Category: Sales Tax (page 1 of 2)

Sales Tax Considerations During the Pandemic

I have been having a great deal of conversations with folks across the state about what is going on with their sales taxes (and occupancy and food and beverage taxes).  What has happened versus what was expected for FY21 and what they are thinking about for FY22 now that local governments are starting to begin their budget processes.  I thought it might be useful to share some of the questions I have been getting and my answers to them and some of my broader thoughts about sales taxes and the pandemic, though it is no crystal ball.  I am going to structure it like a q&a.  I am not covering everything here and please reach out if there is more than I can help with.

 

  • Q: Our sales taxes are recovering quickly, what are you seeing other places in the state?
  • A: We are seeing that sales taxes have recovered more quickly than most people anticipated. That is great news, but I think a dose of caution should accompany it.  First, we see a bump starting in in the June collections (so sales for the month of May) where it went from down 13.3% year-over-year to down 4% year-over-year and then by July (so June sales) it was up year-over-year by 10.75%.  So that is all really promising, but we have to keep a few things in mind.  1) That is right when the state moved into Phase 2 and there may have been pent up demand. 2) That is when we have more generous unemployment benefits and federal stimulus, so people had more disposable income than they might otherwise have had.  3) Some people were deferring payments on rent and/or utilities, so they had less income than it looked like from their spending in that period.  Also, that trend is not universal.  Some areas are doing much better and others are having a slower recovery.

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Update: The Impact of the COVID-19 Crisis on Local Government Budgets for FY21

In a previous blog post, The COVID-19 Crisis and How North Carolina Local Governments are Budgeting for It, I laid out the results of a survey that the NCLM and the NCLGBA had conducted to counties and municipalities across the state in April.  In this week’s blog post I am going to provide an overview of an updated survey that was send out in May.  This survey had fewer respondents, but also provides more up-to-date information about the strategies and plans that local governments in North Carolina have, with another full months of information and better understanding of how COVID-19 is impacting their jurisdiction.
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The COVID-19 Crisis and How North Carolina Local Governments are Budgeting for It

Recently the North Carolina League of Municipalities (NCLM) and the North Carolina Local Government Budget Association (NCLGBA) partnered on a survey of county and municipal governments across the state to better understand how local governments are budgeting for FY21.  There are 142  responses.  29 are from counties and 113 are from municipalities.  See the map below to see the number of jurisdictions from each county area (total of the county and municipal responses).


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Wayfair Windfall?

 

Where is the windfall promised by the South Dakota v. Wayfair, Inc ruling? This is the first blog post in a short series about economic nexus, local sales and use taxes, and your revenue!

Well, first let’s all get on the same page.  What is the South Dakota v. Wayfair, Inc (Wayfair) ruling, and why do we care about it?

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Sales Tax Reform: Articles and Virtual Roundtable

In the wake of the Wayfair ruling and our changes happening in North Carolina I am excited to share a virtual issue of Public Budgeting & Finance that I edited.  It compiles articles published in the journal and presents questions and concerns regarding the future of sales tax policy.  It also makes access to the articles open (i.e., FREE!) for the next six months.  So please take a look, there are a mix of studies that examine state and local issues.

 

 

Also, in addition to editing the virtual issue, I will be moderating a virtual roundtable next Thursday (Sept 6th) on the topic.  Please tune in!  The presenters are: Donald Bruce from the University of Tennessee, Cynthia Rogers from the University of Oklahoma, and Barry Boardman is the Chief Economist for the NC General Assembly. The presenters are very knowledgeable and experts on different aspects of sales taxes and are sure to share important insights, suggestions, and considerations.  See the flier for the event!

 

Autonomous Vehicles are coming, is your city ready?

Do you want your bonds to kill your city’s bond ratings?

Do you want your bonds to go into default?

Do you want to be responsible for a backlash against the mayor/council for not planning for a future you should have known was coming?

Do you want your city to become even more clogged with traffic, but this time the cars are empty and slowing everyone down?

Ignoring autonomous vehicles (AVs) may be possible today, but just know, they are coming soon–and by soon I mean this year (2017). While AVs may not yet be mainstream transportation today, do not count on it just being something your grandkids use. Cities have to start planning now, or their leaders will be saying YES (begrudgingly) to those questions above. A new report out from the folks at the Sustainable Cities Initiative at the University of Oregon is looking to help you deal with these questions. You can read our report here.

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Senate Bill 126: You down with this SB? Yeah, you know me… So you know that it is complicated.

There has been a great deal of interest in the distribution of local sales tax revenue in North Carolina in the past few years.  I will admit that as a scholar of local sales tax policy and effects, it has been an interesting time to be in the state (and made me much more popular!).  Not surprisingly, I have been having a lot of conversations with people across the state about SB 126, so I thought I would put some of my thoughts down on proverbial paper.

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LOST: Finally explained! Mysteries Solved! Secrets Revealed! Part 3

Previously on Death &Taxes, we learned that LOSTs and North Carolina’s local governments have a complicated relationship and that LOSTs favor some counties more than others.

There are many important characters in the story of LOSTs and North Carolina.  There are the earmarks, the revenue that goes to the municipalities, the revenue that is distributed on a per capita basis, and the tax on food.  I will let you decide which is Jack, Kate, Sawyer, and Locke.  However, I am going to just come out and say, the black smoke monster is the issue of equity across the counties. Continue reading

LOST: Finally explained! Mysteries Solved! Secrets Revealed! Part 2

Previously on Death &Taxes, we learned that LOSTs and North Carolina’s local governments are important to each other, but dare I say it, have a complicated relationship.

LOSTs are an important source of revenue and some of that revenue is earmarked, but that is not why they have been receiving so much attention.  The reason they have suddenly been a part of the tax reform discussion is the perceived inequity of the revenue raising capacity of different counties across the state. Continue reading

LOST: Finally explained! Mysteries Solved! Secrets Revealed!

Lost Season 6 Cast, Source: Indie Wire

If you were like me, then you were not satisfied with the series finale of Lost and you are hoping that this blog by a faculty member at UNC is somehow is going to put it all together for you and redeem the show.  Sorry, I am here to blow your mind with revelations about LOSTs or local option sales taxes.  Wait, wait, do not be too disappointed.  LOSTs are actually a hot button issue these days and are vital to financing local government in North Carolina…and spoiler alert the blog is called “Death and Taxes” so hopefully you saw this coming (more than the lame conclusion of Lost).

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