Cabarrus County will ask the legislature for permission to raise the local sales tax, knowing that the county and Concord must raise $80 million to pay for speedway owner Bruton Smith's incentives package.
Concord leaders support adding a half-cent to the tax, which could generate an estimated $10 million per year. Without it, both governments would likely have to slash programs or raise property taxes to cover the incentives.
There's still no agreement on exactly what projects the $80 million will cover. The deal still needs votes of approval from the City Council and county commissioners.
The package is expected to consist mainly of road upgrades and noise abatement at Smith's new drag strip.
The city and county also said they would try to try to obtain $20 million of the $80 million from the state over three years to help pay for the deal, or they would provide that amount themselves. But state officials have made it clear to local leaders there is no additional money available for them now.
The county commissioners have made the sales tax increase part of their legislative agenda for the year, with revenue dedicated to road improvements and public transportation, County Manager John Day said.
But commissioner Coy Privette, a longtime foe of tax hikes, called the plan "a dumb idea."
"All this came about because of a blunder by the City Council of Concord," Privette said. "Why should we penalize all of the residents of the county for that?"
N.C. Sen. Fletcher Hartsell, a Concord Republican, said he didn't know how likely it was that the county would get its sales tax increase.
Such pitches are generally a tough sell in the legislature. But if lawmakers sign off, they could give commissioners the authority to vote for an increase or have them put the issue to local voters in a referendum.
Part of the sales tax increase could pay off debt for the incentive projects, Day said.
Gov. Mike Easley said he would be surprised if lawmakers pass a tax hike in an election year. The legislature reconvenes this week.
If the sales tax plan fails, Day said, the only other funding choices would be to raise property taxes or cut programs in the budget. "It'll come down to making those hard choices," he said.
The incentives amount, to be spread over a number of years, is sizable compared with the county's general fund budget, about $176 million this year, and Concord's, at $62 million.
Not all the money from a sales tax hike would go to the speedway debt, but Concord City Manager Brian Hiatt said he believed there would be enough to cover the incentive costs.
He said a conservative estimate of the debt on the projects would be "less than $5 million" annually. Each 1-cent increase in county property taxes generates an estimated $1.6 million in revenue this fiscal year.
The notion of seeking a sales tax increase had been discussed for at least several weeks before the deal with Smith was finalized around Thanksgiving. As in most N.C. counties, the sales tax rate in Cabarrus is 6.75 percent.
Concord Mayor Scott Padgett said a sales tax increase would help other projects, too, such as potentially extending light rail from Charlotte into Cabarrus.
City and county attorneys are working with Smith's lawyers on finishing the incentives deal. About $5 million would go to nonroad projects, Hiatt said, including noise abatement at the drag strip, and likely would be funded through some form of incentives grant.
