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Originally published: 2013-04-30 19:06:22
Last modified: 2013-04-30 19:06:20

Watauga makes sales tax change official

Watauga County Manager Deron Geouque hand-delivered a resolution Tuesday requesting a change in the county's sales tax distribution method, cementing a plan expected to cost the town of Boone about $2 million next fiscal year.

Now, Boone leaders must decide how to cut its budget or increase its revenue stream to deal with the expected loss of funding, which will go into effect July 1.

"The loss of $2 million dollars in the sales tax distribution will be devastating to the citizens and business in the town of Boone, as there will need to be a drastic cut in services and programs," the Town Council said in a statement released earlier this month. "It will affect the town's ability to provide services to its residents and to those who work here and vacation here."

The Board of Commissioners voted 3-2 on April 16 to switch to a hybrid ad valorem system, which will provide more funding next fiscal year to Watauga County, Seven Devils, Blowing Rock and Beech Mountain. The board directed that Geouque not submit the resolution to the N.C. Department of Revenue until April 30, the final day in which counties may request a change, to allow for any last-minute compromises.

The switch was devised in response to the Boone Town Council's vote to adapt its multi-family housing regulations, changes the council said would create more housing stock for the work force and the county said would jeopardize the sale of the former Watauga High School property.

In letters exchanged last week, neither Boone nor the county would budge in its demands. Boone con tinued to request a closed-session meeting with a mediator, while the county was resolute in its request for an open meeting.

"It's unfortunate that it came to this," Commissioners Chairman Nathan Miller said Tuesday. "We waited until the last possible second to try to make it so the parties could come together, but they refused to meet with us in the open."

Boone Mayor Loretta Clawson could not be reached by presstime Tuesday.

Who gets what?

Because the sales tax collected varies from year to year, it's not certain exactly how much each municipality will receive next fiscal year.

Based on estimates from the 2011-12 sales tax figures, Beech Mountain would gain about $470,000, Blowing Rock would gain about $334,000 and Seven Devils would gain about $73,000 under the hybrid plan.

Watauga County expects to receive about $500,000 more from the change due to agreements worked out with the smaller towns to return a portion of their increases to the county. Chairman Nathan Miller has said he intends to recommend cutting the county's annual allocation of about $319,000 to the rural fire departments due to the additional sales tax money they're slated to receive.

Based on the county's figures, Boone would receive about $2 million less next fiscal year, although Town Manager Greg Young said his calculations were closer to about $1.7 million.

What will Boone do?

While most towns are dreaming of how to spend their windfalls, staff members in Boone are already re-evaluating next year's budget, which is currently being formulated, Young said.

In a letter to town residents April 2, the mayor said the shortfall would force the town to cut or discontinue services, which could include snow removal, street maintenance, police and fire protection, and sidewalk maintenance and expansion.

"There would be no more greenway construction or nonprofit support," the letter continued. "Of course, a tax increase would have to be considered."

The Downtown Boone Development Association on Monday sent a letter to members warning that the reduction in Boone sales tax revenue will likely result in decreased funding for downtown improvements.

"It is highly likely that the pending streetscape plans for new sidewalks, trees and other improvements will be put on hold as well as the recently proposed improvements to Howard Street," read the letter, sent from the DBDA Board of Directors.

"These cuts may or may not affect our seasonal promotions and other opportunities for downtown events and festivals," the letter stated.

What about the high school deal?

Meanwhile, the issue at the root of the sales tax change -- the sale of the former high school -- is still up in the air.

Prospective buyer Phil Templeton said in an open letter April 8 that he intended to withdraw his $18.9 million offer by the end of the inspection period, which county staff said ends May 12.

"It is hoped that civil discourse and cooperation will prevail and that our town and county leaders will work together to abolish the many unreasonable regulations which limit and complicate business activity which is so vital to our community," Templeton wrote.

-- Reporter Anna Oakes
contributed to this story