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N.C. counties see sales tax changes in Senate bill

The Associated Press

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RALEIGH — Four large North Carolina counties would see their authority to raise sales taxes scaled back under legislation passed Tuesday by a Senate panel.

Republican supporters say the measure would give more options to most counties to generate local revenues. But opponents, particularly Democrats from Wake County, say it would harm counties that received previous authority from the General Assembly to generate more revenue than others — particularly to assist with broad public transit projects.

The proposal, if it becomes law, would prevent a scheduled November referendum in Mecklenburg County on whether to raise sales tax by a quarter-penny.

The bill, which has gone through many changes over the past week, would cap the local sales tax that nearly all 100 counties in North Carolina can charge at 2.5 percent — a combined state and local rate of 7.25 percent.

More than 90 counties are now at 6.75 percent or 7 percent. Senators overseeing the bill say the measure would give those counties more choices to offer voters if they want to approve new taxes — through either quarter-cent or half-cent increases, with proceeds going to education, public transportation or other purposes.

“We’re not raising taxes on anybody,” said Sen. Rick Gunn, R-Alamance. “This is leveling a playing field. It is offering these counties (and) large counties options,” while providing certainty with the cap, he added.

The General Assembly currently authorizes Mecklenburg, Wake, Forsyth, Guilford, Durham and Orange counties to raise their combined rate to 7.5 percent, but only Durham and Orange have reached that percentage after voters approved half-cent sales taxes for transit, including a discussed light rail system in the Triangle.

While Durham and Orange would be exempt from the proposed cap, the other four counties would not. Mecklenburg is already at 7.25 percent. Wake, which is considering a quarter-cent sales tax on the ballot in November, would be in a bind because the Triangle light rail requires a half-cent public transit tax in the future with Durham and Orange.

Guilford and Forsyth have similar half-cent taxing authority for public transit, but voters haven’t authorized it yet. Guilford has its own quarter-cent tax on the ballot in November, too.

Sen. Dan Blue, D-Wake, told Gunn it appeared that the bill would “put the shaft to Wake County” because they have only one option if they want to work with Durham and Orange counties on transportation.

“You are now creating an un-level playing field among those (four) counties,” added Sen. Josh Stein, D-Wake. Later, he said the measure was the latest of several passed by the Republican-led General Assembly that have harmed areas where Democrats carry greater political weight.

The North Carolina Association of County Commissioners considers the bill “greatly improved” over previous versions by giving greater flexibility to counties on how to use local revenues, association lobbyist Johanna Reese said in a news release. The association still is concerned the cap “will limit options for counties in the future,” she added.

The measure, scheduled for Senate floor debate Wednesday, would also need House support. Gov. Pat McCrory would be asked to sign any bill into law.

The bill would expand eligibility for the state’s Job Maintenance and Capital Development Fund to benefit a packaging company in Haywood County. The Senate also added language that authorizes crowdfunding. Such language had previously passed in the House. Under this provision, a North Carolina-based company could sell to state residents securities that are not registered under state or federal law, likely on a website.