There’s no plan to seek an increase in the showroom tax that helps support the High Point Market Authority, President and CEO Tom Conley said following a report in the local newspaper.
“This is a conversation that has been going on for, what, seven years,” Conley told the Home Furnishings Association.
The authority operated on a budget of about $6.7 million in the 2018 fiscal year, according to its audit report, providing transportation, marketing, guest services, entertainment, administrative, parking and other services to stage the April and October furniture markets. It drew about $1.6 million of that from a showroom tax of 15 cents per square foot. The rest came from state and local government appropriations, sponsorships and a few other sources.
The showroom tax rate has been unchanged for more than a decade, while market boosters have pushed for increases in government allocations to cover more services, higher costs and greater efforts to attract new buyers from around the world.
State legislature controls the showroom tax
The authority’s board of directors, which includes industry representatives and local elected officials, doesn’t have the power to raise the showroom tax. It would need approval by the state legislature and the High Point City Council. In a July 7 front-page story, the High Point Enterprise quoted Scott Eckman, an authority board member and executive vice president for home décor and leasing for the International Market Centers, as expressing doubt about the prospects for a green light in Raleigh, the state capital.
“Our understanding is that, right now, lobbyists have advised against pursuing this as a path of additional revenue,” Eckman told the newspaper.
IMC, the largest owner of market property and therefore the greatest contributor to the showroom tax, would back an increase in the right circumstances.
“We support mechanisms for the market to raise revenue, because the plan is to reinvest the money into the market experience and into acquiring additional buyers and attendees,” Eckman told the Enterprise. “So, even though we might have a liability, we would support the market authority if the board decides that’s the right path.”
A political long shot
North Carolina’s budget year runs from July 1 through June 30. The 2019 legislative session is nearly over, and no increase in the showroom tax was requested or acted on. The legislature isn’t scheduled to reconvene until May 2020, making it unlikely it could enact a higher showroom tax in time for the fiscal year beginning in July 2020, even if it were inclined.
“If you look up the definition of a long shot, that’s what we’re talking about,” Conley said.
That doesn’t lessen the authority’s desire to strengthen the market by enhancing services and boosting attendance. It can tout impressive numbers on its behalf. A study by the Global Value Chains Center at Duke University, released in February, pegged the annual economic impact of the market at $6.7 billion, up from $5.4 billion five years earlier. The market generates more than $200 million annually in state and local tax revenues, according to the study, helping advocates make the case for additional appropriations from the state, as well as from the city of High Point and Guilford County.
It’s tough going, however, when the assignment is asking politicians to raise a tax.
Doug Clark is content manager, government relations liaison and Policy Matters blog author for the Home Furnishings Association.
