Frequently Asked Questions regarding new county authority referenda

The 2007 State Appropriations Act (H1473) provides counties with the authority to levy either a land transfer tax (up to 0.4 percent) or a local sales tax (0.25 percent), following approval in a non-binding advisory referendum. H1473 creates two new articles under G.S. 105 — Article 60 for the local option land transfer tax (H1473 SECTION 31.17.(a)), and Article 46 for the local option ¼ cent sales tax (H1473 SECTION 31.17.(b)).

Question: What are the steps a county needs to consider when scheduling a referendum?
Answer: Any county that is subject to Section 5 of the Voting Rights Act of 1965 will need to submit its request for pre-clearance to the U.S. Attorney General. The State of North Carolina has already submitted its request for pre-clearance of the authorizing legislation to the U.S. Attorney General.

All counties must contact their local board of elections and the State Board of Elections in order to have the advisory referendum included on the ballot. If a county is unable to get the advisory referendum on the ballot, it may call for and hold a special election. The special election may not be held within the period of time beginning 30 days before and ending 30 days after the date of any other primary, election, special election or referendum.

Question: Can the ballot include advisory referendums for both the land transfer tax and the quarter-cent sales tax?
Answer: Yes – both are authorized under state law. If both referenda pass, then the Board of Commissioners would have to choose which one to authorize, if they so desire. They cannot enact both.

Question: Must the Board of County Commissioners levy a tax if the voters approve a referendum for either the local option transfer tax, sales tax or both?
Answer: A Board of County Commissioners is not obligated to levy a tax if the majority of those voting in a referendum on either the land transfer tax or sales tax vote in support of a levy.

Question: Can a county stipulate uses of the monies on the ballot as a part of the referendum?
Answer: A county may not stipulate the use of the money on the ballot. A county Board of Commissioners may adopt a resolution that stipulates how they plan to use the revenues.

Question: Is there a prescribed format for the question of the ballot?
Answer: Yes. Legislation specifies how the question must be presented on the ballot:

Land Transfer:
Ballot Question – The form of the question to be presented on a ballot for a special election concerning the levy of the tax authorized by this Article shall be: '[ ] FOR [ ] AGAINST
Real property transfer tax at the rate of up to [X] percent [X%] of value or consideration.'
Note: The land transfer tax amount can be set at a rate up to .4%, in increments of .1%.
Sales Tax:
Ballot Question. – The form of the question to be presented on a ballot for a special election concerning the levy of the tax authorized by this Article shall be: '[ ] FOR [ ] AGAINST
Local sales and use tax at the rate of one-quarter percent (0.25%) in addition to all other State and local sales and use taxes.'
Note: The sale tax amount is set at a rate of .25%.

Question: When is the earliest the sales tax will become effective if the Board of County Commissioners levies the sales tax via resolution (following a referendum) during November 2009?
Answer: April 1, 2010, so long as the resolution levying the tax is adopted by January 31, 2010. The sales tax may become effective on the first day of any calendar quarter so long as the county gives the Secretary of Revenue at least 60 days' advance notice.

Question: If the voters pass the referendum for the sales tax, what happens next?
Answer: If the Board of Commissioners wishes to levy the tax, it must provide 10 days public notice of its intent to adopt a resolution to levy the tax. After it adopts the resolution, it must send a certified copy of the resolution along with a certified copy of the election results of the referendum to Kenneth R. Lay, the Secretary of the Department of Revenue. The DoR's address is:

Department of Revenue
P.O. Box 25000
Raleigh, NC 27640

The Association has prepared a model resolution for a successful sales tax referenda.

Question: If the voters pass the referendum for the land transfer tax, what happens next?
Answer: If the Board of Commissioners wishes to levy the tax, it must provide 10 days public notice of its intent to adopt a resolution to levy the tax. After it adopts the resolution, it must send a certified copy of the resolution along with a certified copy of the election results of the referendum to the county Register of Deeds office.

Question: When is the earliest the land transfer tax will become effective if the county board of commissioners levies the land transfer tax via resolution (following a referendum held concurrent with the November 2009 general election)?
Answer: Jan. 1, 2010, so long as the resolution levying the tax is adopted in November 2009. The tax may become effective only on the first day of a calendar month set in the resolution levying the tax, which may not be earlier than the first day of the second succeeding calendar month after the resolution is adopted.

Question: Are there restrictions on the use of either of the new local option tax revenues?
Answer: Land transfer tax revenues are expressly authorized to be used for any lawful purpose. The sales tax is not restricted or earmarked.

Question: If the referendum fails, can a county hold a subsequent referendum on the same question, and if so, must a county wait a certain period of time prior to holding another referendum?
Answer: Per Gerry Cohen (N.C. General Assembly Bill Drafting), there are no restrictions on resubmitting a land transfer tax or the new quarter-cent sales tax to the voters again if it has failed, other than the 30-day window mentioned above.

Question: Can a county spend public money educating citizens on issues related to the local option revenue sources and the referendum process?
Answer: Yes. Similar to an election for a general obligation bond, a county may spend money to educate the public on issues related to either of the new local option revenue sources. However, a county may not spend money asking the voters to approve a sales tax or land transfer tax referendum.

Question: Can members of a county board of commissioners actively promote the passage of a referendum for the new local option revenue sources?
Answer: Yes. The board of commissioners may approve resolutions in support of the passage of a referendum for the new local option revenue sources. A county commissioner may publicly endorse and support local option revenue sources.

Question: Can a county reverse its decision to levy the new local option sales tax, and instead levy the local option transfer tax (or vice versa)?
Answer: It is possible to repeal either of the new local option revenues sources and hold a referendum on the other revenue source. You are not required to repeal the existing revenue source prior to holding an advisory referendum on the other revenue source, but a county may only levy one local option revenue source. The transfer tax can be repealed (or the rate reduced) via resolution. The repeal will not take effect until the end of the fiscal year in which the resolution was passed. The new sales tax can be repealed only by special election, at the request of the board of commissioners, or by written petition.

As with any local legal matter, we ask that you consult with your county attorney and county board of elections as you consider these local referendum options.