Macon votes no, again, to quarter-cent sales tax
The quarter-cent sales tax was estimated to generate $2.4 million annually. File photo
For the second time in two years, Macon County voters have rejected the implementation of a quarter-cent sales tax to bolster funding for local public schools. However, the margin of defeat for the referendum is shrinking.
“Historically, this vote on the quarter-cent sales tax may take many times, but seems to get closer to passing each time,” said Commission Chairman and retired Franklin High School Principal Gary Shields.
When voters in Macon County went to the polls last week, the ballot included a referendum that asked whether they were in favor of a “local sales and use tax at the rate of one-quarter percent (0.25%) in addition to all other state and local sales and use taxes.”
Election results show that of the 21,905 ballots cast in the county, 10,213 voted against the referendum, about 51.22%, and 9,726 voted in favor of the referendum, about 48.78%. Just under 9% of voters chose not to pick a side on the referendum.
If it had passed, the referendum would have raised the sales tax from 6.75 to 7 cents per dollar, impacting out-of-towners and locals alike on all items sold in Macon County other than unprepared foods and gas.
In North Carolina, all counties have the option to locally levy a quarter-cent sales tax. According to the legislation, the sales tax can be implemented on the first day of any calendar quarter as long as the county gives the North Carolina Department of Revenue at least 90 days advance notice. If a referendum is held in November during the General Election and passes, the earliest the county could begin collecting revenue would be April 1 of the following year, provided it adopts a resolution levying the tax and forwards it to the Department of Revenue prior to Dec. 31.
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The failure to pass the quarter-cent sales tax represents a loss for public schools in the county, as all additional revenue from the increase would have stayed in Macon County for use in local public schools. When commissioners and county administration were creating the fiscal year 2024-25 budget, they determined the quarter-cent sales tax was projected to accrue about $2.4 million for the county annually.
Back when the county first embarked on the new Franklin High School project, county leaders had hoped revenues from the quarter-cent sales tax would help offset the costs of construction, which will total about $127 million. However, after the county was awarded a state grant to pay for $62 million of the project, the price tag nearly halved and the county is now on the hook for about $65 million.
With the county in excellent financial condition as of last budget season, then-County Manager Derek Roland was able to present a budget in which Macon County maintained the lowest tax rate in the state of North Carolina, $0.27 cents per $100 of assessed property value, and was still able to achieve its capital improvement plan.
“Over the next five years, you’re able to complete $180 million of capital projects, $146 of which comes in 2025,” said Roland during the budget process. “You’re able to do this and never fall below $7 million in your capital reserve fund that has been established for capital projects and never fall below $25 million in your fund balance.”
This led commissioners to push for the quarter-cent sales tax — which would apply to anyone making purchases in the county, including visitors — as a way to lower the tax burden for residents of the county.
“If we get the quarter-cent, we could essentially drop our mill rate by two mills,” said Commissioner Josh Young during the budget process. “I think it’s a strong point to make to the people that we could collect funds from pass-through revenue and offset our local mill rate by two cents and keep all our CIP fully funded.”
With one penny on the tax rate generating about $1.25 million in revenues for the county, the quarter-cent sales tax would generate almost as much as two pennies on the tax rate.
Mitch Brigulio, the county’s financial advisor, said that the nature of Macon County’s economy supported Young’s idea.
In March, commissioners decided to put the referendum on the ballot for the General Election.
Originally, the stated use of any income from the sales tax was for “capital projects of the Macon County School System.” In addition to the new high school the county also has ongoing capital projects at the Highlands School and Nantahala School. What’s more, there will be needs in the near future for a new East Franklin Elementary School, which is overcrowded and has several maintenance needs.
However, when Shields brought the topic up again during the commissioners’ May meeting, the board decided to expand the use of revenues to include both capital and operating expenses in the school system.
As recently as the groundbreaking for the new Franklin High School on Oct. 18, local officials were encouraging voters to choose yes on the referendum.
“Everybody knows that there’s an election coming up pretty soon,” said Franklin Mayor Jack Horton. “The one thing on the ballot that I’m looking at is the passage of the quarter-cent sales tax which will go a long way to retiring the debt on this project.”
Macon County is alone in the seven westernmost counties of North Carolina in that it has not yet implemented the quarter-cent sales tax.
“I think it’s a way to reduce the burden on the property tax and let everyone participate in making this project a reality,” said Horton.
Despite encouragement from local elected leaders, voters chose not to pass the quarter-cent sales tax. However, the margin of defeat was much narrower this time around, than the last time the referendum was on the ballot in 2022.
During the midterm election in 2022, the same referendum was on the ballot for Macon County and 15,124 people cast their vote on the question. Of those, 8,575, or about 55%, voted against the measure, and 6,829, or about 45%, voted in favor. That is in contrast to the 51% to 49% margin this time around.
If a referendum fails, a county can legally hold a subsequent referendum on the same question after one year. For Shields, a retired life-long educator, this might be an option for Macon County.
“I will continue to support the vote at each opportunity,” Shields said following the latest vote on the referendum. “The quarter-cent sales tax is a participation tax of $2 million dollars comes into our coffers meaning that the ad valorem tax can stay low by using these monies toward capital and operational expenses.”
