CURRITUCK, N.C. — Currituck County Commissioners will meet once again this week to discuss the path forward after the North Carolina Court of Appeals found that the county inappropriately spent millions of dollars in occupancy tax revenue.
Chair Bob White told News 3 the county will likely seek to appeal the ruling, but in the meantime, commissioners will need to figure out how to close a budget hole the ruling created.
Occupancy tax revenue from things like hotels, bed and breakfasts and short-term rentals is only supposed to be used for expenses to promote tourism, which can include marketing and beach nourishment, critics said.
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But the county had also been using revenue to fund police, fire, EMS and other services on the Currituck Banks, especially as the population on the coast swells during the tourist season.
The county budgeted roughly $6 million alone for those purposes this fiscal year, according to White.
Commissioner Paul Beaumont, who has been the Board of Commissioners appointee to the county’s Tourism Advisory Board, said the situation causes an issue for both this fiscal year, which ends June 30, and for next fiscal year.
“The impact to that is ok, are what services are we going to look at cutting to make sure we can execute the budget that we approved,” Beaumont said. "Furthermore, in next season, which starts July 1, our FY 25, what kind of tax increase or where are we going to get the funds necessary to provide that public safety, specifically for the Outer Banks during the tourist season?”
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Groups including the Corolla Civic Association filed suit in 2019, alleging that and other spending by the county violated state law, which changed in 2004.
The county had argued the public safety spending qualified as “tourism-related expenditures.”
The appeals court found the county did not act in “bad faith,” but sided with the plaintiffs as it overturned a lower court ruling.
“The CCA and the local community are, of course, staunchly supportive of local law enforcement, fire & EMS services,” the association said in a statement following the appeals court ruling. “The lawsuit was solely about how those services are funded.”
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Currituck Chamber of Commerce president Josh Bass said the business community is keeping a close eye on what happens next.
“We’ve certainly been using occupancy tax this way for a long time, and so I think the challenge is going to be what we do,” Bass said. "They’re going to have to figure a balance between the level of service that they’re offering, especially in the Corolla/Carova communities and what they’re going to do in terms of taxpayer costs."
He said while the beaches have accounted for a lot of occupancy tax revenue over the years, inland tourism is also growing.
“You’re starting to see some tournaments,” Bass said. "You’re starting to see some inland tourism; you’re starting some inland tourism; you’re starting to see some people stay in an Airbnb on the mainland, and using this as a potential jumping off point to explore the region."
Commissioners will meet in a closed session on Wednesday, and that will likely be followed by public meetings on the issue in the coming weeks, White said.
