North Carolina HB 305: Guilford County Sales Tax Distribution Modifications.

Bill Text

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025

SESSION LAW 2025-87
HOUSE BILL 305

*H305-v-6*
AN ACT APPLICABLE TO GUILFORD COUNTY ONLY THAT (1) PROMOTES
FAIRNESS IN SALES TAX DISTRIBUTIONS BY ALLOWING MUNICIPALITIES
THAT DO NOT LEVY AD VALOREM TAXES TO RECEIVE A PERCENTAGE OF
LOCAL GOVERNMENT SALES AND USE TAX DISTRIBUTIONS; (2) MODIFIES THE
BALLOT QUESTION FOR A REFERENDUM REGARDING THE LEVY OF THE
ARTICLE 46 QUARTER-CENT SALES AND USE TAX; (3) SPECIFIES THE USES OF
THE ARTICLE 46 TAX PROCEEDS; AND (4) DISTRIBUTES A PORTION OF THE
ARTICLE 46 TAX PROCEEDS TO CERTAIN MUNICIPALITIES IN GUILFORD
COUNTY.

The General Assembly of North Carolina enacts:

SECTION 1.(a) Definitions. – The definitions in G.S. 105-472 apply to this section
to the extent they are not inconsistent with the provisions of this section. In addition, the
following definitions apply in this section:
(1) Allocated share. – The product of a qualifying municipality's per capita
distribution multiplied by twenty-five percent (25%).
(2) Council. – Defined in G.S. 160A-1.
(3) Per capita distribution. – The net proceeds of the tax collected under Articles
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)(1).
(4) Qualifying municipality. – A municipality that meets all of the following
requirements:
a. Is in Guilford County.
b. Does not levy ad valorem taxes.
c. Does not receive distributions under G.S. 105-472(b)(2).
SECTION 1.(b) Authorization. – Notwithstanding G.S. 105-472(b)(2), 105-486(c),
and 105-501(a), a qualifying municipality may 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 ad valorem method of distribution
under G.S. 105-472 is in effect for Guilford County.
SECTION 1.(c) Resolution Required. – The council of a qualifying municipality
shall adopt a resolution indicating its intent to receive an allocated share in accordance with this
section. A resolution adopted in 2025 must be adopted no later than October 1, 2025. For a
resolution adopted in any other year, the resolution must be adopted during the month of April.
For a resolution under this subsection to be effective, a certified copy of it must be delivered to
the Secretary in Raleigh. 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 an allocated share. A resolution under this
subsection is effective for net proceeds distributed beginning on and after the fiscal year
following the fiscal year after the adoption of the resolution and is effective until either (i) the

Page 2 Session Law 2025-87 House Bill 305
municipality no longer meets the criteria of a "qualifying municipality" or (ii) a resolution by the
Guilford County Board of Commissioners choosing the per capita distribution method becomes
effective in accordance with G.S. 105-472.
SECTION 1.(d) Discontinuation. – If either of the conditions listed in (i) or (ii) of
subsection (c) of this section are met, the distributions shall be discontinued in accordance with
this subsection. If the condition in (i) of subsection (c) 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 beginning on and after the fiscal year for which ad valorem
taxes are levied by the municipality. If the condition in (ii) 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