ROCKINGHAM — Two months removed from their most recent regular meeting, city council members on Tuesday had their first chance to publicly express their collective disappointment in the Richmond County commissioners’ decision to change its sales tax distribution method from per capita to ad valorem.
The commissioners approved that change in early April. When the decision was first being considered, County Manager Bryan Land said that, based on conservative estimates, the county would take in 10% more of the sales tax revenue under the new method, or $675,000. This is significantly lower than what the Department of Revenue (DOR) estimates the impact will be based on the sales tax revenues from the 2018-2019 fiscal year. The county would have taken in $1,840,000 more in sales tax revenues, or a 25.41% increase from how much they received under the per capita method, according to DOR.
Rockingham would have received $767,000 less in sales tax revenue, or 33.03%, according to DOR. All of Richmond County’s municipalities would be financially strained, per the DOR’s estimates. Small towns would be hit especially hard — Norman, for example, would lose 100% of its sales tax revenue.
At Tuesday’s meeting, Mayor Pro Tem John Hutchinson asked city manager Monty Crump if he had received from the commissioners an explanation of the formula Land used for his initial calculations, which Crump has asked Land for repeatedly in the weeks since the county’s decision. Crump said he hasn’t received anything.
Hutchinson asked Crump, “You requested that, I’m sure, a number of times?”
“Multiple times,” Crump responded.
“I just wanted to express my disappointment that the county will not communicate with us or other municipalities,” Hutchinson said.
Several other council members echoed Hutchinson’s frustration.
“From my readings, I feel like it’s very evident that it’s (the commissioners’) problem — it’s not something that just started because of what we’ve done,” Councilwoman Denise Sullivan said.
“I’m disappointed in the county’s actions, based on the fact that there’s no communication,” Councilman Bennett Deane said. “There was none on the front end.
Councilwoman Anne Edwards requested background information as to how the county’s takeover of the city’s extraterritorial jurisdiction (ETJ) — areas where residents pay county taxes but where the city enforced codes — played a role in the change to ad valorem. In a previous email provided to the Daily Journal, Land told Crump the change was made partly because, “The county has been absorbing additional functions from the municipalities over the years, and we thought it would be appropriate if that was recognized in the sales tax distribution.” The main expenditures Land mentioned were the ETJs and the eight new employee salaries that Land claimed the county took on in order to staff the new 9-1-1 center.
Crump said those reasons were unjustified, and he explained at length how those two situations unfolded from Rockingham’s point of view.
He also spoke about how anomalies like the COVID-19 crisis wouldn’t have an impact on how much municipalities are affected by the change to ad valorem, as Chairman of the Board of Commissioners Kenneth Robinette said in a letter to the editor published in the Daily Journal over the weekend.
“One thing that is clear is the actual sales tax numbers may change” but the proportion of the total the municipalities will lose will not, Crump said.
“They’re going to change in relation to the conversion formula, based on the ad valorem and the percentage of your ad valorem tax base levied in regard to the county,” he continued.
Crump compared the scenario to a pie chart, with each piece representing the share of sales taxes levied to Richmond County and each municipality.
“Rockingham may have 35 percent of that pie, all the way down to (zero) percent like Norman,” Crump explained. “If the sales tax is lower, that pie is smaller, but you still get the same percentages, and the numbers are always going to be significantly lower because of the percentage and the way the ad valorem tax is computed.”
Although the City Council was disappointed in the commissioners’ handling of the sales tax distribution method change, they were encouraged by the municipalities’ collective response. All six municipalities approved proclamations urging the county to overturn their decision and instead raise property taxes to make up for their budget shortfall.
“I will say I appreciate the working relationship we’ve built the last four to six weeks with the other towns and cities in this county,” Hutchinson said. “It’s the closest we’ve worked with them in a long time.”
In other business, the City Council heard about the city’s budget for the upcoming fiscal year. Crump said the proposed budget is currently being printed and prepared, and copies will be distributed later this week. A budget workshop was scheduled for 1 p.m. on May 27. A public hearing for the proposed budget will be held during the regular City Council meeting on June 9.
Council members also unanimously approved an audit contract for the fiscal year ending June 30. The contract is with Anderson Smith & Wike, PLLC.