Sales & Use Taxes

Sales Tax Receipts Analysis

Overview

Orange County's local sales tax rate is 2.75%, which is comprised of five different sales tax levies: Article 39 at 1%; Articles 40, 42 and 43 at 0.5%; and Article 46 at 0.25%. 

Counties must share Articles 39, 40 and 42 revenues with municipalities within its territory either on a per capita or ad valorem basis. Orange County currently distributes this revenue on a per capita basis. 

A portion of the County's share of Articles 40 and 42 must be dedicated to public school capital needs. By resolution, the Board of County Commissioners share 50% of the revenue from the Article 46 with local school districts for capital needs.

Sales and Use Tax Levies:

  • Article 39

Background

Article 39 Sales & Use Tax is the original local-option sales tax for counties authorized in 1971. The tax is set at one percent (1%) of eligible sales. Beginning in October 2003, Article 39 contains food tax as instructed in G.S. 105-469. All 100 counties in North Carolina currently levy this tax.

Article 39 Sales and Use Tax is collected by the NC Department of Revenue then distributed to each taxing county on a point of delivery basis. Under the point of delivery allocation method, revenue is distributed to the county in which goods are delivered. The point of delivery is typically where the sales transaction occurs. However, larger items (such as construction materials) may be delivered to the purchaser’s home or where the goods are to be used. Sales tax collections are credited to the county in which the delivery site is located, regardless of where the retailer is located.

  • Article 40

Background

The 1983 General Assembly authorized counties to levy an additional one-half percent local option sales tax (Article 40) as an added source of revenue to meet growing financial needs and to reduce reliance on other revenues, such as property tax.

When originally enacted, counties were required to set aside 40 percent for the first five years of the levy and 30 percent for the next five years. In 1998, the General Assembly enacted legislation to extend the county-required earmarks.

Distribution Equation

Article 40 Sales and Use Taxes are collected in a statewide pool and then allocated to the county area based on county population percentage after statutory adjustments. Statutory adjustments require the population proportion to be multiplied by an adjustment factor. The adjustment factor for Orange County is currently set at 1.15. This factor increases revenue that would be distributed to a county on a typical per capita basis.

A county must divide the proceeds among the local government units within its territory either on a per capita or ad valorem basis. Orange County currently distributes this revenue on a per capita basis.

  • Article 42

Background

The NC General Assembly authorized counties to collect a half-cent sales tax under Article 42 beginning in FY 1986-87. The initial legislation mandated that counties set aside 60 percent of their share of the tax for public school capital outlay for 11 years. In 1998, the Legislature made the 60 percent share permanent.

For the purpose of additional supplemental sales tax, public school capital outlays are defined as: funds appropriated for school capital outlay; increases in county school capital reserve on funds; and funds used to make debt service payments on any school bonds issued after the date five years prior to the effective date of the sales tax.

Distribution Information

Article 42 Sales and Use Tax is distributed on a point of delivery basis. The point of delivery allocation method distributes the revenue to the county in which the taxed goods are delivered. Point of delivery is typically where the sales transaction occurs. However, larger items such as construction materials may be delivered to the purchaser’s home or where the goods are to be used. The delivery site is where the sales taxes are credited for the sales tax collection, regardless of where the retailer is.

A county must divide the proceeds among the local government units within its territory either on a per capita or ad valorem basis. Orange County currently distributes this revenue on a per capita basis.

  • Article 43

Background

In August 2009, the NC General Assembly ratified the Congestion Relief and Intermodal Transport Fund Act, allowing Orange, Durham and Wake Counties to generate new revenue for public transportation. These revenues include a one-half cent sales tax (Article 43 sales tax) that can be levied in each county if approved by public referendum. Voters in Orange County approved the referendum on Nov. 6, 2012, by a 59-41 margin.

A regional transportation public authority, known today as Go Triangle, was created to help administer these revenues and work on public transit service projects involving all three counties. The Orange County Bus and Rail Investment Plan was created to help expand transit services in Orange County in particular. 

The revenues from Article 43 are allocated by the North Carolina Department of Revenue to GoTriangle, which then allocates a portion of that money to Orange County through reimbursements for projects that either offer new public transit services or expand existing ones.

*Note: Article 43 is accounted for as a part of intergovernmental revenues rather than sales tax on the County’s General Ledger.

