First I want to thank you all for being here today, this is an interesting bill I think this bill is been talked about more of a data bill than I think any other bill I've ever seen, how about that? And I think this is one of the most important bills that we'll see this session because we're talking about a system that is many in place for a long, long time that I think is outdated, and really has divided I think the state into 2 North Carolina's, and I think this is a a bill that will fix that issue and I'll try to get in our talking points and I'm sure you've got plenty of questions. But reforming our state's sales tax system will help ensure all North Carolina counties benefit from tax dollars their own citizens pay, so they have the local resources necessary to strengthen public education, attract new jobs and contribute to our states economy. North Carolina inequity system of redistributing sales tax is unfair. It provides a huge advantage to a few rich areas that are booming by hurting the overwhelming majority of our states counties. That's because years of disproportionate share of tax revenue has been redistributed to urban prosperous areas of the state, for large shopping malls and commercial centers all their old neighbors to drive in and spend their hard earned sales tax dollars out of town. For example, under the current system, Wake County is receiving about $145 million in sales tax revenues, while nearby Warren County is only receiving about $2.4 million. Mecklenburg County is receiving $193 million, Wakes neighbor Anson County is receiving just $2.8 million. So you have one county of residence subsidizing white county schools and Anson county of residence subsidizing Mecklenburg county schools, in fact the current system has allowed Mecklenburg county to receive more in sales tax revenue than over 50 of our least prosperous counties combined, that's just not right. In addition to the unfair advantage of counties with large commercial centers received, some counties benefit from outdated confusing adjustment factors created in the late 1980s to further redistribute sales tax premiers and enrich the home counties of a few powerful state leaders. For instance, the Home county of the former powerful leader, senate leader receives 49% more revenue than if it was strictly on a per capita basis. Wekblain county, Columbus county, I'm sorry receives 19% less. In 2001 North Carolina joined a national streamline sales tax agreement to move the collection of sales tax on large deliverly items from point of sale to point of delivery. Yet the state did not repeal the unfair adjustment factors leading to a double win fall for some counties. When you consider that Mecklenburg, Wake and Durham counties were awarded over 85% of the JDIG in Santa Clones last year, and receive more dollars under the new transportation funding plan, even if as they already received this proportionate share of sales tax revenue it seems that most of the state is set up for failure by the status quo. This inquities create a viscous cycle that forces rural counties to fund their public skills and basic infrastructure needs for a sky-high profit taxes. And sky-high profit taxes in much of rural North Carolina create another major obstacle, a new industry locating and creating jobs there. This is the big reason two North Carolinas, one is that booming, and one that is bursting. To address this major problem we're proposing a three-year phasing to our per capita sales tax system. So citizens from our mostly poor rural counties no longer involuntarily redistribute their tax dollars to subsidize a few rich urban counties when they drive to those areas to spend their money. Instead, those who purchase goods will actually benefit locally from the sales tax dollars they spend. Brown needed our lower and rural communities to receive more of the sales taxes, their home residence pay will require a large counties to tighten their belts slightly. Now, there will be far more winners than losers, the best majority of counties win while a small number of other counties will see far more minor adjustments. Large urban counties have had an unfair advantage for decades. This bill restructures the sales tax system so rural, poor counties can finally receive a fair shake. We will finally have a system that empowers the entire state to prosper and compete which benefits us all. And with that I will try to answer any questions With your new plan how does it affect within a county?
For example Cumberland County where I'm from we've got an urban area on the west side and extremely rural area on the right side with several very small towns. Does it move money from the urban communities on the west to the rural communities on the east side of the counties? This is based on a county wide system that will be allocated wide. Again it's for the counties as it's allocated. So you're saying that that the Cumberland County example, the county will decide how that's distributed? Is that what you are saying? The money also for the is allocated per capita is loyal. So let's check the scenario, 200.000 per county, 100, 000 live within city limits 100, 000 of that will be allocated out to the cities per capita, the rest will go through the county itself per capita. Could you describe the three year how would that transition happen? As a set up today, you have 75% of the dollars are going point of sale, 25% is per capita. This will move it the first year to 50/50 then the second 25/75 the other way and finally the third year to 100% per capita. And do the adjustment factors, do those go away right away? yes they do, the just factors go away. No, I'm sorry they're scaled in over 3 years as well, we looked at it both ways, they're scaled in both ways are phased in over three years. Yes Barry. I understand what you're saying about rural counties having a hard time making it. They're not getting enough money. Philosophically, these areas that have the larger shopping malls they have a lot of infrastructure, therefore to support their [xx] counties have to do that, their [xx] police that have to provide for those [xx] they be getting the money to be able to do that to watch themselves [xx] Barely that has been the argument, but my argument is look at these other 19 counties they have no money to pay teacher supplements like the bigger counties have. They don't have the money to build new schools, like the wealthier counties have. They have no money to expand their water and sewer projects like the wealthier counties have, so I think it's just a poor argument and I think the opposite has taken place. for this four counties have, in my opinion, gotten further and further behind over time. You mentioned sir a point of delivery, how we do that when selling orders from Amazon or elsewhere out of state, how is the sales tax moved now, and how will it move differently under your bill? All the Amazon pieces is a piece I don't know we are still working on as far as those collections but this is basic sales tax dollars that are collected within counties, at a point of sale when they go and buy an idol. So what you have now is someone from Anson county goes to Mecklenburg county or Let's talk about that Okay I'm from Anson county and I order something from Amazon and it comes from Kansas, alright? So among the sales tax that I pay what happens to that money? That's a good question and I need to get you that information. I'm just not exactly sure how it is allocated Okay But I will get you that answer [xx] also told me earlier about jobs, Senate's money and also transportation funds Well, that's it too Berry and that's the other places Now a larger counties are getting majority of the JDIG and incentive dollars. Also with transportation reform, the urban areas are getting most of those transportation dollars as well. So again you have tax dollars from across the state going to a few counties that benefit them, so again this I think trust move the needle back to something that's fair for those poorly well counties, yes. The preliminary plan, I remember, had more counties in the red, can you explain how you got from that earlier plan to this one? Right, the pace that you were talking about is if you went today from where we are to a basically poor capita overnight. This is a three-year phasing, and because of the growth in sales tax collection, so this period about three and a half percent growth factor which is very, very conservative, our folks tell us that the growth factor is actually over five percent, but I wanted to be very conservative. I didn't want to put numbers out there that were inaccurate, so this is a very conservative approach so it is considering the 3.5% growth factor over those three years. And does this make it I guess easier to get it out of the Senate, I mean, there are really fewer counties in Red? Oh yeah, I honestly try and think through the Bill, I think it's fair because you're giving counties time to adjust.
