SEPTEMBER 2, 2010 ISSUE
Big Fat NO
Watauga Voters Reject Quarter-Cent Sales Tax Hike
Nearly two-thirds of Watauga County citizens voting in Tuesday’s referendum on a quarter-cent local sales tax increase were against the measure, defeating county commissioners’ hopes for a new revenue stream to fund recreation facilities.
The Board of Commissioners said they would use revenue from the sales tax increase—had it been approved—to fund the debt service for a new county recreation center, eastern community center and school recreation improvements.
The referendum saw a turnout of 7,112 voters, or 23.5 percent of registered voters in Watauga County, according to unofficial results.
“I was really anticipating less,” said Elections Director Jane Hodges, who noted that past special elections have had a lower turnout.
Of that total, 4,428, or 62 percent, voted against the sales tax increase, while 2,705 (38 percent) voted for it. Hodges said the Board of Elections will conduct a hand and eye recount later this week, and a canvass will take place September 7, at which time the results will be deemed official.
Deborah Greene, who led a committee opposed to the sales tax increase, was at the Board of Elections office as the referendum results came in.
“I’m very pleased that the citizens got out and voted,” Greene said. “I actually expected for it to be a little closer.”
Opponents of the sales tax increase argued that this is the wrong time for a tax increase to fund recreation facilities, citing a sizable county debt amounting to $104 million and a continuing economic recession. Some also questioned the need for additional recreation facilities in the county.
Proponents of the measure said the county has waited too long for an affordable indoor recreation facility, especially considering Watauga County’s severe winters. The county’s aging indoor swimming pool needs replacement, and the current low cost of construction makes now the best time to build, they said.
“Although I’m disappointed, I do accept the outcome,” said Board of Commissioners Vice Chair Billy Ralph Winkler. “I knew there was a possibility that it wouldn’t pass, but I had hoped it would have been closer.”
Winkler said the county is limited in its ability to raise revenue—restricted to increases in property taxes or a local option sales tax increase.
“[The sales tax increase is] the option that creates the most revenue with the least burden on the local residents,” Winkler said. “It’s a good option, but the timing was not right.”
The county can’t afford to fund the construction of recreation facilities in its current budget, but it must continue planning, he said.
“We know that the pool’s going to fail,” he added. “Right now we’ll just regroup and see what our options are.”
The commissioners began pursuing the development of an indoor county recreation center earlier this year, submitting a request for $12 million in Recovery Zone Economic Development Bonds to the U.S. Department of the Treasury in February. The bonds, created by the federal economic stimulus package in 2009, can be used to finance government projects with economic development outcomes.
An indoor recreation center has been identified as a top priority for the county through community surveys and in the county’s Parks and Recreation Comprehensive Systemwide Plan.
The commissioners first hired Asheville-based firm PBC&L Architecture to draw up plans for a recreation center at a designated location on the new Watauga High School property but later directed the firm to design a center located at the old high school property, thinking the site’s topography would allow the center to be constructed for a cheaper price.
The board changed plans yet again when it learned the proposal of a rec center at the old high school site might deter potential developers of the property. The sale of the old high school site is needed to offset the cost of the $79 million new high school. The commissioners resolved to build the rec center at the original site—the new high school property.
On May 18, the commissioners adopted a resolution to hold the August 31 referendum. Before the county could issue the Recovery Zone Economic Development Bonds to finance the recreation facilities, it first had to seek approval from the state’s Local Government Commission. The sales tax increase was needed to fund the debt service on the bonds.
“If the sales tax referendum had been approved, we would have had to have filed a formal application for approval of the bonds to the Local Government Commission,” said County Manager Rocky Nelson. “With the referendum being defeated, that is a moot point at this time.”
As of Wednesday, the county has spent $208,823 from its capital reserves in planning for the new recreation center and other facilities, including $197,730 in architectural fees, $12,000 for geotechnical engineering services and $3,093 for surveying.
The cost of the referendum election was estimated at $30,000.
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