Issue 5 reported that Asheville's municipal service district automatically became eligible for a share of countywide sales tax distribution, because a North Carolina MSD is legally a taxing entity in the same category as a city, county, school district, or fire district. Nobody involved in designing the district anticipated it; the executive director learned of it from city staff. District revenue reached $1.68 million partway through FY26 against an original $1.25 million projection. Council then directed more than $200,000 of that allocation toward two downtown police positions, which runs directly at the statutory line that MSD proceeds must fund supplemental services and cannot substitute for services the city already provides. Every North Carolina district manager should pull their own FY25 and FY26 revenue statements and check for the same line. The mechanic is not discretionary; it is a state distribution formula applied to taxing entities.

Watch: Whether the police allocation draws a formal supplantation challenge, and whether the supplantation restriction attaches to MSD property tax proceeds specifically or to district revenue generally. That legal question decides the whole thing.

Source: Plat Street Issue 5 BO-F-6; North Carolina local sales and use tax distribution framework