SIMPLIFYING NC LOCAL SALES TAX DISTRIBUTION.

View NCGA Bill Details2019-2020 Session
Senate Bill 650 (Public) Filed Wednesday, April 3, 2019
AN ACT SIMPLIFYING NORTH CAROLINA'S LOCAL SALES TAX DISTRIBUTION.
Intro. by Brown, Hise.

Status: Re-ref to Finance. If fav, re-ref to Rules and Operations of the Senate (Senate action) (Apr 18 2019)
S 650

Bill Summaries:

  • Summary date: Apr 9 2019 - More information

    Section 1

    Amends Section 9, SL 1967-1096, to specify that the Secretary of Revenue must allocate (was, divide) the net proceeds of the Mecklenburg County local sales and use tax in accordance with GS 105-472(a), as amended, and that the net proceeds from the tax must be used as provided in GS 105-472(a1), as enacted. 

    Section 2

    Amends GS 105-469 to eliminate the provisions concerning per capita distribution of first one cent local option sales taxes. Instead, provides for the Secretary to monthly distribute local taxes to the taxing counties in accordance with GS 105-472(a), as amended, and requires the net proceeds of the local taxes on food distributed to counties to be used by the taxing counties as required in GS 105-472(a1), as enacted.

    Sections 3 through 8

    Current law, GS 105-472, requires the Secretary of Revenue (Secretary) to allocate the net proceeds of the first 1/2% sales and use tax, imposed under Article 40 of GS Chapter 105, to the taxing counties on a per capita basis according to the most recent annual population estimates certified to the Secretary by the State Budget Office. Further, current law requires the Secretary to adjust the amount allocated to each county by multiplying the amount by the appropriate adjustment factor set out in the table provided in GS 105-486(b), which lists adjustment factors by county or counties.

    Amends GS 105-472(a) to require the Secretary's monthly distributions of the net proceeds of the first 1/2% sales and use tax collected under Article 40 to be allocated in two ways as follows: for the percentage allocation made on a point of collection basis, allocation of the net proceeds of the tax collected in that county; and for the percentage allocation made on a per capita basis, net proceeds of the tax collected to the taxing counties according to the most recent annual population estimates certified to the Secretary by the State Budget Office. Establishes a schedule for the distribution of net proceeds collected in each fiscal year with corresponding per capita and point of collection percentages, with the beginning fiscal year being 2020-21 with a per capita percentage allocation of 31.25% and a point of collection percentage allocation of 68.75%, and through phasing ending both the per capita and point of collection percentage allocations at 50% for 2023 and thereafter. Establishes use restrictions to require that 90% of the revenue received by a county from the per capita allocation be used by the county for public education and community colleges purposes, with the remainder used for any public purpose. Allows for the Local Government Commission to make exceptions to the use restrictions upon petition by a county, as specified. 

    Makes conforming changes to GS 105-486. Eliminates the adjustment factor multiplier table. Makes further clarifying changes.

    Amends GS 105-501 to require the Secretary's monthly distributions of the net proceeds of the additional 1/2% sales and use tax collected under Article 42 to be allocated in accordance with GS 105-472(a) and used as provided in GS 105-472(a1).

    Amends GS 105-522 (City hold harmless for repealed local taxes) and GS 105-523 (County hold harmless for repealed local taxes) to add to their defined terms to include amount of sales and use tax revenue allocated under GS 105-472 or SL 1967-1096 (specifies the term represents allocations based on 100% point of collection), amount of sales and use tax revenue allocated under 105-486 (specifies the term represents allocations based on 100% per capita), and net proceeds

    Repeals GS 105-487 and GS 105-502 concerning use of additional tax revenues by counties.

    Section 9

    Directs the Secretary to calculate the distribution amount for the 2020-21 fiscal year within parameters set forth in the Section, as specified. Establishes that the distribution amount is $5.2 million for the fiscal year July 1, 2020. Requires monthly allocation and distribution to taxing counties of an amount equal to one twelfth of the distribution amount calculated under the act multiplied by the respective allocation percentage provided for the county, unless not provided, which then makes the allocation percentage 0%. Provides for situations of excess or shortage. Prohibits amounts allocated from being divided among the county and its municipalities. Defines taxing county under the Section to include those levying the first one cent sales and use tax, the first one-half cent local sales and use tax, and the second one-half cent local sales and use tax. Establishes that these adjustment are not to be included in the calculations made under GS 105-469, GS 105-522, and GS 105-523.

    Section 10

    Effective July 1, 2020, amends GS 105-524, concerning the distribution of additional sales tax revenue for economic development, public education, and community colleges. Provides new parameters for the calculation of the distribution amounts from local sales taxes for the fiscal years beginning on or after July 1, 2019, by adding a multiplier phase out percentage set at 60% for fiscal year 2020-21, 33.3% for fiscal year 2021-22, and 14.3% for fiscal year 2022-23. 

    Repeals GS 105-524 and makes conforming changes to GS 105-469 and GS 105-523, effective July 1, 2023.

    Section 11

    Effective July 1, 2020, unless otherwise provided, and applies to sales tax revenues collected on or after that date and distributed to counties and cities on or after September 1, 2020.


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