2015 Local Sales Tax Distribution Changes 1

Fall 2015 Understanding of New Distribution Plan  Sales Tax Base Expansion to Services: Expected to yield $67.2 million in local sales tax revenues during the Fiscal Year.  Distribution of Revenues: Distribution of $84.8 million to 79 counties according to allocation percentages in the bill:  $67.2 million - estimated amount of sales tax base expansion  $17.6 million - state appropriation  Future Years: Over time the amount distributed to the 79 counties would be adjusted by the same rate as local sales tax change 2

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New Article 44 Local Option Sales Tax Distribution (G.S )  Statutory Interpretation & Dept. of Revenue Administration Distributed to 79 Counties according to allocation percentages in G.S (c) Distributed to all 100 counties according to 50/25/25 formula under G.S (e) $84.8 million G.S (b), (c) $84.8 million (taken from all counties’ Articles 39,40, & 42 collections) $17.6 million state appropriation $17.6 million G.S (e) $67.2 million projected sales tax base expansion + $17.6 million local sales tax revenue 4

Compare Alexander County Brunswick County New Sales Tax Base Expansion Revenue Contribution to $84.8 million Fund % Allocation for from $84.8 million Fund Allocation from $17.6 million State Appropriation NET + $135,988 - ($176,791) + $1,326,108 + $36,692 = $1,321,998 ($40,803)$1,285,305$1,321,998 New Sales Tax Base Expansion Revenue Contribution to $84.8 million Fund % Allocation for from $84.8 million Fund Allocation from $17.6 million State Appropriation NET + $484,651 - ($744,458) + $0 + $154,510 = ($105,297) ($259,807) ($105,297) Note: Some counties show a net loss because the hold harmless amounts that counties distribute to cities are factored into the calculations. 5