In the past 12 months, musicians like Bruno Mars and Billie Eilish played sold-out concerts in Charlotte.
The Census Bureau named Charlotte the fastest-growing city in the country.
Buzzy, expensive restaurants were packed, apartments kept rising, and companies announced thousands of high-paying jobs.
Yet amid the good vibes and positive headlines, there’s one puzzling statistic: Consumer spending in Mecklenburg County appears to be flattening.
The county government told The Ledger this week that it expects its share of sales taxes collected in Mecklenburg to be $414.3M for the 12-month period that ended in June. That’s a touch less than the $414.8M the county collected in the same period in 2024-25.
State figures show a similar pattern: A Ledger analysis of N.C. Department of Revenue data shows that taxable sales in Mecklenburg were $37.13B in the year ending in June, up 3.1% from a year earlier – or about equal to the rate of inflation in that period. Mecklenburg’s increase was below the state average (4.7%) and slower than any surrounding counties, where spending is growing at a faster clip. The state numbers are considered to be the best local indicators of consumer spending.
While the slowdown in Mecklenburg’s sales tax revenue might seem baffling in a wealthy and fast-growing county, it is not an immediate financial challenge for local governments, which receive money from many other sources — most notably, property taxes.
But it does represent millions of dollars of forgone revenue that could have been used on parks, health care and housing, and could eventually shift more of a burden to property owners to fund the operation of growing local governments.
Over time, lower-than-expected consumer spending could also result in billions less coming in for the voter-approved transit-and-transportation sales tax that took effect July 1. That could endanger spending on light rail lines, buses and roads. [More on that in Thursday’s Charlotte in Motion newsletter, in Part 2 of this series.]
There are several possible explanations for Mecklenburg’s drop-off in sales tax revenue, with some having to do with the peculiarities of how the money is collected and distributed. Economists also have guesses, from declining sales of big-ticket items like cars and furniture to a maturing of the county’s economy compared with fast-growing suburbs to general economic uneasiness.
“There’s just a general unsettling feeling in the economy,” said Mike Walden, an economics professor at N.C. State University. He says surveys show consumer confidence has fallen, and that when people aren’t confident, they don’t spend as much money.
A few years ago, sales tax revenue was growing at a faster pace coming out of COVID.
Mecklenburg County’s share, which is allocated by a formula using actual sales and population, increased by $38M, or more than 10%, from 2022 to 2023, according to county data. It increased by about $10M in 2024 and by $16M in 2025. The county said it does not have the amount for the final month of the 2026 fiscal year (June), but that it estimates sales tax revenue for the year will be about $561,000 less than in 2025.
David Boyd, Mecklenburg County’s chief financial officer, said that much of the difference this year is explained by higher-than-usual payouts to nonprofits, which pay sales taxes but then can apply to have them refunded. For 2026, the amount of refunds – to such entities as schools and hospital systems – increased by more than $30M, or more than double the amount from 2025. (The Ledger and N.C. Health News reported in July that the state introduced new limits on large hospital systems claiming sales tax refunds.)
The county is seeking more details from the state about the identities of those nonprofits and the reasons for the high amount of refunds.
Aside from the issue of refunds, Mecklenburg sales tax revenue “has been relatively stable and growing, just not as fast as it was in the past,” Boyd said.
The county budgeted about a $19M increase for 2027, or 4.5%, a number developed earlier in the year before some of the latest data emerged. Boyd acknowledged that figure “may be overly optimistic.” It is one of the highest estimates of any N.C. urban county.
Accurately forecasting sales tax data can be tricky, said David Baker, the director of tax and revenue outreach for the N.C. Association of County Commissioners.
“Sales tax is very difficult to forecast for many different reasons, and it is not uncommon for counties to either underestimate or overestimate revenue from sales tax,” he said in an emailed response to questions from The Ledger. “The tax itself is volatile because it is based on consumer spending, which goes up and down based on changes in the economy.”
Other counties in N.C. urban centers, including Gaston, Guilford and Forsyth, have noted in their budgets that sales tax revenues have slowed after falling short of projections in recent years.
Other potential reasons for a slowdown in the growth of sales tax revenue in Mecklenburg include:
- Retail build-out: There has been little new retail construction in recent years in Mecklenburg, so there are fewer new places to spend money as there might have been in the past.
- Bigger base: Because Mecklenburg is so large – the second-largest county in the state, with 1.2 million residents – it is hard to continue sustaining big increases in spending on a percentage basis.
- Fuzzy numbers: The data on sales tax collections isn’t a clean reflection of consumer spending because of what is taxed, what isn’t taxed and the way the state distributes tax money to counties.
- Fuel transfer: If people are spending more money on gas, which has increased in price and is not subject to sales taxes, that might leave less money to spend on items that are taxed, resulting in a decrease in sales tax revenue.
- Large items fall flat: Because interest rates remain at higher-than-usual levels, consumers are holding off on buying expensive items such as cars. Same with mortgage rates: with fewer people buying houses and moving, there is less need to buy furniture.
- Lower-income households squeezed: In recent years, wages in lower-income households haven’t kept pace with rising expenses or raises of wealthier households. “They’re not seeing the kind of wage increases that the upper-income people have,” Walden said.
- Urban/suburban divide: As regions grow, the inner core tends to grow more slowly than outlying areas, where there is more available land to build housing and retail. “The fastest growth is now occurring beyond the beltline in most of the areas of the South,” said economist Mark Vitner of Piedmont Crescent Capital.
- Population growth slowing: Demographic changes and tougher immigration policies have slowed the number of people moving to Mecklenburg and other counties.