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GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
SESSION LAW 2025-87
HOUSE BILL 305
*H305-v-6*
AN ACT APPLICABLE TO GUILFORD COUNTY ONL Y THAT (1) PROMOTES
FAIRNESS IN SALES TA X DISTRIBUTIONS BY A LLOWING MUNICIPALITI ES
THAT DO NOT LEVY AD VALOREM TAXES TO REC EIVE A PERCENTAGE OF
LOCAL GOVERNMENT SALES AND USE TAX DISTRIBUTIONS; (2) MODIFIES THE
BALLOT QUESTION FOR A REFERENDUM REGARDI NG THE LEVY OF THE
ARTICLE 46 QUARTER-CENT SALES AND USE TAX; (3) SPECIFIES THE USES OF
THE ARTICLE 46 TAX P ROCEEDS; AND (4) DIS TRIBUTES A PORTION O F THE
ARTICLE 46 TAX PROCE EDS TO CERTAIN MUNIC IPALITIES IN GUILFOR D
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 m eets 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 distri bution
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 resol ution 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 b e 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 f rom 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 b y 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 amo ng the county and its other municipalities in
accordance with G.S. 105-472(b)(2).
(4) Provide Guilford County and any municipality that levies an ad valorem tax
on behalf of a taxing district or otherwise distributes a taxing district's share
of net procee ds under G.S. 105-472(b)(2), the amount of what the taxing
district's distribution would have been but for the allocated share to a
qualifying municipality.
SECTION 1.(f) Hold Harmless. – A taxing district in Guilford County or the City
of Greensboro for which ad valorem taxes are collected by the county in behalf of the taxing
district shall receive their funds from the county or the City of Greensboro, as applicable, under
G.S. 105-472(b)(2) as if the allocated share had not been paid to a qualifying municipality under
subsection (b) of this section.
SECTION 1.(g) Service/Fire Districts Inapplicable. – Ad valorem taxes levied by
any service or fire district located in whole or in part within a qualifying municipality shall not
prohibit that municipality from receiving net proceeds under this section.
SECTION 1.(h) This section is effective when it becomes law and expires for net
proceeds distributed beginning on or after the date of the levy of a tax by Guilford County that
was approved in a referendum authorized under Article 46 of Chapter 105 of the General Statutes,
as amended by Section 2 of this act. If the Guilford County Board of Commissioners repeals the
tax levied under Article 46 of Chapter 105 of the General Statutes, as amended by Section 2 of
this act, this section is reenacted for net proceeds distributed beginning on or after the date of the
repeal. The Guilford County Board of Commissioners shall notify the Revisor of Statutes if it
either levies or repeals the tax under Article 46 of Chapt er 105 of the General Statutes, as
amended by Section 2 of this act.
SECTION 2.(a) This section applies to Guilford County only.
SECTION 2.(b) G.S. 105-537 reads as rewritten:
"§ 105-537. Levy.
House Bill 305 Session Law 2025-87 Page 3
(a) Authority. – A tax levied under this Article must be approved in a referendum. If the
majority of those voting in a referendum held pursuant to this Article vote for the levy of the tax,
the board of county commissioners may, by resolution and after 10 days' public not ice, levy a
local sales and use tax at a rate of one-quarter percent (0.25%).
(b) Vote. – The board of county commissioners may direct the county board of elections
to conduct an advisory referendum on the question of whether to levy a local sales and use tax in
the county as provided in this Article. The election shall be held in accordance with the
procedures of G.S. 163-287, except that the election shall not be held within one year from the
date of the last preceding election under this section.
(c) Ballot Question. – The form of the question to be presented on a ballot for a special
election concerning the levy of the tax authorized by this Article shall be:
"[ ] FOR [ ] AGAINST
Local sales and use tax at the rate of one -quarter of one percent (0.25%) i n addition to all
other State and local sales and use taxes."taxes to be used solely for classroom teacher salary
supplements, fire protection equipment and services, for Guilford Technical Community College,
and to be used by municipalities for any public purpose.""
SECTION 2.(c) G.S. 105-538 reads as rewritten:
"§ 105-538. Administration Administration, distribution, and use of taxes.
(a) Definitions. – The following definitions and the definitions in G.S. 105-472, to the
extent they are not inconsistent with the provisions of this section, apply in this section:
(1) Adjusted distribution. – The net proceeds of the tax collected under Articles
39, 40, and 42 of Chapter 105 of the General Statutes distributable to a
municipality as calculated u sing the per capita distribution method under
G.S. 105-472(b)(1) multiplied by twenty-five percent (25%).
(2) Ad valorem distribution. – The net proceeds of the tax collected under Articles
39, 40, and 42 of Chapter 105 of the General Statutes and distribu table to a
municipality as calculated using the ad valorem distribution method under
G.S. 105-472(b)(2).
(3) Allocated share. – An amount equal to a qualifying municipality's ad valorem
distribution subtracted from its adjusted distribution but only if the amount is
positive.
