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Council discusses using Act 866 local sales-tax option to accelerate road projects
Summary
Town leaders discussed Act 866 — a state law that would allow municipalities to place up to a 1% local sales-tax referendum on the ballot, with at least 20% of proceeds used for property-tax relief — and whether the town should consider a referendum to fund road and intersection projects.
At the May 19 workshop, staff briefed council members on a recently passed state law (referred to in the presentation as Act 866) that allows municipalities to draft an ordinance and ask voters to approve up to a 1% local sales tax to pay for infrastructure and municipal services.
Mark Orlando summarized the law’s mechanics: "It would allow the municipal municipalities to impose a 1% local sales tax and use to provide property tax relief for owner occupied homes," adding that a minimum of 20% of proceeds must be used to reduce property taxes for owner-occupied households and that the ballot must list each project, the amount and duration. Orlando cautioned that the tax could not be placed on the ballot this November and must follow state-level enactment procedures.
Councilmembers responded positively to the concept as a locally controlled revenue source for roads after noting the town has limited dedicated road revenue. One councilmember urged staff to begin planning the conversation and explore a potential referendum well in advance of any county-level referendum that could affect the town's ability to use the tax in some areas.
Staff noted key constraints: the tax is limited to 1%, revenues must be dedicated to listed projects, and state limits on combined sales-tax rates (9%) could affect feasibility in parts of the jurisdiction. Staff also said revenues can be used for debt service if bonds are included on the ballot (the ballot must disclose principal amounts).
Council asked staff to evaluate the ordinance language and timeline, coordinate with county officials and bring the item to committee when the governor signs the law or more details are available.
