Chamber Supports Waterways Maintenance and Dredging Plan
Photo Courtesy of Amy Nelson
On September 1, the Board of Directors of the Carteret County Chamber of Commerce unanimously voted to adopt a resolution supporting a quarter cent increase in the county sales tax bringing it from 6.75 cents to 7 cents. The County Commissioners adopted a similar resolution stipulating that the revenue generated will be used for waterway dredging and maintenance.
It’s estimated that the tax adjustment will generate approximately $2.5 million in annual revenue. A study commissioned by the County estimated that conservatively 52% of the sales tax collected would be paid by non-residents and visitors to the county. Additionally, the State has established a Shallow Draft Navigation Channel Dredging and Aquatic Weed Fund that will provide two State dollars for every dollar the County provides. The only way to tap into the state fund is with matching funds from the County.
“Our waterways are our life’s blood when it comes to both commercial and recreational fishing and boating,” said Tom Kies, President of the Carteret County Chamber of Commerce. “It’s getting more and more difficult to find Federal and State funding to keep our waterways open. If there ever was a time to act on this, it’s now.”
The sales tax adjustment will not include groceries, prescription medicine, gasoline, certain agricultural supplies and motor vehicles.
The Board of County Commissioners has established a Waterways Management Committee to administer the funds. The duties of this commission will be to hold community meetings to seek input from the community on waterways dredging and maintenance, formulate and maintain a schedule of waterway maintenance as well as working closely with the U.S. Corps of Engineers, the N.C. Division of Water Resources and other Federal and State agencies in pursuit of projects and funding to benefit the County’s waterways.
Answers to some of Common Questions:
Q1 – Why is the ¼¢ sales tax being proposed?
A1 – To maintain access and navigability of the waterways of Carteret County. Given the current absence of federal funding this is becoming a local responsibility. Additionally, this tax will be used to match and leverage State dredging funds.
Q2 – Who pays sales taxes and what is the current rate?
A2 – The Sales and Use tax is applied to purchases of tangible personal property and “uses” such as renting accommodations, paying for services associated with tangible property, etc. A 4.75% general State rate is applied, and items subject to the general rate are also subject to a minimum 2% County rate (total is 6.75%). Seventy Counties in the State (including Carteret) have a 6.75% rate, twenty-seven Counties apply a 7.00% rate, one a 7.25% rate, and two a 7.50% rate.
A study conducted by East Carolina University in 2014 estimates 52% of the sales tax in Carteret County is generated by those who don’t live in the County (i.e., visitors).
Q3 – How much would a ¼¢ sales tax generate?
A3 – Approximately $2.5 million per year, which can be used to leverage other state and federal funds to maintain our waterways.
Q4 – How do I know the funds won’t be used for any other purpose than waterway dredging? What safeguards are in place?
A4 – (1) To ensure fiscal transparency, the County Board of Commissioners passed a resolution in August 2016 to establish a special line item revenue fund to receive and account for the ¼¢ sales tax. Also, (2) The County created the Waterways Management Committee earlier this year. This citizen group will also serve as a custodian of the waterway dredging sales tax.
Q5 – My boater registration fee went up a few years ago for dredging. Why?
A5 – In 2013 the State created the Shallow Draft Navigation Channel Dredging & Aquatic Weed Fund. It is endowed by an increase in boater registration fees and 1% of the boat fuel tax. This is estimated to generate $19 million annually to help fund dredging projects across the State. Access to these funds requires matching funds which the proposed ¼¢ sales would provide.
Q6 –Why then another tax or fee for dredging?
A6 – To generate the local cost-sharing dollars to leverage with the Shallow Draft Navigation Channel Dredging & Aquatic Weed Fund. By virtue of State Law (SL 2016-94), dredging projects in Carteret County are eligible for a 67% State cost-share. The proposed Carteret County ¼¢ sales tax would be an instrument to generate all or most of the 33% non-State cost-sharing dollars. Thus if the $2.5 million generated by the County ¼¢ sales tax is fully leveraged with the State fund; then a total of roughly $7.5 million could be available for dredging projects in any given year using 67% State – 33% local cost-share formula.
Q7 – What happens if the ¼¢ sales tax referendum fails?
A7 – Local governments, in addition to marinas and other businesses will have to provide funding to dredge and dispose shoal material by other means. They will have to make up the difference from somewhere. For local governments, this likely means out of their General Fund endowed mostly by ad valorem property taxes.
Q8 – What channels will be eligible to receive waterway funding?
A8 – All channels will likely be eligible to some degree or another to receive sales tax proceeds designated for waterway dredging. The County and the Waterway Management Committee is inventorying the channels within the County. The inventory is aimed to comprehensively identify all channels previously maintained by the federal government, municipally-maintained channels, HOA-maintained channels, and others.