On Thursday, N.C. Governor Pat McCrory signed into a law tax changes that would repeal privilege taxes for municipalities across the state according to the Associated Press.
Wilmington Mayor Bill Saffo said the Port City will definitely feel the hit. He estimates the city will lose $1.7 million through the lost privilege taxes.
"Sales taxes, business taxes and property taxes are one of the predominant ways that we receive funding for the city. Eliminating one of those revenue streams is obviously going to affect our bottom line," explained Saffo.
The Wilmington Mayor said the lost revenue will have to be made up one way or another.
"We're either going to have to cut services, or we're going to have to increase taxes to pay for those services," explained Saffo. "It's not a free ride."
If services need to be cut from one of the city's departments, Saffo said the first choice would be public safety.
"Almost 50 percent of our budget is policeman and fireman and the cost for service are not slowing down, they're only increasing. We have a growing area, a growing community, a growing city and those calls for services continue to grow," said Saffo.
Saffo hopes the privilege tax is reformed by lawmakers in Raleigh, but not totally done away with.
"There should be some sort of a tiered system and there should be some fair way to collect those revenues, but to eliminate them altogether would put a financial burden on the city taxpayers and the city itself," the mayor said.
Saffo said the state senate has talked about giving all the municipalities a one year reprieve to prepare for the tax loss. He said this wouldn't have too much of an effect on the city of Wilmington though.
"In our particular case, because we start billing in May and collecting them in June, it wouldn't do us any good. We already are starting to collect for 2015 business taxes now," said Saffo.
According to the Associated Press, $62 million in losses is expected for municipalities across the state unless lawmakers reinstate the tax in another form or provide other revenue sources.
Copyright 2014 WECT. All rights reserved.
322 Shipyard Boulevard