(4) 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
municipality as calculated using the per capita distribution method under
G.S. 105-472(b)(1).
(5) Qualifying municipality. – A municipality located in Guilford County that has
an adjusted distribution that is greater than its ad valorem distribution.
(b) Administration. – The Secretary shall, on a monthly basis, allocate t o each taxing
county the net proceeds of the tax levied under this Article. If the Secretary collects taxes under
this Article in a month and the taxes cannot be identified as being attributable to a particular
taxing county, the Secretary must allocate th e net proceeds of these taxes among the taxing
counties in proportion to the amount of taxes collected in each county under this Article in that
month. For purposes of this Article, the term "net proceeds" has the same meaning as defined in
G.S. 105-472.
Except as provided in this Article, the adoption, levy, collection, administration, and repeal
of these additional taxes must be in accordance with Article 39 of this Chapter. G.S. 105-468.1
is an administrative provision that applies to this Article. A tax levied under this Article does not
apply to the sales price of food that is exempt from tax pursuant to G.S. 105-164.13B or to the
sales price of a bundled transaction taxable pursuant to G.S. 105-467(a)(5a). The Secretary shall
not divide the amount allocated to a county between the county and the municipalities within the
county.
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(c) Distribution Method. – During any year in which the ad valorem method of
distribution under G.S. 105-472 is in effect in the taxing county, the Secretary shall calculate and
distribute, on a monthly basis, the net proceeds of the tax collected under this Article as follows:
(1) Of the amount allocated to the taxing county, calculate and set aside an amount
equal to the sum of the amounts listed in this subdivision multiplied by a
fraction with a numerator of 1 and a denominator of 12. The amounts
calculated under this subdivision shall be based on using the total annual net
proceeds from the prior fiscal year. The amount set aside under this
subdivision shall be dis tributed in accordance with subdivision (3) of this
subsection. The amounts are:
a. The greater of twenty percent (20%) of the net proceeds or five million
dollars ($5,000,000).
b. The greater of ten percent (10%) of the net proceeds or two million
five hundred thousand dollars ($2,500,000).
(2) From the amount remaining after the calculation in subdivision ( 1) of this
subsection, deduct a qualifying municipality 's allocated share and distribute
the allocated share to the qualifying municipality.
(3) From the amount remaining after the distribution in subdivision ( 2) of this
subsection, distribute to the county the amount set aside under subdivision (1)
of this subsection plus the remaining net proceeds, if any, after the distribution
in subdivision (2) of this subsection.
(d) Municipal and District Use. – Each fiscal year, a qualifying municipality, except for
the Town of Summerfield, shall use the net proceeds of a tax distributed to it under this Article
only for any public purpose. The Town of Summerfield shall distribute the allocated share to the
Summerfield Fire District until the cumulative total distributed reaches three million dollars
($3,000,000). The Summerfield Fire District shall use the net proceeds distributed to it only for
capital enhancements for water resources related to fire protection. When the cumulative total
distributed to the Summerfield Fire District reaches three million dollars ($3,000,000), the Town
of Summerfield shall retain the allocated share distributed to it on and after that date and use it
for any public purpose. For purposes of this subsection, the "cumulative total" is determined from
the first distribution until distributions across fiscal years equal or exceed three million dollars
($3,000,000).
(e) County Use. – Each fiscal year, a county shall use the net proceeds of a tax distributed
to it under this Article for the items and in the amounts and priority order as set forth in this
subsection. A county shall use the net proceeds of a tax distributed to it under this Article to
supplement and not to supplant or replace existing funds or other resources for the items listed
and shall, at a minimum, maintain funding for the items listed at a level that meets the average
level of funding provided for that item during the previous 10 years. The items and amounts are
as follows:
(1) Twenty percent (20%) or f ive million dollars ($5,000,000) , whichever i s
greater, to the Guilford County Fire and Rescue Council for equipment
purchases or capital expenditures necessary to provide fire protection services
in the county.
(2) Ten percent (10%) or two million five hundred thousand dollars ($2,500,000),
whichever is greater, to the Guilford Technical Community College for capital
expenditures.
(3) The remainder for classroom teacher salary supplements. For purposes of this
subsection, a "classroom teacher" is an employee of a local board of education
employed as a teacher who spends at least seventy percent (70%) of his or her
work time in classroom instruction."
House Bill 305 Session Law 2025-87 Page 5
SECTION 2.(d) This section is effective when it becomes law and applies to
referenda held on or after that date for which the Guilford County Board of Commissioners has
adopted a resolution prior to, on, or after the effective date of this section.
SECTION 3. Except as otherwise provided, this act is effective when it becomes
law.
In the General Assembly read three times and ratified this the 31st day of July, 2025.
s/ Rachel Hunt
President of the Senate
s/ Allen Chesser
Presiding Officer of the House of Representatives