W. Brian Hiatt has served as Concord's City Manager since 1998. He came to Concord from Hickory where he served as Assistant City Manager for over 10 years. Brian holds a Bachelor of Science Degree in History and Government Service from Appalachian State University where he was a summa cum laude graduate, and a Master of Public Administration from the University of North Carolina at Chapel Hill. Active in the community, Brian is a Past President of the Academic Learning Center and continues to serve on that Board. He is on the Board of Directors for the Cabarrus Economic Development Corporation and the Water and Sewer Authority of Cabarrus County. He currently serves as Chairman of the Cabarrus County United Way, his second time serving in that role. Brian served as the Chair of the United Way Campaign in Cabarrus County in 2002. He is a Past-President of the Concord Rotary Club, where he was named Rotarian of the Year in 2012, and the Lake Hickory Rotary Club. He is also a former board member of Hospice of Cabarrus County. He is a Past President of the North Carolina City and County Management Association, having served as President in 2012-13, and has served on several committees supporting the International City and County Management Association. Brian was a member of the Board of Directors of the NC League of Municipalities from 2004 through 2008 and now serves on its General Government Legislative Action Committee. . Brian is married to Julie, and they have two grown children, Andrew and Erin.
Will the General Assembly further redistribute local government sales taxes paid in Cabarrus County?
If you shop for clothes, shoes, or other items in Concord, you pay a sales tax on those items. Do you ever think where this money goes after your purchase? Some members of the North Carolina General Assembly are proposing to increase the redistribution of sales tax paid in a city or town so that other local governments in the State get a larger portion of sales tax revenues, regardless of their retail base and the services required to support it. The chart below and the following paragraphs seek to explain the current way these are distributed.
All sales taxes in North Carolina are collected by the State. 4.75 percent of every dollar spent is kept for State programs and services. The rest (2.25 percent) is returned to North Carolina counties and municipalities based on complicated formulas. Half a percent is distributed on a per-capita basis—in other words, according to the population of local communities in all 100 counties across the State. This means regardless of where the sales tax is paid, all North Carolina jurisdictions benefit from it. So part of the sales tax you are paying in Concord already goes to other local governments, even outside Cabarrus County.
Another 1.5 percent is returned to counties on a point-of-sale basis. This means if this portion of the tax is paid in Concord, it will come back to Cabarrus County only. Each county is allowed to choose to distribute this portion either per-capita or ad-valorem. In Cabarrus County, it is the latter, where the dollar amounts of ad valorem (property) taxes levied by the county and each municipality in the county in the preceding fiscal year are compared. The proportion that each unit’s levy bears to the total levy of all units in the county determines the amount of local sales and use tax revenue that each local government receives. Thus, when one Cabarrus local government increases its tax rate and/or grows significantly more than another, it will impact the distribution of these sales taxes. Currently, Concord receives 21.64 percent of the local sales tax retuned. Concord’s portion has been on a downward trend over the last ten years, primarily due to changing tax rates among local governments.
The final quarter percent of the total for local use (remember, it is 2.25 percent of every dollar spent) is returned to Cabarrus County for school needs.
If the General Assembly changes the formulas to further redistribute the sales tax dollars paid in Concord so that other counties benefit, estimates show the City could lose over $1.3 million in existing revenue. Keep in mind this is in addition to the $1.1 million Concord is already planning to lose because the General Assembly will no longer allow local governments to charge business privilege license taxes. Several leaders in the General Assembly have promised further tax reform will result in revenues that will replace these privilege license revenues, however, we will not know if these promises will be kept until later in the session, and likely after a balanced budget must be adopted by City Council.
Certainly, cities like Concord are fortunate to be growing. However, residents know that when you grow you must also invest in infrastructure and public safety to accommodate both the benefits and challenges. The State has profited greatly by those communities that are growing. The State receives the majority of sales tax revenues collected in Concord, which are already redistributed to make sure all North Carolina citizens receive their equitable share of State services.
The result of reducing local revenue options is to put more of a burden on local property taxes, which has become the only source of significant controllable General Fund revenue for local governments.
If you look at the local funds that are being spent to provide services to a growing city, from the many street projects underway, to the construction of Fire Station 11 on Weddington Road, to the purchase of body cameras for the Police Department, to the expansion of the City’s recreation system, residents can see that these sales tax revenues are being used to offset the impact of the very growth that is increasing revenues for the State of North Carolina. Regardless of the municipality, the State needs to be careful not to cut off its nose in spite of its face.