First impressions are important for the success of any activity or enterprise, and that is something that Carteret County must consider as it prepares to divvy up its sales tax revenues to the county’s 11 municipalities.
What do sales tax distributions have to do with first impressions? Simple - currently the lion’s share of the county’s sales taxes is ending up in the coffers of the tourism- centric towns which are the destination for the vast majority of our visitors. This leaves only pennies for the mainland towns for maintenance of the infrastructure for all new arrivals to see and experience, which of course creates that “First Impression.”
Currently sales tax revenues are distributed on an ad valorem tax base formula. This favors the four Bogue Banks tourist towns of Atlantic Beach, Pine Knoll Shores, Indian Beach, and Emerald Isle, and the mainland towns of Beaufort and Morehead City, where property values are higher due to water access and water views.
The five other mainland towns, led by Newport and Cape Carteret, want distribution based on a per capita formula. Using this calculation will provide Newport, the largest town geographically and second largest in population, and the other smaller towns of Peletier, Cape Carteret, Cedar Point and Bogue with more revenues in the distribution. Using this formula with last year’s revenues, Cedar Point would have received $440,000 versus it’s actual receipts of $112,000 and in the case of Newport it would have produced $1 million in additional revenue.
The four beach towns and Beaufort oppose this change, arguing that they are the primary source of the tax funds and that they are most heavily impacted by the tourists coming to their towns.
We can’t disagree with these six town’s arguments but there is a need for a formula or system which will address the funding needs of the mainland municipalities already stressed with growing tourism and commercial traffic that will accelerate and become more demanding over time. The soon-to-be completed I-42 highway terminating in Newport will add a whole new dimension to traffic that needs to be accommodated now and not after the interstate is completed.
County Commissioner Robin Comer whose district includes the mainland towns in the western end of the county, voted with the majority of commissioners in early March to maintain the ad valorem formula, but was pressured by his constituent towns to seek a change. Last week the commissioners voted 6-1 to establish a seven-person committee to study alternative or hybrid distribution formulas.
Interestingly, Commissioner Mark Mansfield, who represents Morehead City and the surrounding unincorporated communities, was the sole opponent. Yet Morehead City Mayor Jerry Jones, concerned with maintaining cooperation within the county, has expressed support for reconsidering the formula package.
One hybrid solution that could be considered is accounting for seasonal activity, with tax revenues collected during the heaviest portion of the tourist season distributed on an ad valorem formula, while the tax revenues collected in the “off-season” would be distributed on a per capita basis. This would take into account the role each municipality plays in the revenue process.
As Mayor Jones has noted, a review of the possible development of a hybrid solution will go a long way to maintaining a sense of community, collegiality and cooperation among the municipalities as they deal with the stresses of a fast-growing tourism and commercial economy. There is little time to prepare.
Newport Mayor Dennis Barber, frustrated by the late board decision said, “I wish this committee would have been formed last month and not waited until it’s almost impossible to get anything done this coming year.”
There is no question the five towns that currently enjoy a lion’s share of sales tax revenues will experience budget stresses that will call for budget adjustments. But the eventual opening of I-42 will have a major impact on many of the mainland towns, particularly Newport. The western towns of Peletier, Cape Carteret and Cedar Point have their own problems now with the increased traffic on N.C. Highways 24 and 58. And that stress will only accelerate in the coming year as the state and region open back up with the eventual recovery from the pandemic.
First impressions are important. Keeping that in mind, the county commissioners are wise, albeit late, to review how to split the golden egg of our economy- the growing sales tax base. Otherwise, in keeping with the golden egg metaphor, we may end up starving the goose.