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Commissioners keep ad valorem method for distributing local sales tax
Summary
After a presentation on two statutory options, the board voted to continue using an ad valorem (property-value) formula rather than a per-capita split when allocating county local sales taxes to municipalities and taxing districts.
The Halifax County Board of Commissioners adopted a resolution to use the ad valorem method of distributing local sales and use tax revenue for fiscal year 2025/26 after hearing an overview from county attorney Glen Rawlins.
Rawlins explained the two statutory distribution options available under state law: a per-capita method (which prorates distributions to municipalities by population) and an ad valorem method (which prorates distributions by the taxable property base of each municipality versus the rest of the county). He said Halifax County currently uses and staff recommended staying with the ad valorem method because it directs a larger share to the county while still requiring the county and municipalities to share portions of their receipts with subordinate taxing districts (for example, municipal shares that must be passed through to a municipal school district).
Rawlins noted the per-capita approach would increase payments to towns (and municipalities urged that option in prior public hearings) but reduce the county share; the ad valorem method produces somewhat higher county receipts but requires the county to turn part of its share to other taxing districts (for instance, rural fire districts and school tax districts) based on the county's levies.
Commissioner Redden asked how many municipalities had expressed a preference; staff said many towns had in previous public comment favored the per-capita method. Rawlins and staff explained the Department of Revenue performs the calculation and that the board must notify the Department of Revenue annually which method it will use.
Vice Chair Davis moved to adopt the ad valorem method as recommended; Commissioner Webb seconded. The vote was unanimous.
Why it matters: the choice affects how local sales-tax revenue is shared among the county, towns and subordinate taxing districts (fire, school tax districts). Changing the method can shift hundreds of thousands of dollars between jurisdictions; staff provided multi-year tables comparing both approaches.
Ending note: staff will file the adopted resolution with the N.C. Department of Revenue and finalize the FY25/26 distribution schedule accordingly.
