2010 North Carolina Code
Chapter 105 Taxation.
Article 3 - Franchise Tax.
105-116.1. Distribution of gross receipts taxes to cities.

105‑116.1. Distribution of gross receipts taxes to cities.

(a) Definitions. The following definitions apply in this section:

(1) Freeze deduction. The amount by which the percentage distribution amount of a city was required to be reduced in fiscal year 1995‑96 in determining the amount to distribute to the city.

(2) Percentage distribution amount. Three and nine hundredths percent (3.09%) of the gross receipts derived by an electric power company from sales within a city that are taxable under G.S. 105‑116.

(b) Distribution. The Secretary must distribute to the cities part of the taxes collected under this Article on electric power companies. Each city's share for a calendar quarter is the percentage distribution amount for that city for that quarter minus one‑fourth of the city's hold‑back amount and one‑fourth of the city's proportionate share of the annual cost to the Department of administering the distribution. The Secretary must make the distribution within 75 days after the end of each calendar quarter. The General Assembly finds that the revenue distributed under this section is local revenue, not a State expenditure, for the purpose of Section 5(3) of Article III of the North Carolina Constitution. Therefore, the Governor may not reduce or withhold the distribution.

(c) Limited Hold‑Harmless Adjustment. The hold‑back amount for a city that, in the 1995‑96 fiscal year, received from gross receipts taxes on electric power companies and natural gas companies less than ninety‑five percent (95%) of the amount it received in the 1990‑91 fiscal year but at least sixty percent (60%) of the amount it received in the 1990‑91 fiscal year is the amount determined by the following calculation:

(1) Adjust the city's 1995‑96 distribution by adding the city's freeze deduction attributable to receipts from electric power companies and natural gas companies to the amount distributed to the city for that year.

(2) Compare the adjusted 1995‑96 amount with the city's 1990‑91 distribution.

(3) If the adjusted 1995‑96 amount is less than or equal to the city's 1990‑91 distribution, the hold‑back amount for the city is zero.

(4) If the adjusted 1995‑96 amount is more than the city's 1990‑91 distribution, the hold‑back amount for the city is the city's freeze deduction attributable to receipts from electric power companies and natural gas companies minus the difference between the city's 1990‑91 distribution and the city's 1995‑96 distribution.

(c1) Additional Limited Hold‑Harmless Adjustment. The hold‑back amount for a city that, in the 1995‑96 fiscal year, received from gross receipts taxes on electric power companies and natural gas companies less than sixty percent (60%) of the amount it received in the 1990‑91 fiscal year is the amount determined by the following calculation:

(1) Adjust the city's 1999‑2000 distribution by adding the city's freeze deduction attributable to receipts from electric power companies and natural gas companies to the amount distributed to the city for that year.

(2) Compare the adjusted 1999‑2000 amount with the city's 1990‑91 distribution.

(3) If the adjusted 1999‑2000 amount is less than or equal to the city's 1990‑91 distribution, the hold‑back amount for the city is zero.

(4) If the adjusted 1999‑2000 amount is more than the city's 1990‑91 distribution, the hold‑back amount for the city is the city's freeze deduction attributable to receipts from electric power companies and natural gas companies minus the difference between the city's 1990‑91 distribution and the city's 1999‑2000 distribution.

(d) Allocation of Hold‑Harmless Adjustment. The hold‑back amount for a city that, in the 1995‑96 fiscal year, received from gross receipts taxes on electric power companies and natural gas companies at least ninety‑five percent (95%) of the amount it received in the 1990‑91 fiscal year is the amount determined by the following calculation:

(1) Determine the amount by which the freeze deduction attributable to receipts from electric power companies and natural gas companies is reduced for all cities whose hold‑back amount is determined under subsections (c) and (c1) of this section. This amount is the total hold‑harmless adjustment.

(2) Determine the amount of gross receipts taxes that would be distributed for the quarter to cities whose hold‑back amount is determined under this subsection if these cities received their percentage distribution amount minus one‑fourth of their freeze deduction attributable to receipts from electric power companies and natural gas companies.

(3) For each city included in the calculation in subdivision (2) of this subsection, determine that city's percentage share of the amount determined under that subdivision.

(4) Add to the city's freeze deduction attributable to receipts from electric power companies and natural gas companies an amount equal to the city's percentage share under subdivision (3) of this subsection multiplied by the total hold‑harmless adjustment.

(e) Disqualification. No municipality may receive any funds under this section if it was incorporated with an effective date of on or after January 1, 2000, and is disqualified from receiving funds under G.S. 136‑41.2. No municipality may receive any funds under this section, incorporated with an effective date on or after January 1, 2000, unless a majority of the mileage of its streets is open to the public. The previous sentence becomes effective with respect to distribution of funds on or after July 1, 1999. (1997‑118, s. 1; 1997‑426, s. 3.1; 1997‑439, s. 3; 1997‑456, s. 55.5; 1998‑22, s. 3; 1999‑458, s. 11; 2000‑128, s. 2; 2001‑430, s. 11; 2002‑120, s. 2; 2005‑435, s. 34(b).)