With budget increase looming, Essex County mulls sales tax hike

ELIZABETHTOWN - Faced with dire projections for their 2011 budget, Essex County officials are already considering an increase to the sales tax.

Jay Supervisor and Board of Supervisors Chair Randy Douglas introduced a resolution at the Essex County Ways and Means Committee meeting April 26 that would allow the county to apply for a quarter-percent increase in its sales tax rate.

Wilmington Supervisor Randy Preston had suggested the increase a week prior after County Manager Dan Palmer predicted as much as a 30 percent increase in the property tax levy if significant cuts are not made to the 2011 county budget.

"I think we need to look at it pretty seriously," said Preston April 19, "and I think we have no other option than to look at raising the property tax, which I am very much against doing."

Many supervisors agree raising the sales tax has less of an impact on Essex County residents than an increase in property tax because they believe a significant percentage of sales tax is paid by people not living in Essex County.

"The thing with sales tax is everybody contributes," said Palmer. "For every dollar of income the average person earns, they may spend about three cents in sales tax."

Based on that figure, Palmer said, the estimated $1.5 million that would be generated by a quarter-percent increase in the sales tax could cost residents up to 10 times more because it would equate to a 22-cent-per-thousand increase in the property tax.

Palmer has said that Essex County attracts about 2 million overnight visitors each year, helping to generate the nearly $22 million in sales tax revenue the county takes in annually. The current property tax rate of $1.98 per thousand is enough to generate the county's $13.25 million property tax levy.

The deadline for counties to submit a request for a sales tax increase is May 25, said Palmer. Applying for the increase allows, but does not require, the county to enact it.

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