  • Article 46

Background

In the November 2011 election, Orange County voters approved the Article 46 One-Quarter Cent (1/4 cent) County Sales and Use Tax, which became effective on April 1, 2012.

The Sales and Use Tax is estimated to generate approximately $2.5 million, annually. In June 2011, the County and school systems outlined potential initiatives (PDF) that could be funded by the tax, if approved. The Board of County Commissioners approved a ten-year commitment to allocate the proceeds as follows:

  • Fifty percent (50%) of the funding will be allocated equitably between the County’s two school systems, based on the Average Daily Membership (ADM) of each school system, for the dedicated purpose of funding capital projects, including but not limited to, facility improvements at older schools and the procurement of technology.
  • Fifty percent (50%) of the funding will be allocated to Orange County Economic Development initiatives, including funding infrastructure improvements needed to recruit new businesses and expand existing businesses; funding for business loans and grants to grow businesses in Orange County; targeted business recruitment, retention, and expansion efforts; and community branding and marketing.

Financial Tracking and Collection

Article 46 funds remain in a Special Revenue Fund separate from the County’s General Fund, allowing for a more isolated and accurate tracking of revenues and expenditures.

The NC Department of Revenue (NCDOR) coordinates the collection and distribution of sales tax revenue. County receipt of sales tax revenue from its original assessment is approximately three months. For more information, please refer to NCDOR’s Sales Tax Distribution and Closeout Schedule (PDF).

The tables in the report outline revenue collected and expenditures incurred since the tax's inception. The tables are updated each month with prior month's information. All revenue and expenditure figures have been rounded to the nearest dollar. Please direct any questions or comments to the Department of Finance and Administrative Services.

County Economic Development Initiatives

  • Project Name: Buckhorn Mebane Phase 2 Water and Sanitary Sewer Project
  • Approved: June 2012 (PDF)
  • Budget: $4,591,546

The project area is part of the 3,000 acre Efland/Buckhorn/Mebane Utility Planning Area and comprises over 800 acres of economic development land use. This area is generally located along a 3-mile corridor south of I-85/I-40 and north of West Ten/Bowman Roads. 

A gravity sewer ‘backbone’ system is being installed that will flow back to the City of Mebane. In addition, 16-inch water mains will be installed to support an additional 900 acres with new and enhanced water supply and fire flow. 

These facilities are strategically placed within prime development areas consistent with intergovernmental and community planning study areas and agreements. Proactive rezoning through the BOCC in these areas has made the location more competitive when vying for targeted business and industry. 

The project is an important phase of the utility master plan that will also create some of the infrastructure to allow the sewer flow from Efland to be redirected to Mebane.

Sales Tax Collections

Monthly sales tax distributions for Orange County.
Month Article 39 Article 40 Article 42 Article 43 Article 46
2020/01 $1,000,202.02 $700,008.44 $500,272.48 $701,452.63 $356,327.73
2020/02 $1,082,861.64 $705,056.92 $541,956.25 $775,015.92 $390,852.87
2020/03 $1,249,898.49 $676,233.32 $624,827.28 $898,513.47 $455,452.87
2020/04 $1,074,425.03 $702,121.88 $538,119.28 $760,916.49 $392,089.28
2020/05 $1,017,188.51 $696,200.67 $509,774.61 $710,850.89 $362,996.05
2020/06 $715,496.59 $738,361.86 $361,185.58 $453,471.28 $233,437.80
2020/07 $(504,668.34) $601,768.33 $(242,273.69) $(539,341.87) $(275,010.39)
2020/08 $932,154.32 $610,569.05 $466,453.63 $650,559.67 $328,743.06
2020/09 $1,019,264.36 $692,622.67 $512,536.66 $687,481.64 $342,866.29
2020/10 $914,709.61 $600,165.13 $458,641.11 $624,157.70 $313,250.94
2020/11 $1,024,842.47 $689,034.05 $514,328.31 $696,205.14 $354,285.21
2020/12 $1,173,993.64 $823,602.32 $588,771.74 $824,428.41 $419,216.04
2021/01 $1,067,181.57 $776,159.87 $535,201.83 $742,497.35 $377,778.87
2021/02 $1,090,438.71 $713,204.66 $545,652.51 $779,634.59 $390,384.18
2021/03 $1,101,026.68 $755,565.29 $551,787.90 $776,364.96 $390,363.49
2021/04 $1,099,793.51 $739,980.90 $550,593.80 $778,401.02 $390,592.96