News

Hyde commissioners raise occupancy tax rate to 5 percent

Ocracoke’s Silver Lake Harbor. Photo: C. Leinbach

June 6, 2017

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By Connie Leinbach

The Hyde County commissioners last night unanimously approved raising the Occupancy tax to 5 percent effective Jan. 1.

This 2 percent will be in addition to the 3 percent tax currently levied on all lodging rentals on Ocracoke–on top of the 6.75 percent sales tax to all hotel room and rental house fees.

So, visitors paying for lodging starting Jan. 1 will pay a total of 11.75 in taxes on their rentals.

In community meetings prior to this one, a number of lodging owners expressed their opposition to adding to the tax saying it unfairly targets the lodging industry.  They suggested a fairer way to raise more money would be to raise the sales tax, add a food tax or further raise the property tax rate to spread the hit on everyone.

During a public comment period last night, Bob Oakes, an owner of Ocracoke Island Realty, said that a survey of his property owners showed the majority were against it.

He questioned the “rush and full-court press” to enact this tax.

“I have a problem with something that hasn’t been tested,” he said. “I’d like to see you slow down a bit and see if the $70,000 (invested in the Magellan/Element marketing research and advertising plan) works.”

He was referring to the Ocracoke Civic and Business Association’s receipt of Occupancy Tax money last year to hire a professional firm to research and create a message for island-wide advertising.

Darlene Styron, owner of the Sweet Tooth, asked the commissioners what will happen if raising the occupancy tax rate results in fewer lodging bookings.

“It was said to me, ‘it’s there for the taking; let’s take it.’ I haven’t heard anyone for it except for our local government and that speaks for itself.”

She added that singling out Ocracoke to pay more taxes further separates the island and the mainland and she hopes the county pursues enacting a food tax.

By law, under the management of a five-member tourism development authority (TDA) composed by islanders appointed by the commissioners, this new 2 percent tax will go toward tourism promotion and infrastructure

The other 3 percent collected will remain under the management of the Ocracoke Occupancy Tax Board, which can allocate funds “for any legal purpose.”   Rich said the addition of this 2 percent frees more money from the 3 percent coffer to support island nonprofits.

County Manager Bill Rich. Photo: P. Vankevich

As it is now, the commissioners must approve the allocations recommended by the Occupancy Tax Board, but the TDA’s allocations will not need the approval of the commissioners.

Hyde County by law receives 10 percent of the total collected of the 3 percent tax. It will receive only 3 percent of the 2 percent tax collected.

Later in the meeting, the commissioners learned that they would be able to rescind the tax if they want.

In addition to this occupancy tax increase, the commissioners approved raising the county property tax rate to $.0073 per $100,000 assessed valuation. Put another way, property owners will have to pay $90 more per $100,000 of assessed valuation.

This property tax increase will raise $6,040,000 in property tax revenues, which down from $6,218,896 last year, according to a county budget worksheet.

This equals a loss of $178,896 in revenue to the county. Rich’s budget proposal also projects a $85,000 loss in revenues from Payment In Lieu of Taxes.  Instead of government agencies, such as the National Park Service and the federal Mattamuskeet Wildlife Refuge paying taxes on the true value of their lands within Hyde borders, these agencies are allowed to pay what they want.

To shore up the loss of income, Rich’s budget proposed that $100,000 simply be taken off the top from Ocracoke’s 3 percent Occupancy Tax collections. This fund is expected to yield about $480,000 this year.

Ocracoke’s Commissioner Tom Pahl made a motion to delete this from the revenue budget.

“I’m opposed to taking this directly from the Occupancy Tax funds and giving it directly to the county budget,” he said. “We should not undermine the viability of that board.”

The board approved Pahl’s motion and agreed that Rich should take $100,000 from the fund balance and said the county should ask for an appropriation next April at the same time as all of the other island nonprofits.

By law, all North Carolina counties must have a fund balance of at least 8 percent of the operating budget as a contingency fund. Currently, Hyde County’s fund balance is 30 percent, or about $4.5 million.

“That was my compromise,” Pahl said after the meeting. “I agreed to go along with raising the Occupancy Tax but Bill had to take that $100,000 out of the budget.”

Rich’s proposed operating budget is balance at $15,524,345 in revenues and expenses, which is the same as this year’s budget.

In other business, the commissioners accepted the resignation of islander Teresa Adams as the county’s public information officer, effective July 1.

Her son, Donny Shumate, who is the county information technology director, was appointed interim information officer.

 

 

 

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