Burke County sales tax revenue levels off: Municipal leaders remain optimistic

Considered to be one of the largest sources of municipal revenue, Burke County sales-tax receipts show signs of leveling out this budget year despite signs of a robust economy, but municipal officials say they aren’t too concerned.

Sales taxes are generated from your purchases whether it be at the grocery store, a local business, or an online boutique. These monies are collected by the N.C. Department of Revenue and are distributed within the counties based on what is spent within county boundaries.

The revenues are placed in the local governments’ general funds, the principal financial support for basic services like police and fire departments, parks and recreation, and government operations like roads, schools, and infrastructure.

In Burke County, Valdese is projected to receive $1,879,492 while Morganton is expected to receive $6,920,661, according to their budgets.

For Morganton, these taxes represent 15.8% of its overall general fund revenues ($43,732,350) in the fiscal 2024-2025 budget. Sales tax receipts in Valdese represent about 24.7% of its overall general fund revenues ($7,618,990).

While both forecasts represent increases over the previous year, municipal leaders said the growth is leveling.

Morganton’s City Manager Sally Sandy and Valdese’s Assistant Manager/CFO Bo Weichel said that shoppers are spending less and one of the factors is the aftermath of the COVID years.

“When COVID hit, everybody thought that all the sales were going to bottom out and we were going to struggle,” said Sandy. “What really happened was that people were sitting at home in a lot of cases and doing online shopping. They received the revenue that they didn’t expect and spent it. The state of North Carolina, for the first time ever in February 2020, started collecting taxes on online sales.”

With people no longer receiving stimulus checks, sales tax revenues have dropped since people do not have the extra money in their pockets, said Weichel.

Prioritizing and strategizing

When asked about long-term strategies in Valdese, Weichel said that the fluctuation of sales tax revenue is “unpredictable,” because it depends on consumer spending.

“If the markets are strong, people are gonna spend,” said Weichel.

One potential strategy that he reported is increasing the county’s local sales tax rate from 2% to 2.25%, like Caldwell County. Raising it a quarter would be considered beneficial to all cities/towns within Burke, he said, but this is not established at the local level.

Moving forward, Morganton may need to evaluate and prioritize their expenditures since their revenues are not as high, said Sandy.

“We always take a portion of that and apply it toward our capital program. So, it’s one way that we reinvest in the assets in the community- the parks, the vehicles with which we serve our citizens, sidewalks, public safety, things like that. The rest of it, we use to fund normal operations,” she said.

For example, Morganton has written into the budget a $2.5 million fire truck which the City will purchase with borrowed money. This will require a debt service plan that would be paid from the general fund, where the sales tax revenue is placed.

The debt service on the truck would be prioritized over other capital improvement items like upgrading a playground or purchasing public safety cars. The City would shift things around and work towards a plan of what comes first.

“There’s always some challenges, just like in your personal life, right? When you have to adjust to a raise in your salary or an additional revenue that you weren’t getting,” said Sandy. “It’s like closet space. If you get more, you fill it up and find ways to spend it. Hopefully, we’ve found wise ways to invest that.”

If sales tax revenue drops appreciatively, Morganton will compensate to meet its fiscal needs through realignment of budget allocations, Sandy said.

Saydie Bean is a general assignment reporter for The Paper. She may be reached at 828-445-8595, ext. 2011, or saydie@thepaper.media.