HB 305 — Guilford County Sales Tax Distribution Modifications.

GENERAL ASSEMBLY OF NORTH CAROLINA SESSION 2025 H 21 HOUSE BILL 305 Committee Substitute Favorable 4/29/25 Short Title:

Representative Blust.

For a complete list of sponsors, refer to the North Carolina General Assembly web site.

State and Local Government, if favorable, Finance, if favorable, Rules, Calendar, and Operations of the House March 6, 2025 A BILL TO BE ENTITLED AN ACT TO PROMOTE FAIRNESS IN SALES TAX DISTRIBUTIONS FOR MUNICIPALITIES IN GUILFORD COUNTY BY ALLOWING MUNICIPALITIES THAT DO NOT LEVY AD VALOREM TAXES TO RECEIVE A PERCENTAGE OF LOCAL GOVERNMENT SALES AND USE TAX DISTRIBUTIONS.

(1) AllocatedCouncil. share.

– The product of a qualifying municipality's per capita distribution multiplied by twenty-five percent (25%).

(2) Council.

(2) Net proceeds.

– The product of a qualifying municipality's per capita distribution multiplied by twenty-five percent (25%).

– The net proceeds of the tax collected under ArticlesArticle 39,39 40, and 42 of Chapter 105 of the General Statutes and distributable to a qualifying municipality as calculated using the per capita distribution method under G.S.

105-472(b)(2),105-472, 105-486(c), and 105-501(a), a qualifying municipalitymunicipalitymayreceive maydistributions receive an allocated share of the net proceeds of the tax collected under Articles 39, 40, and 42 of Chapter 105 of the General Statutes in accordance with this section during any year in which the adGuilford valoremCounty methodBoard of Commissioners chooses the ad valorem distribution method under G.S.

105-472105-472. is in effect for Guilford County.

– The council of a qualifying municipality shall adopt a resolution indicating its intent to receive annet allocatedproceeds share in accordance with this section.

A resolution adopted in 2025 must be adopted no later than June 30, 2025.

For a resolution adopted in any other year, the resolution must be adopted during the month of April.

If the council of a qualifying municipality fails to adopt a resolution under this subsection, or if a certified copy of the resolution is not delivered to the Secretary, that qualifying municipality is prohibited from receiving annet allocatedproceeds. share.

A resolution under this subsection is effective for net proceeds distributed beginning on and after the fiscal year following the succeeding fiscal after the adoption of the resolution and is effective until either (i) *H305-v-2* General Assembly Of North Carolina Session 2025 the municipalitynomunicipality no longer meets the criteria of a "qualifying municipality" or (ii) a resolution by the Guilford County Board of Commissioners choosingchooses the per capita*H305-v-1* distributionGeneral methodAssembly becomesOf effectiveNorth inCarolina accordanceSession with2025 capita distribution method under G.S.

105-472.105-472, after which time the municipality shall adopt and submit a new resolution in accordance with this subsection.

SECTION 1.(d) Discontinuation.Proportional Reduction.

– IfThe eithernet proceeds of the conditionstaxes listeddistributed into (i)Guilford orCounty (ii)and ofto subsection (c) of this section are met, the distributionsmunicipalities shall be discontinued in accordanceGuilford withCounty thisunder subsection.G.S.

If105-472 theshall conditionbe inproportionately (i)reduced ofby subsectionthe (c)amount of this section is met because the municipality levies an ad valorem tax, then the distribution under this act shall be discontinued effective for net proceeds distributed beginningto onqualifying andmunicipalities afterunder thethis fiscalsection. year for which ad valorem taxes are levied by the municipality.

IfSECTION the1.(e) conditionService/Fire inDistricts (ii)Inapplicable. of subsection (c) of this section is met, then the distribution under this act shall be discontinued effective for net proceeds distributed beginning on and after the fiscal year following the succeeding fiscal year after the adoption of the resolution by the Guilford County Board of Commissioners choosing the per capita distribution method of distribution.

The council of the qualifying municipality shall adopt and submit a new resolution consistent with this subsection indicating the condition resulting in the discontinuance of distributions under this act.

A certified copy of a resolution under this subsection must be delivered to the Secretary in Raleigh.

SECTION 1.(e) Distribution Method.

– The Secretary of Revenue shall calculate and distribute the net proceeds of the tax collected under Articles 39, 40, and 42 of Chapter 105 of the General Statutes under this act and provide certain information to assist with distributions made by the county and its municipalities to taxing districts as follows:

(1) Determine Guilford County's allocation in accordance with G.S.

105-472(a).

(2) Deduct a qualifying municipality's allocated share from the county allocation and distribute the allocated share to a qualifying municipality.

(3) Divide the remaining funds among the county and its other municipalities in accordance with G.S.

105-472(b)(2).

(4) Provide Guilford County and any municipality that levies an ad valorem tax on behalf of a taxing district or otherwise distributes a taxing district's share of net proceeds under G.S.

105-472(b)(2), the amount of what the taxing district's distribution would have been but for the allocated share to a qualifying municipality.

SECTION 1.(f) Hold Harmless.

– A taxing district in Guilford County or the City of Greensboro for which ad valorem taxes are collected by the county in behalf of the taxing district shall receive their funds from the county or the City of Greensboro, as applicable, under G.S.

105-472(b)(2) as if the allocated share had not been paid to a qualifying municipality under subsection (b) of this section.

SECTION 1.(g) Service/Fire Districts Inapplicable.

Page 2 House Bill 305-Second305-First Edition