§ 105-523. County hold harmless for repealed local taxes. - North Carolina Statutes

§ 105‑523.  County holdharmless for repealed local taxes.

(a)        Intent. – It is theintent of the General Assembly that each county benefit by at least fivehundred thousand dollars ($500,000) annually from the exchange of a portion ofthe local sales and use taxes for the State's agreement to assume theresponsibility for the non‑administrative costs of Medicaid.

(b)        Definitions. – Thefollowing definitions apply in this section:

(1)        City hold harmlessamount. – The hold harmless amount determined under G.S. 105‑522 for theeligible municipalities in a county.

(2)        Hold harmlessthreshold. – The amount of a county's Medicaid service costs and Medicare PartD clawback payments assumed by the State under G.S. 108A‑54 for thefiscal year, less five hundred thousand dollars ($500,000). A county's Medicaidservice costs for fiscal years 2008‑2009, 2009‑2010, and 2010‑2011are determined without regard to the changes made to the Federal MedicalAssistance Percentage by section 5001 of the American Recovery and ReinvestmentAct of 2009.

(3)        Repealed sales taxamount. – The sum of the following amounts allocated for distribution to acounty for a month:

a.         The amount of salesand use tax revenue allocated under G.S. 105‑486. This calculationdetermines the effect of repealing a one‑half percent (1/2%) sales anduse tax distributed on a per capita basis.

b.         An amount determinedby subtracting twenty‑five percent (25%) of the amount of sales and usetax revenue allocated under G.S. 105‑472 or Chapter 1096 of the 1967 SessionLaws from fifty percent (50%) of the amount of sales and use tax revenueallocated under G.S. 105‑486. This calculation determines the effect ofdistributing a one‑quarter percent (.25%) tax on the basis of point oforigin instead of on a per capita basis.

(c)        Requirement. – If acounty's repealed sales tax amount plus its city hold harmless amount for afiscal year exceeds the county's hold harmless threshold for that fiscal year,the State is required to hold the county harmless for the difference by payingthe amount of the difference to the county. The Secretary must withhold fromsales and use tax collections under Article 5 of this Chapter the amount neededto make the county hold harmless payments required by this section.

(d)        Method. – TheSecretary must estimate a county's repealed sales tax amount, city holdharmless amount, and hold harmless threshold for a fiscal year to determine ifthe county is eligible for a hold harmless payment. The Secretary must send toan eligible county with the distribution made under G.S. 105‑472 forMarch of that year an amount equal to ninety percent (90%) of its estimatedhold harmless payment. At the end of each fiscal year, the Secretary mustdetermine each county's hold harmless payment for that year. The Secretary mustsend by August 15 the remainder of the county's hold harmless payment for thefiscal year that ended on June 30. The Secretary of the Department of HumanResources must give the Secretary of Revenue the data needed to determine acounty's hold harmless threshold.  (2007‑323, s. 31.16.4(d); 2007‑345, s.14.4(b); 2008‑134, s. 15(a), (d), (f), (h); 2009‑399, s. 4(a).)