ROCKINGHAM — County and municipal leaders are “opening a dialogue” to try to come to common ground regarding the method of sales tax distribution.
During Tuesday’s meeting of the Richmond County Board of Commissioners, Hamlet City Council member Abbie Covington and Dobbins Heights Mayor Antonio Blue presented a joint statement on behalf of all municipalities 11 months after commissioners “made a critical decision” to switch up from per capita, which is based on population, to ad valorem, which is based on property values.
Reading the statement aloud, Covington said the decision, made without consultation with the municipalities, “crippled the financial sustainability of all cities and towns.”
(Note: See the statement and financial figures attached at the bottom of this story.)
“They made this decision based on fundamentally inaccurate information, and they did so without fully understanding what it would do to our communities,” she read. “Now we know the impact, we know the truth, and we must take action. It is time to reverse this decision.”
Last year, County Manager Bryan Land said in an email to Rockingham City Manager Monty Crump that projections showed an increase to the county’s coffers of around 10% or $675,000.
According to figures by municipal accountant Ken Anderson, the county’s sales tax revenues increased $1,975,879 over the prior year in the first eight months after the change — and are expected to be nearly $3 million for the year.
Documents show the town of Norman received nothing starting in May 2020.
“These fundamental cuts are unsustainable and have put all the cities and towns in Richmond County on a path to bankruptcy,” the statement reads. “Some communities have more time than others, but the fate remains the same. The larger communities can increase property taxes to tread water for some time, but the smaller ones don’t have the same options, and eventually we all will drown.”
Projections show Norman becoming insolvent in two years and all other municipalities going under within seven years.
“When was the last time Hamlet raised taxes,” Commissioner Andy Grooms asked Covington.
She replied that that question, to her, is irrelevant.
“We raise taxes when necessary and we were forced into a situation of necessity,” because of the allocation change, Covington said. “You could very easily say, ‘When was the last time the county raised taxes?’”
That was in 2018 — two years after the board voted to decrease the property tax rate. In 2016, then-Commissioner Ben Moss, wary of future expenses, warned and voted against the reduction. Two years later, the county had to raise the rate higher than it had been at the time of the decrease.
Commissioner Tavares Bostic, who is one of the three current board members from the group that approved the change, asked Chairman Jeff Smart if the conversation was appropriate considering pending litigation, and what the board hoped to accomplish “tonight.”
Smart said that what was being talked about didn’t directly have anything to do with the mediation, but was to hear the concerns of the municipalities with budget season starting up.
“Also, I thought it was important to continue the open dialogue between us and the municipalities,” Smart said. “I do not want this to be a negative thing for anybody.”
He added that he knew exactly what they were going to talk about and distributed packages to the other commissioners ahead of the meeting.
Commissioner Justin Dawkins, vice chairman, said his own analysis agreed with all the figures — within 1% — except the insolvency estimation.
Dawkins said he didn’t see enough evidence to support the claim of Rockingham, Hamlet and Hoffman’s insolvency within the next few years.
“I see no evidence within the provided analysis showing consideration for recent property tax increases, fee additions and other applicable matters Abbie just referenced,” he said.
Rockingham, in June, raised its property tax rate for the first time in two decades from $0.48 to $0.58 per $100 valuation, and added a $1.50 per month increase to its residential and commercial garbage fee to try to close the gap.
“Of the $738,000 difference that was listed, the estimated years until insolvency would change to approximately 100 years,” Dawkins said. “I’m not saying this was an ideal solution for the municipalities to make, I’m just saying I don’t agree with” the claim of insolvency.
While nothing could be decided immediately, Dawkins said the willingness of the municipalities to communicate calls on the board to “create a continuing forum to determine the best solutions.”
“Whether it be per capita or ad valorem — either of which are going to require some concessions … — one thing is for sure is that a silent approach is not going to help us move into a positive direction and there’s no need for us to draw on the past. The only way that we’re going to build trust between the two of us … is to continue this dialogue and have transparency and communication going forward.”
Covington said that Rockingham and Hamlet are in a better position than the smaller towns which don’t have the same taxing capacity.
Dobbins Heights also had to raise its property tax rate for this fiscal year, but, as Blue pointed out, the town isn’t as successful in tax collection.
When he was first elected mayor, the collection rate was around 51%. According to last year’s budget message, the rate had increased, but only to 77.94%.
Blue said he approached the county for help in collection — a plea that fell on deaf ears.
“I plugged at it, I did what I was told to do, I cut, I did everything I could do,” he said.
The fund balance, when he came on board, “was so low, it was a shame,” adding that sometimes the power was shut off at the town hall.
“I know what it’s like to be bad,” Blue said. “But I know now what it’s like to be better — but I don’t want it to go back to being bad.”
Referencing a recent meeting regarding a countywide clean-up effort, Blue concluded, “If we can work together on some things, we should be able to work together on all things.”
The other mayors — Rockingham’s Steve Morris, Ellerbe’s Fred Cloninger, Hoffman’s Tommy Hart and Norman’s Tonia Collins — joined remotely from Hamlet City Hall.
Morris raising taxes, as a government official, is a gut wrenching decision, and for the city and other municipalities to have to do so to make up for the shortfall was not fair to the residents.
He said the county’s estimate from last year was “a gross mistake.”
Morris said last year he called three commissioners and the county manager to ask “how much is this going to hurt the city of Rockingham.”
Since then, he added, no one has been “man enough to call me back.”
“We wanted to talk and we still do,” Morris said. “We’re not going to get a resolution tonight, but we’ve got to start somewhere.
“Someone mentioned earlier, ‘What about a lawsuit?’ Well, there has not been a suit filed, we’re trying to do some mediation to prevent that. But if we got the sales tax back, I imagine that would go away, because our problems could be resolved as easy as that.”
Following Morris’ comments, the board went into closed session to consult with the county attorney.
When they came out, Smart said he would continue to encourage communication between the local governments “so we can understand and be aware of each others accomplishments and challenges.”
“Doesn’t mean we’ll always agree, but hopefully we’ll be able to move forward and eliminate some surprises along the way.”
