Orange commissioners discuss referendum plans for transit tax

Orange County commissioners were briefed on benefits of the regional light rail transit and bus plan during a work session Tuesday night. Commissioners heard from county and Triangle Transit staff and Chapel Hill Mayor Mark Kleinschmidt about the plan, including the preferred route of a light rail train, called the "locally preferred alternative" and how Chapel Hill has included transit in its land use plans.

Commissioners said they hope to put a half-cent transit tax referendum on the ballot in the November. They did not set a date for a vote, but it would have to be by May, to put it on a November ballot, said Commissioner Chairwoman Bernadette Pelissier. Commissioners also plan to hold public hearings in the two ends of the county.

Before they vote on putting a referendum on the ballot, the commisioners said they would complete three inter-local agreements to work out the financial details for the plan. The three agreements will be between Orange County and its municipalities, Hillsborough, Chapel Hill, Carrboro, between Orange County and Durham County and between Orange County and Triangle Transit. 

Craig Benedict, planning and inspections director for the county showed commissioners a graph of declining sales tax revenue for the county. County sales tax revenue dropped $7 million, from $22 million in 2008 to $15 million in 2009. Since then it has continued to steadily decline, Benedict said.

There are two reasons for the decrease, Benedict said in an interview Wednesday. In 2008 the state shifted the model in which counties collect their tax revenue. Counties now receive money from a point of sale model rather than a population based model.

A population based model previously allowed the county to reap sales tax revenue even if its residents were spending their money in another county. After retailers reported their taxes, the state redistributed the funds back to the counties where the shoppers were from. Now, the state distributes tax revenues based on where a sale took place. With limited retail opportunities, Orange County lags behind other counties and continues to see a decrease in revenue, which could affect funding for a regional transit plan, Benedict said.

"You need more retail in Orange County to really generate the same revenue as before," he said. The economic downturn has also played a role. "I don't know what part of it was the economy and what part of it was the change in sales tax distribution methods," he said.

The county and Triangle Transit have created a fiancial model for the project that assumes revenues will be flat for the next few years, then start to pick up, Benedict said. If revenues don't pick up,  there may not be enough sales tax to fund the project, even if a half-cent tax passes.

"We would hope that by focusing and investments with transportation  improvements in Orange County that some of this investment would be returned by virtue of increasing property values and increasing sales tax revenue," he said. "...If our revenues stayed flat when there was an assumption of increasing then we have to make adjustments."