By Colin Campbell -
ccampbell@newsobserver.com
03/15/2015 2:00 PM | Updated: 03/15/2015 10:35 PM

Leaders in the state Senate are crafting a plan that would shift millions in sales tax revenues from urban and coastal counties to more rural areas across North Carolina, according to interviews and documents.

The full plan has not been disclosed publicly, but the Senate’s majority leader, Harry Brown, a Jacksonville Republican, said in an interview that he expects to file legislation soon that would change how the state parcels out a portion of taxes collected when people buy clothing, building materials and other goods.

The change would have significant ramifications for budgets in towns, cities and counties statewide, creating winners and losers and likely forcing a debate about the state’s urban-rural divide.

As it is now, a part of sales tax collections are funneled back to counties under a formula based largely on where the sale occurs. Counties with more retail operations – often in more urban settings – benefit from this. When shoppers from outlying areas visit malls in Wake, Durham or Mecklenburg counties, for example, those counties get to keep a larger share of the sales tax money, and it is used for their schools and other services.

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Raleigh City Councilwoman Mary-Ann Baldwin said the council could be forced to increase property taxes as a result. The legislature’s previous elimination of business privilege license taxes cut a source of income to the city that had been about $7 million.

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