So I think that's fair to those counties that may not be getting as much as they were, so it would phase in approach I think it is fair to them. That's why I think it is fair to the counties that will be receiving more because it kind of phases it in for them as well so they can plan better. I'm not sure getting it all one time is a good idea for some of those counties as well to be quite honest. I see you've got some House numbers is up here with you. Is House leadership also backing this? We have a lot of House members that support this plan. Okay, but Speaker Moore for example. Are you representing or are you here to represent the leadership? John? I don't want to speak to that I'm not puzzling to speak on behalf of the Speaker, but we do plan on filing a companion bill with this. We do have a tremendous amount of interest in this bill on the House side, and look forward to taking it debated I think committees and see where it goes from there. Senator Brown, and I apologize because I just want to put it in the simplest terms because I came to make sure that I'm understanding it correctly. So in other words, let's do one example like let's say so does this mean that sales tax is collected in Guilford County, for example, more of the tax that are collected there are going to be shared with us surrounding borrowed[sp?] counties and in fact does that basically what's going to happen? It does move it from a point of sale where now you have 75% of sales tax collected as point of sale. A quarter is per capita, this moves that all to our per capita system. What you have now in Guilford County, you'll have someone from the [xx] counties around Guilford County going to Guilford spending their hard earned dollars, and Guilford getting to benefit from all those dollars. that's not fair to those citizens that live in the outlined counties that don't get to use those sales tax dollars. What about I could see how perhaps some of the populous counties such as [xx] will use an argument to say that they do a lot of commerce to people who come out of the state and their county is the destination? I'm sure that you can argue any of those but again if you look at what's happening to the poor lower wealth counties. The system we have now has created a larger and larger divide over time because they're pretty stagnant, they don't have any growth so they don't get any advantage on the per capita piece that's 25% because they're stagnant. While your larger counties continue to grow so they take a bigger piece of the pie each and every year so the smaller counties lose in that scenario then again they take their tax dollars drive to the wealthier county and spend it and the wealthier counties keep 75% of that money. It then go back to the county that the people that spent the money live in, and that's not fair. First procedure [xx] quick. Don't call this against me. Okay. Seen a lot of things cancelled tomorrow morning. It's a plan to is out tomorrow. The bill will come out tonight. It hasn't been scheduled in the committee yet. So we're are going to get it scheduled [xx] not at this point. OK [xx] that's OK, neither one OK In advance for this there was some concern about areas being made whole. Is there any plan for that or are they just going to have to, as you said, tighten their belts? Well again the phasing I think allows the counties to adjust, and again the're going to have to tighten their belt some, but not as much as going to going there from day one, so I think it allows the counties that will have to give a little to adjust over a three year period and just makes it easier on them as well. It strikes me that the people like in Dare County and will kind of argue that a lot of that sales tax money has got people from out of state will get a vacationing or a redacting part of it here and this provide services for that infrastructure and they're taking pretty severe hit, they've got to pay for those out-of-state peoples needs. Well again I mentioned one particular county that right now is getting a dollar 49 cents on every dollar it collects And the people who are getting that service the people who have the big giant beach houses at the end of the roads and waters and the sewers and they spend most of their times living in other states Well, again, if you'll look at the property tax rate of those particular counties as well, they have the lowest property tax rates in the state. So, again, they're benefiting from the sales tax base, and from the low property tax base, because they are being subsidized by other counties. Just a detail I don't understand how Wake ended up in the positive and Durham in the negative, just I think Wake it is a bigger
county it's got more shopping centers and converse, how did that happen? Probably because the of the per-capita piece Wake is growing so fast, that the per-capita piece catches it up. And that's what you'll see in a lot of the counties that may be on the short end, I don't want to say short end it's not maybe the right way to express it, but maybe where they're losing a little bit in this scenario, because they're growth counties in a short amount of time they'll catch up pretty quick. Because the per-capita piece allows them to catch up because the rural areas have very little growth at this point. So they'll be stagnating again so per-capita piece allows those counties again to catch up over time. So that 3.5 annual growth you're talking about population growth not economic growth? It's sales tax revenue growth, it's what it is. Sales tax growth. Alright, Thank you so much.