On November 8th, Rutherford County residents will vote on a local sales and use tax at the rate of one-quarter percent in addition to all other State and Local sales and use taxes.
If this referendum passes, the additional tax is expected to generate approximately $1.2 million per year that will go toward the critical facility needs facing Rutherford County Schools.
For more information, please see the following brochure
Who put this issue on the ballot?
The NC General Assembly granted county boards of commissioners the authority to levy, subject to voter approval, an additional one-quarter cent (1/4¢) sales and use tax. Upon the recommendation of the Rutherford County School Board, the Rutherford County Board of County Commissioners approved a resolution on March 15, 2016 calling for a November 8, 2016 Special Advisory Referendum concerning the levy of a one-quarter cent (1/4¢) county additional sales and use tax.
What will these funds be used for?
The additional sales tax will be spent on critical school facility needs.
What are the critical school capital facility needs?
The Rutherford County School’s Facilities Committee reconvened in 2014 and spent four months analyzing data presented by the school administrators, visiting the school system’s older facilities, reviewing population trends and formulated the recommendations that appear in their 2015 report. The committee recommended three phases of building planning over the next decade, which included current immediate facility maintenance needs, a Phase I five-year plan to replace R-S Middle School, Cliffside Elementary School and the bus garage/maintenance facility and a Phase II ten-year plan to replace East Rutherford and Chase High Schools. The estimated costs for the identified school system capital outlay over a ten-year period is approximately $199 million, which includes expenditures for general capital outlay, furnishings, new facilities, technology, technology infrastructure and vehicle replacements.
How much additional sales tax will be generated?
The Rutherford County Finance Department and the North Carolina Association of County Commissioners estimate, based on current sales tax figures, that the one-fourth of a penny sales and use tax would generate approximately $1,200,000 annually.
How does this compare to property taxes?
One penny in Rutherford County property tax raises close to $530,000 (excluding economic development incentives paid out). One-fourth of a penny in sales tax is projected to raise around $1,200,000 per year.
Will the tax be permanent or will it have a sunset provision?
The Rutherford County Board of County Commissioner’s authorizing resolution to place the sales tax option on the November 8, 2016 ballot does not include a sunset provision. However, the current or future Board could elect to sunset the tax at some point in the future.
Are there items exempt from the sales tax?
The sales tax will apply to purchases on items such as clothing, household supplies, electronics as well as prepared food and drinks (restaurant or store).
There are numerous items exempt from the sales tax including prescription medication, gasoline, certain agricultural supplies and motor vehicles. For a full listing, see North Carolina General Statute 105-164.13.
Non-prepared food (groceries) are also exempt per General Statute 105-164.13B.
When will the new sales tax rate be enacted?
If approved by the Rutherford County voters and then the Rutherford County Board of Commissioners, the increase would be collected beginning April 2017.
Has the sales tax referendum been on ballots in other counties?
Yes, since the legislature granted counties authority to seek voter approval, many counties have placed the referendum on a local ballot. In fact, several counties in our area have already approved and enacted the additional one-quarter cent sales tax including Buncombe, Haywood, Jackson, Cherokee, Catawba, Alexander, Wilkes, Ashe and others.
What is the current tax rate for Rutherford County and adjacent counties?
The current sales tax rate for Rutherford County is 6.75% or six and three quarters of a cent for a $1.00 purchase. This is the current sales tax rate in adjacent counties as well with the exception of Buncombe County with a sales tax rate set at 7%, Cherokee County in South Carolina with a sales tax rate set at 8% and Spartanburg County with a sales tax rate at 6%. The average sales tax rate in North Carolina is 6.83% and the average is 7.34% in South Carolina.
If the sales tax passes, does this mean property taxes will not be increased?
Going forward, it will require a mix of various fund sources to meet the current and future critical school system capital outlay needs. The sales tax lessens the pressure on property tax but it will be up to the current or future Board of Commissioners to determine future property tax rates during their annual budget deliberations. Currently, property tax revenue constitutes slightly over 61% of funding for Rutherford County government services.
How much will the sales and use tax cost?
The additional one-quarter cent sales and use tax will be one penny for every four-dollar purchase.
How is sales tax different from property tax?
Property taxes are assessed based on how much property you own and the value of that property. Not all residents own property. Businesses pay property taxes. Keeping property taxes low can help encourage economic development.
Sales taxes are generated from monetary transactions. Tourists and visitors to Rutherford County would also help support county services such as addressing school facility needs through a sales tax. According to data from the NC Department of Commerce, Rutherford County ranks 28th in the state with respect to visitor and tourism related revenue.
What is the voting procedure?
Details on the voting process can be found on the Board of Elections website. The form of the ballot question for the additional one-quarter cent sales tax is mandated by the NC General Statute 105-537(c). Please see below:
[ ] FOR [ ] AGAINST
Local sales and use tax at the rate of one-quarter percent (0.25%) in addition to all other State and local sales and use taxes.
Why is it not stated on the ballot how the county plans to use the additional one-quarter cent Sales Tax?
The NC General Statutes define that a county may not stipulate the use of these funds on the ballot.
Doesn’t the state provide funding for building construction?
No. School construction is a local responsibility.
Why can’t the county use lottery money for new schools?
The 2014 State budget, Senate Bill 402, rewrote the lottery statutes and eliminated the 40% statutory guarantee of net lottery proceeds for school construction, a dedicated funding stream in place since the lottery’s inception in 2005. Counties have counted on this statutory funding stream to issue bond indebtedness for school construction with 70 counties (including Rutherford County) dedicating their lottery proceeds to repay school debt service. The NC Education Lottery proceeds have been 22% less than originally projected and changes in the law in 2007 decreased these funds as well. In FY2009-2010, the lottery funds distribution to Rutherford County hit a high of $1,177,371 and then in FY2010-2011, when the distributions statewide were capped at $100mil, the county distribution dropped to $690,605. Distributions have continued to decline and the lottery distribution to Rutherford County was only $585,730 for FY2015-2016. Lottery funds alone are not sufficient to address critical capital facility needs and new school construction. Also, the Corporate Tax set aside (the ADM fund), which was previously earmarked to address school system capital outlay needs, was permanently eliminated in 2014.
Will the proceeds generated by the proposed referendum apply to charter schools?
County governments are not permitted to provide any direct funding to charter schools. Funds to charter schools are allocated indirectly through the local school administrative unit. G.S. 115C-426
directs the State Board of Education to promulgate a uniform budget format for local school units that must include at least three funds – the State Public School Fund, the local current expense fund and the capital outlay fund. G.S. 115C-238.29H and 115C-238.29H(b) define that charter schools are entitled to a proportional share of state appropriations and monies in the local current expense fund to a local school unit. However, there is no statutory allocation of monies to a charter school from a local school administrative unit’s capital outlay fund. For more information on this topic, visit NC School of Government Coates' Canons article County Funding for Charter Schools and NCGS 115C-218.105, State and Local Funds for a charter school.