There is a proposal in the General Assembly to reallocate sales tax revenues in a way that benefits rural counties and hurts urban counties. Jim Baker, a Madison County commissioner and retired superior court judge, said the lack of revenue from local sales taxes hurts county economic development efforts. “We do not have industry moving in,” Baker said. “We can’t support industry. We can’t afford to do any incentives to bring industry in.”

Hate to break it to Mr. Baker, but the sales tax revenue is not why you can’t attract business – and it’s OK.   Let’s take a close look at Madison County, North Carolina. Here are some quick facts from the US Census.

  • Persons below poverty level: 17.3%
  • Median household income: $38,598
  •  Population: 21,157
  •  Private nonfarm employment: 3,058
  • Total number of firms: 2,214
  •  Land in square miles: 450
  • Persons per square mile: 46.2

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Madison County is almost 75% forested and includes Pisgah National Forest along the Blue Ridge Parkway and the Cherokee National Forest. Nearly 25% of the land in the county is owned by the federal government meaning the county cannot use it for development or residential purposes nor collect property taxes from those acres. In addition, elevations range from 1250 feet along the French Broad River basin to 5,670 feet at Bald Mountain – making whatever land the county does own very difficult and/or expensive to develop.

So even if the redistributed sales tax revenue comes to Madison County, I doubt there is any chance they will be able to attract any significant new businesses or jobs. It all has to do with the amount and type of land available, not with the wealth or revenue streams of the county. If Madison County wants to increase its revenue, it needs to get its land back from the federal government so it can collect property taxes – not ask urban counties to fund their economic development through sales tax redistribution.

In a recent report by JLF, Madison County did not report spending any county funds in economic incentives from 2009-2014.