Fairmont floats 1-cent tax hike

First Posted: 2/20/2014

FAIRMONT — Gwendolyn Hunt is a bargain hunter.

For her Main Street business, Gwen’s Discount, she searches for the lowest prices on everything from jeans to cell phones to stock her shelves. Outside of work, she’s just as frugal, even factoring tax into her shopping budget — which is why she’s not so thrilled about a recent proposal to raise sales taxes in Fairmont by 1 percent.

“I really feel like we’re being asked to pay enough, to be honest,” the lifelong Fairmont resident said.

The rate hike, which first needs approval from the Republican-dominated General Assembly, would raise sales taxes in the town from 7 to 8 percent, generating an additional $153,000 a year for the local government that has struggled with declining tax revenue and rising expenses. Approval from the General Assembly would only mean that it would be put before voters in a referendum.

“We’re kind of in a situation where we have a lot of fixed income residents, so instead of putting a burden on them by raising waster and sewer, we thought about having a penny sales tax increase …,” said Monte McCallum, the recently elected Fairmont commissioner who pitched the idea.

Extra revenue from the tax hike would go into the town’s General Fund, which gradually shrank from more than $700,000 in 2007 to $270,964 at the end of the past fiscal year, according to an audit. Five and a half percent of that balance is not assigned to an expense. The Local Government Commission recommends that municipalities leave 8 percent of their General Funds unassigned to ensure their financial security.

Raising sales taxes would allow the town to draw revenue from people who stop while traveling on Interstate 95 or N.C. 41, rather than solely relying on the town’s 2,642 residents for more income, McCallum said. Last year, $354,286.75 in collected sales tax was distributed back to Fairmont by Robeson County, according to a state Department of Revenue report.

“There’s not a lot of money here to begin with, if they do raise the tax up, I really think that would hurt me as a small business ownwer,” said Hunt, who opened her store about a month ago. She heard about the hike from Mayor Charles Townsend when he came into her store on Wednesday, the day after it was proposed.

Hunt said many Fairmont residents work in Lumberton and, if the tax rate were raised, they would spend their money there.

McCallum isn’t buying.

“I really don’t see that as a problem … if someone did work in Lumberton and bought items in Lumberton before they got to Fairmont, I’m pretty sure that it would balance out,” he said.

Johnny Dunson, who owns F.F. Palace Restaurant, also on Main Street, said he doesn’t see many out-of-towners in Fairmont.

“They come through 95 not off 95,” Dunson said. The restaurant has been open for three years, and if Disney memorabilia lining the walls is any indication, sees may families.

McCallum said most residents he’s spoken to understand the reasoning behind the proposal.

“We’re trying to dismantle some of the problems that we were having in the past,” McCallum said. “We’re trying to have an outlet until we can physically see some of the changes we have made.”

Linda Vause, Fairmont’s town manager and finance officer, said some financial changes were made that “haven’t been seen to fruition yet,” such as contracting out the Department of Public Safety’s communications services to the Robeson County Sheriff’s Office. An audit of the 2013-2014 fiscal year “should look better,” she said.

A customer at Webster’s Pharmacy on Main Street said a sales tax increase isn’t “the right way to go about” fixing the town’s financial woes.

“I think that kind of tax will affect folks locally … the ones that really need the help,” said the lifelong Fairmont resident, who didn’t want to provide his name. He said he’d could get behind contributing a little more to the town if his money were designated towards specific expenses.

“It just seems wrong to pick out one community,” he said

Rep. Garland Pierce, who represents District 48, which includes includes parts of Robeson County, said it will be tough to get approval from the General Assembly.

“The present party in power is not too much in favor of tax increases … that’s a hard sell in the General Assembly, any tax increase is a hard sell,” Pierce said.

Robeson County’s government is seeking a 1 percent increase in the sales tax as a way to create a revenue stream to pay perhaps for a new jail and technology school. If that were to happen, Robeson County, at 8.25 percent, would have the highest sales tax in the state.

Robeson County voters in 2010 approved a quarter-cent hike in the sales tax rate during a referendum.