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Southport serves as backdrop for first meeting on future of municipal finance 

by: Scott Mooneyham, NCLM Advocacy Communications Strategist

The League held the first meeting in a series of meetings on the future of municipal finance, A Path Forward: Vibrant Cities Today and Tomorrow, in the picturesque town of Southport, at the mouth of the Cape Fear River in December. The meeting proved lively and insightful, with municipal officials from the region discussing the finance and policy challenges that they face in an uncertain and changing world. Much of the discussion focused on the pending repeal of the privilege license tax, which legislators have slated to end on July 1 and will put a combined $62 million hole in municipal budgets.

The talk, though, did not end there. Other topics included population growth and shifts that are affecting cities, changing demands on city services, sales tax distributions, and the role that municipal services and property taxes play in economic development. Chris Nida, League director of research and policy analysis, gave a presentation on the history of state tax policy, moving into recent legislative changes that includes the pending repeal of the business privilege license tax. The presentation included a comparison of North Carolina’s relatively modest property tax rates with those of other states and a look at projections showing more of North Carolina’s population becoming urbanized.

A panel discussion followed that included panelists’ own experiences dealing with the financial challenges faced by their communities. The four panelists were Shallotte Mayor Walt Eccard, Wilmington Councilman Kevin O’Grady, Fayetteville City Manager Ted Voorhees, and Brunswick County Economic Development Commission Executive Director Jim Bradshaw. O’Grady noted cities spend large sums providing services to non-residents citing how 39 percent of traffic accidents to which Wilmington police respond involve non-residents. He also demonstrated the relatively small take that

municipalities receive from sales taxes, setting out seven pennies and showing that less than one remained for cities and towns. Regarding the privilege license tax, O’Grady said, "Why would we abuse our businesses? We are happy for them to be here."

Voorhees said providing fewer revenue options for cities is bad tax policy, and local elected officials are essentially being left with one decision — whether to raise or not raise the property tax. At the end of the discussion, Eccard recognized and thanked Representative Frank Iler of Oak Island for attending, acknowledging that it was not easy for him to hear what at times were critical comments about the General Assembly. Rep. Iler called for more communication about the effects of state tax changes on municipalities.

The League chose Southport for the first location of these regional meetings because Brunswick County towns, along with the City of Wilmington, just upstream and across the Cape Fear, will be significantly affected by the loss of privilege license tax revenue. Wilmington stands to lose more than $2 million. The League also held a Jan. 26 meeting in Burlington, which stands to lose more than $500,000 from the repeal.