied them to do so as it would benefit the county by allowing them to secure significant grant funds to build the state-of-the-art facility.
The sales tax revenue losses pose an existential threat to Dobbins Heights, Hoffman, Ellerbe and Norman, unlike Rockingham and Hamlet whose budgets can withstand the hit. If the projections hold, Norman would lose 100% of its sales taxes levied, or $25,793.61. Hoffman would lose 85.84%, or $89,669.28. Dobbins Heights would lose 79.44%, or $120,185.13. Ellerbe would lose 55.61%, or $103,960.90.
Reach Gavin Stone at 910-817-2673 or gstone@yourdailyjournal.com.
