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NC Fairs Assessing Tax Hike Impact

4/10/2015

By Timothy Herrick

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How much do we charge for admissions in 2015?

This basic question became a burning question, forefront in the  minds of the 302 attendees at the annual convention of the North Carolina Association of Agricultural Fairs, held  January 7 - 9, 2015 at the Sheraton Imperial Hotel in the Research Triangle Park, Durham.

Unfortunately the attendees - representing 30 fairs (there's a total of 41 registered agricultural fairs, according to the association) in the Tar  Heel state - came away from the convention with more questions than answers.

This year's ticket fee confusion at the admission gate level was caused by sales tax confusion at the legislative level. To off-set cuts to state income and corporate taxes that caused a budgetary shortfall, North Carolina increased the rate then expanded the reach of its sales tax to include outdoor and live event admission fees, eventually further expanding the tax to include events by nonprofits, impacting school alethic competitions, Performing Art Center concerts and of course, fairs. 

But as the saying goes, the devil is in the details. Legislation requires regulations to be written - and then interpreted - in order to be implemented. The interpretation phase seems to be the stage where the new fair tax is. N.C. Fairs, having never collected a sales tax before, and fair mangers and other professionals are working through a problematic array of issues, ranging from how will the fair convey collections to the state to what to do when a promotion is being conducted -  will a sales tax be charged for admission promotions (e.g.,  when military personnel are admitted free  or when a sponsor underwrites a day's admission costs).

Other issues in need of clarification include: will additional sales taxes be implemented on midway ride tickets.

It appears that as of the convention, the only thing certain about the tax is the amount - 7.5 percent - must be levied. 

Perhaps the only solace is that when it comes to being burdened by the new sales tax expansion, fairs are not alone. "The tax goes across the board, and it affects everyone," said Kevin Donald Hardison, Marketing Specialist, North Carolina Department of Agriculture and Consumer Services. "The tax is on every event, from movies to events. The interpretation of the law is still being discussed. Fair managers were wondering how do we do this, let's sit down and talk about this. It is a relatively new revenue stream so there are a lot of questions the fairs have."

Hardison admitted that tax talk at the convention only opened more questions, but there will be an additional workshop in March he said, and by June the regulations and collection infrastructure will be in place.

Questions and consternation lingered post-convention, although the gathering featured intensive meetings with government officials and a well-attended workshop, "Sales Tax Session - Understanding the Basic of Fair Admission Sales Tax Collection and Payment." 

"The association is working through the sales tax, and we are still working on the details," admitted  said Ronnie Turner, of the Lee Regional Fair in Sanford, and the 2015 Association President.  

Part of the reputation of any fair is its affordability - and while the sales tax will remain relatively affordable, inherent in the affordability is an established admission price. If fairs increase that price, it may decrease their attendance; if the fairs maintain the price, they absorb the cost and decrease the bottom line. Turner said that "fairs are making that decision now. We are still in a gray area."

The extent of impact the sales tax expansion will have on fairs may be unknown, but they seem prepared to take a financial hit.  "It will definitely affect the bottom line," said Turner. "People come out to the fairs every year, but county fairs are low income areas. Those customers have a limited amount of money to spend. The fairs may have to cut back, or hire fewer workers." 

The theme of this year's convention was "Planting Seeds for Future Fairs." Speakers included motivational speaker, Chad Porter - Overcoming Life's Challenges and Becoming a Difference Maker -  and Danny Aguilar, Assistant General Manager and Director of Marketing - Delaware State Fair, who presented  30 Quick Ideas to Get the Creative Juices Flowing When Planning your Next Event. NC State Senator Brent Jackson, Peter Daniel - Assistant to the NC Farm Bureau President, and David Smith - Chief Deputy Commissioner of Administration with the NC Dept. of Agriculture and Consumer Science, addressed attendees later during the convention. 

The convention featured entertainment showcases, a 2.5 day trade show, where 34 associate members maintained booths. Awards given out included the "Got To Be NC Agriculture" awards, which is based on attendance. Winners were:  American Legion Post 76 Agricultural Fair of Stanly County; Cape Fear Fair & Expo;  Cleveland County Agricultural Fair and the Cabarrus County Fair. Smith presented Certificates of Appreciation, including Image Awards Stanly American Legion 76,  Lee Regional Fair, and Wayne Regional Ag Fair; Agriculture Awards - Chowan County Regional Fair, Wayne Regional Agricultural Fair, and Dixie Classic Fair; and Youth Awards - Drexel Community Fair; Cape Fear Fair & Expo; and Wayne Regional Agricultural Fair.

In addition, Wesley Wyatt, NC State Fair Manager, received the Holmes McBride Humanitarian Award. 
  
Hardison describes the fair industry in North Carolina as healthy. "We had a fairly decent weather pattern last year, and a lot of the fairs saw increased attendance."
In spite of grappling with the unknown, he said that following a strong 2014 season, convention attendees "were happier this year than at last year's convention."
 "The fair industry is healthy in North Carolina, we have great fairs," agreed Turner, who explained that some North Carolina fairs "are struggling" but that most "are good managed fairs and have had positive growth. Overall, when the fairs catch good weather, they have increased revenue and attendance, which shows they are on very solid ground."

Summing up the outlook heading into the 2015, Turner believes that North Carolina fairs are optimistic. "The economy is starting to open up, people are spending more," he said. "There's an uptick in consumer confidence. We have turned a corner, but we still have a way to go."

He added, "it was a very positive convention.  I think it was a lot more positive than two or three years ago. I think fairs left the convention with their sleeves rolled up and ready to get going."



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