Article 40

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When originally enacted, counties were required to set aside 40 percent for the first five years of the levy and 30 percent for the next five years.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.