Home Local News Sales tax situation dominates discussion at Rockingham City Council meeting

Sales tax situation dominates discussion at Rockingham City Council meeting

Members of the Rockingham City Council observe social distancing recommendations while discussing the county's recent decision to change the method of sales tax distribution.
William R. Toler - Richmond Observer

ROCKINGHAM — While the recent sales tax distribution debacle was barely mentioned during the business portion of Tuesday’s City Council meeting, it became the centerpoint of discussion during the council members’ comments.

Mayor Pro Tem John Hutchinson kicked off the discussion by asking City Manager Monty Crump if he had yet received the county’s calculations on how the municipalities would be affected.

Crump said that he had not and has requested it numerous times since the Richmond County Board of Commissioners decided in its April meeting to change the distribution method from per capita to ad valorem.

“I just wanted to express my disappointment that the county will not communicate with us or the municipalities,” Hutchinson said. “I think I’ve been pretty outspoken on social media, so I’m not going to add a lot to that here.

On his Facebook page on May 8, Hutchinson said he was “completely appalled,” by comments made in a letter to the editor from Kenneth Robinette, chairman of the commissioners — specifically when Robinette said: “The crux their complaints appears to revolve around hurt feelings for failure to be notified of this change so that they could marshal their arguments against the change prior to a vote….”

“What the hell?” Hutchinson wrote. “This is one of the most outrageous things anyone could have said.

“How dare any elected official belittle my concerns for the people I serve!” Hutchinson continued.

“The crux of MY complaint is that there are struggling people who must make hard choices about how to spend the limited money they have,” he said. “Now, they have even less discretionary money because the County has asked them to assume an inordinate share of the county’s deficit.”

Councilwoman Denise Sullivan said some constituents she has spoken to have told her they didn’t want to see the city cut services because of the shortfall caused by the sales tax distribution change, “because they do appreciate what our people do for them.”

“From my readings, I feel it’s very evident that there’s been a problem, it’s not something that’s just started,” she said.

Councilman Bennett Deane also said he was disappointed in the lack of communication from the county.

The municipalities reportedly received no heads-up from the county regarding the change, which came just as budgets should have been presented.

Deane said that there’s no sense from the commissioners that they’ve done anything wrong, or that it would be harmful to the municipalities.

According to an estimation by the N.C. Department of Revenue, the four smaller towns would lose more than 50% of past revenues, with Norman having a 100% loss.

During the commissioners’ meeting last week, Commissioner Rick Watkins proposed a study on the history of taxation in the county be performed by an third-party entity. An addition later made to the proposal was that the county pay half and Rockingham and Hamlet split the second half.

The motion was tabled for the June meeting so County Manager Bryan Land could get a list of companies that could perform the study as well as a cost estimate.

Crump said he has not received requests for two things that are required to bid on a professional services contract.

“I don’t know how the numbers could be any more accurate than the organization that distributes the tax,” Deane said, referencing the NCDOR estimates.

After councilwoman Ann Edwards brought up, as Robinette put it,Rockingham and Hamlet’s “decision to dump their unwanted ETJs upon the County,” Crump went into background on the subject.

He and Mayor Steve Morris explained how the city brought sewer service to the areas of East Rockingham located in the extra-territorial jurisdiction, while the county is the entity that collects the property taxes.

The city also provided zoning enforcement and demolished several dilapidated homes in the area. But recently, the county started charging the city to dump the debris in the county landfill, according to Crump.

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“We decided it was no longer in our interests to have to pick up that extra financial cost … when we were getting no money out of the ETJ,” he said.

He added that the city, at the county’s request, held off on releasing the ETJ from October of last year until January of this year “so they could have more time to get prepared for it.”

“For them to charge us to clean up their mess, in their area, is inappropriate,” Deane said.

Crump said the ETJ would not have become an issue if the county hadn’t charged the city.

Crump also mentioned how Rockingham and Hamlet picked up the slack from the county’s decision to do away with recreation programs during a financial crisis in the ‘80s.

According to him, 60 percent of the children who participate live outside the city limits.

In 1984, the Parks and Recreation budget was $90,000, for which the county paid 50%, Crumps said. However, 35 years later, as the budget has increased to more than $600,000, Crump said the county has only raised its contribution to $65,000.

The city also donated land to the county for the fairly new 911 Center and the Rockingham West Industrial Park, the latter being a detail left out from a press release announcing the expansion of Plastek into the recently constructed shell building, Crump said.

“There’s so many unintended consequences, we’re so interwoven with what we provide and the way we provide it, that it’s burning the bridge of goodwill,” Crump said. “It’s going to unravel a lot of things with Rockingham and Hamlet where we do a lot of stuff jointly with them.”

But the biggest consequence, he continued, is what the sales tax distribution will do to Norman, Dobbins Heights, Hoffman and Ellerbe.

Earlier in the meeting set a date of Wednesday May 7 at 1 p.m. for a combination budget presentation and budget work session at the council chambers.

“When you get the budget in the next couple of days, it’s gonna be kinda rough, it’s gonna be kinda ugly,” Crump said. “You’re going to see some numbers in there you haven’t seen.”

One of those included a proposal for a property tax increase – something that hasn’t been seen in two decades.

Crump said there will also be budget cuts, also for the first time in nearly 20 years.

“It was suggested that we have such a fund balance that we could just use that in lieu of raising taxes,” Deane said. “That will kinda get you in financial straits at some point … that’s not very good annual budgeting is it?”

“That’s correct,” Crump replied. “You can look at the (Local Government Commission) letters the county has got, that’s one of the reasons they’re in the trouble they are in now, excessive use of fund balance.

Hutchinson said one good thing that has come out of the sales tax situation is the working relationship between Rockingham and the other municipalities.

“It’s the closest we’ve worked with them in a long, long time and I think it’s healthy,” Hutchinson said.

There will be a public hearing on the city’s budget at the next City Council meeting on June 9.

The council also approved an audit contract with Anderson Smith & Wike, PLLC.

 

 



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Managing Editor William R. Toler is an award-winning writer and photographer with experience in print, television and online media.