County approves budget amendments to assist municipalities

ROCKINGHAM — At a special meeting Tuesday morning, the Richmond County Board of Commissioners voted unanimously to approve the two budget amendments for the 2020-2021 and 2021-2022 fiscal years to allow for the county distribute funds between the six municipalities as part of the agreement reached between county and municipal leaders to resolve the sales tax dispute that caused much division over the last 15 months.

The municipalities reached a consensus last week to agree to the county’s terms, which included the county sending a total of $1,457,820 to the municipalities in two installments — $728,910 in both fiscal year 2020-2021 and fiscal year 2021-2022 — in exchange for Rockingham and Hamlet not suing the county for breach of contract stemming from the change to an ad valorem sales tax distribution in April 2020.

Representatives for five of the municipalities signed the agreement on June 21, and intend to formally approve it with their boards at their next meetings, while the Hamlet City Council signed and approved it at a special meeting on the 24th.

The agreement also includes an informal request that the county and municipalities at least hold quarterly meetings to “work toward better communication with each other and discussion of projects of mutual benefit.”

“We’ve worked tirelessly, as we know, over the last six months on this and I look forward to continuing meeting and cooperating with the municipalities, as we’ve said, on a quarterly basis — hopefully we’ll have much more communication than that,” said Chairman Jeff Smart to the board following the vote. “Hopefully this helps the municipalities, not only financially but also just the communication with the county and I look forward to proceeding with that.”

The county called the special meeting early Monday morning. Smart thanked the commissioners and county administration for their roles in getting to this point, adding that “this is a huge step forward” for both the county and municipal governments.

By approving the budget amendment Tuesday, the Board of Commissioners has made good on Smart’s goal of resolving this dispute before June 30, the last day of the 2020-2021 fiscal year. Reaching this point also marks a significant benchmark in the relationship between the municipalities and the county that took a major hit last spring, and may be unique in the history of the relationship between the two levels of local government, according to at least one long-time local leader. Hamlet Mayor Bill Bayless said in an interview after their meeting to approve the agreement last week that this kind of cooperation had been talked about in the past but “never came to fruition.”

“We’ve had more [communication] in the last several months than we have had in the last 10-15 years,” Bayless said.

In an interview after the vote Tuesday, Smart said the money changing hands isn’t as important as the potential for new partnerships with municipal leaders, which he said shouldn’t just be between council members and commissioners, but between administrators too.

“It’s got to be more than just elected officials … it’s got to be city managers, the county manager and all the people that report to those folks — they’re the ones that have got to communicate and make it happen,” Smart said. “The commissioners and the other elected officials, we’re here to help and here to make the decisions but it’s got to come from the inner parts of our government, both the county and cities, and hopefully this will open those doors back up and we’ll be able to move forward as one.”

Since four new commissioners took office in November, all Republicans, the relationship has worked its way from near-complete silence, with both sides gearing up for prolonged legal fights, to now an agreement to work towards a common future.

The distribution of the funds by the county for 2020-2021 and 2021-2022, as laid out in the agreement, will be as follows:

• Rockingham — $252,070

• Hamlet — $240,234

• Ellerbe — $66,661

• Dobbins Heights — $76,103

• Hoffman — $63,572

• Norman — $30,270

These funds are meant to mitigate the steep losses each municipality suffered over the last year and will see annually as a result of the change to ad valorem, which redirected sales tax revenues from each of them to the county to the tune of about $3 million. The rancor over this decision was exacerbated by a number of factors: the timing of it coming just after the COVID-19-related shut downs when the economic impact was still uncertain, the lack of prior notice from the county despite state instruction to give the municipalities ample notice, and the dramatic underestimation of the new revenue the county would receive which at the time of the vote was expected to be “conservatively” about $675,000.

The municipalities twice came together, in April 2020 and March 2021, to call on the county to change back to the per capita sales tax distribution method. Rockingham and Hamlet threatened to sue because of County Manager Bryan Land’s multiple public explanations for the change to ad valorem which were that it was a reaction to the cities not financially supporting the new 9-1-1 Center, despite the parties signing a contract in 2015 which stated that the cities would not be asked to fund the Center.

The two cities and the county entered mediation which continued into spring 2021 before agreeing to end it in April to discuss a solution which would require input from the other municipalities. The county submitted an initial offer which only include a one-time payment of $728,910 in exchange for Rockingham and Hamlet not suing, which the municipalities rejected.

The municipalities’ counter-offer included an option for the county to pay the funds they offered to the other municipalities, while Rockingham and Hamlet got none but were still able to sue. This offer was also rejected.

Vice Chairman Justin Dawkins was instrumental in arriving at the final offer of two $728,910 payments in exchange for dropping the threat of litigation, and added in the request for ongoing meetings to work together on future plans for the county as a whole.