Bill
HB 305
Puts 25% of per-capita local sales tax shares to Guilford County municipalities that do not levy property taxes, reducing county allocations accordingly.
Title: Guilford County Sales Tax Distribution Modifications (applicable to Guilford County only)
Status: Ratified (Session Law 2025‑87)
Purpose
- To modify how portions of local sales and use tax proceeds (Articles 39, 40 and 42 / the local government distribution) are distributed in Guilford County so that municipalities that do not levy ad valorem (property) taxes can receive a defined share of those proceeds. The act also makes related procedural changes (ballot language, uses of an Article 46 quarter‑cent tax) for Guilford County.
Key provisions and changes
- New “allocated share” for qualifying municipalities: A qualifying municipality in Guilford County that (a) does not levy ad valorem taxes and (b) does not already receive distributions under G.S. 105‑472(b)(2) may receive an allocated share equal to 25% of its per‑capita distribution (i.e., allocated share = per‑capita distribution × 25%).
- When applicable, the Secretary of Revenue will:
1. determine Guilford County’s allocation under G.S. 105‑472(a);
2. deduct a qualifying municipality’s allocated share from the county allocation and distribute that amount directly to the qualifying municipality;
3. divide the remaining funds among the county and other municipalities per G.S. 105‑472(b)(2); and
4. provide to Guilford County and municipal distributing entities the amounts that taxing districts would have received but for the allocated share deduction.
- Resolution requirement and timing:
- A qualifying municipality must adopt a council resolution indicating its intent to receive an allocated share and deliver a certified copy to the Secretary in Raleigh.
- A resolution adopted in 2025 must be adopted by October 1, 2025. (Other years: resolutions to be adopted in April.)
- A resolution becomes effective for net proceeds distributed beginning on or after the fiscal year following the fiscal year after adoption (i.e., there is roughly a two‑year lag from resolution to distributions).
- Discontinuation: Distributions to a qualifying municipality stop if it begins levying ad valorem taxes or if Guilford County switches to the per‑capita distribution method; the statute specifies the effective years for discontinuance and requires updated resolutions and notice to the Secretary as appropriate.
- Hold‑harmless: Taxing districts (and the City of Greensboro when acting on their behalf) that receive ad valorem collections must be held harmless — they will receive funds as if the allocated share had not been paid to qualifying municipalities.
- Service and fire districts: Ad valorem taxes levied by service or fire districts located wholly or partly within a qualifying municipality do not disqualify that municipality from receiving an allocated share.
- Effective date/expiration: The section is effective when it becomes law and is limited to periods when Guilford County has not levied the Article 46 quarter‑cent tax as amended by Section 2 of the Act. If the county later levies (or repeals) that Article 46 tax, the act includes provisions to reenact or expire the distribution rule accordingly; the Guilford County Board must notify the Revisor of Statutes of levy/repeal.
Who is affected
- Qualifying municipalities in Guilford County that currently do not levy property taxes (they may now receive a partial per‑capita share).
- Guilford County government (county allocation reduced by allocated shares).
- Other municipalities, taxing districts, and the City of Greensboro (affected via adjusted distributions and statutory hold‑harmless mechanics).
- The Secretary of Revenue (administration, calculation, and notification duties).
Procedural/administrative notes
- Municipalities must opt in by formal council resolution and timely delivery of a certified copy to the Secretary.
- The Secretary calculates and implements the deduction/distribution each distribution cycle and must provide information to county and municipal distribution authorities to enable taxing districts to be made whole as required.
- The statute includes specific timing rules for when distributions begin or are discontinued tied to fiscal‑year timing and county decisions about distribution methods or Article 46 tax levies.
Potential fiscal/operational impact (practical effect)
- Shifts a portion of what would otherwise be in the county pool to certain non‑ad‑valorem municipalities, reducing the county’s available allocation and changing the local distribution mix; taxing districts are statutorily preserved (hold‑harmless).
- Administrative burden on the Department of Revenue and on county/municipal finance offices to implement the new deduction, prepare notices, and track eligibility changes.
Compiled from official sources — confirm details with the bill’s official record.
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