ROCKINGHAM — Hours after resolutions were delivered asking the county to reconsider the decision to switch the method of sales tax distribution, County Manager Bryan Land sent an email to commissioners highlighting the reasons behind the “extremely difficult decision.”
Earlier this month, commissioners voted to change the method from per capita, which is based on population, to ad valorem, which is based on property values.
Land said there is a trend of financial burdens being shifted toward the county level, with state and federal reimbursements diminishing while costs continue to escalate.
He also said there is a statewide trend of making the switch to ad valorem, with 52 of the state’s 100 counties currently distributing their taxes that way.
“Richmond County is not the first (and) certainly won't be the last,” Land said.”We have been extremely generous to the municipalities over the years, we could have followed suit with Scotland County and switched to (ad valorem) over a decade ago but we chose to utilize fund balance and balance our budgets on the backs of our employees instead,” adding that they have gone three years with a 1.5% pay increase.
During that time, Land continued, the municipalities kept their tax rates the same while the county had to raise them.
“In speaking with Hoffman yesterday, they advised they haven't had an increase in 40 years,” Land said. “Small incremental increases are a necessary tool to keep up with inflation cost alone.”
In 2016, a majority of the commissioners voted to decrease the property tax rate. However, 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.
“It certainly isn't a fair practice to raise taxes on all of Richmond County including our local industries while municipalities go decades without an increase,” Land said. “Practices of this nature will stifle growth and economic development.”
He added that the county’s current elevated tax rate can not afford to increase again.
Land then named off the departments that the county funds annually including: the Department of Social Services and the Health Department; the sheriff’s office, jail, judicial center, magistrate’s office; as well as Richmond County Schools and Richmond Community College.
“We also contribute over 780k to non-departmental agencies and nonprofits throughout the county,” Land continued. “We have very minimal discretion over our annual budget, most items are mandated by a higher agency.”
As an example, Land said that the county is mandated to provide $2.2 million annually for the school system.
Included with the email was a breakdown of the costs associated with the county’s 911 Center.
“You will recall we absorbed eight municipal employees with zero contribution from the municipalities,” Land said.
This year’s budget for Emergency Services and Code Enforcement increased more than $1.7 million, he added, which he said was “a far cry” from the estimated $675,000 the county stands to gain from the sales tax switch.
Land went on to say that costs for the center will decrease after next year due to infrastructure being paid for, but salary, benefits and other costs will continue to rise.
Rockingham City Manager Monty Crump considers that part of the explanation for the switch as “an absolute red herring.”
According to the interlocal agreement signed in February of 2015, the center is supposed to be self-sufficient, “financed by 911 fees, grants, and funds provided by the county” and the county will not charge the city for taking over the call-taking and dispatch functions.
Crump said the agreement with Hamlet has the same clause and that both cities were approached by the county to cease their communication operations so the county could “maximize their grant application funding request due to the fact the new 911 center would represent a consolidation of service.”
“The County Manager and the Richmond County Board of Commissioners have completely mischaracterized the terms of this agreement and by demanding payment through sales tax distribution change in light of Rockingham and Hamlet(‘s) refusal to double-tax their citizens is in my judgement a breach of contract,” Crump said in an email sent prior to Land’s on Wednesday. “A breach of contract that further, in my opinion, creates sufficient dispute to warrant a potential lawsuit against Richmond County.”
Crump said both cities have cooperated with the county, but are now being punished for “fully performing as provided in the agreement.”
He concluded by saying county leaders were attempting to use Rockingham and Hamlet “as scapegoats for their fiscal ineptitude.”
Land concluded with a recent situation from this year where Rockingham and Hamlet released areas that were in their extra-territorial jurisdiction back to the county.
He said the county has had to hire a third-party firm to keep up with code enforcement and budgeted for an additional employee to help with the workload. He added that it cost the county more than $15,000 to recently demolish one home site.
Earlier in the day, Rockingham Mayor Steve Morris and Hamlet Mayor Bill Bayless went to the county administration building to drop off resolutions from five of the six municipalities asking commissioners to keep the method that has been used for years.
The change is expected to cost Rockingham and Hamlet more than $600,000 each, according to Morris and Bayless. Dobbins Heights Mayor Antonio Blue said in a letter to the state Treasurer’s office that it would cost his town more than $120,000.
At the time, no one had heard from town leaders in Norman.
Crump forwarded an email he received from them late Wednesday afternoon saying they were “taken aback” by the change in distribution method.
“Our town relies heavily on our portion of the sales tax revenues to survive,” the board collectively said in the email. “The proposal by the Commission will be detrimental to our town and its citizens.”
At least one county commissioner has said he isn’t likely to change his mind.
Commissioner Ben Moss said late Wednesday afternoon that “it was a tough decision to make,” and he doesn’t plan to rescind his vote.
“We have to get creative in the way we raise revenue,” he said, adding that the county couldn’t raise its rate any higher and referencing, as Land did, that the municipalities haven’t raised theirs.
Moss also referenced the 911 center and ETJ change.
“They’ve saved hundreds of thousands of dollars,” from both of those changes, he said, suggesting that the sales tax shortfall for Rockingham and Hamlet could be made up from those savings.
