RALEIGH A late-night deal and early morning Senate vote advanced a measure to give four large North Carolina counties the ability to levy a local sales tax as high as 2.75 percent – with a major caveat.
To get the extra quarter percent tax, voters in the four counties – including Wake and Mecklenburg – must approve the tax in a referendum this November, under a deadline in a bill approved 32-11 shortly after midnight.
This is not a problem for Mecklenburg and Guilford counties, which have planned fall ballot campaigns to get the additional tax authority, lawmakers said. But Wake and Forsyth counties will have just three months to put a tax on the ballot and win public support.
“It is impossible in 90 days to start a referendum campaign ... you are all but killing it for Wake County,” said Sen. Josh Stein, a Raleigh Democrat.
Sen. Dan Blue, another Raleigh Democrat, raised the same concerns, saying the Wake County Board of Commissioners hasn’t even approved a sales tax initiative for the fall ballot.
“You’re giving us a choice that’s not really a choice,” Blue said. “Don’t think you are solving any of the problems you have created ... by throwing this at us.”
The debate on the measure spanned two days, starting just before midnight Thursday when the conference committee emerged and continuing Friday when the Senate reconvened at 12:15 a.m.
All other North Carolina counties would see their local sales taxing authority capped at 2.5 percent. Two counties, Durham and Orange, would be allowed to keep their current 2.75 percent local sales tax approved by voters in prior years.
The House overwhelmingly rejected the bill when it came to a vote earlier this week and Republican leaders discussed a way to allow Wake and Mecklenburg to levy taxes at the higher rate, or give them time to phase out the program. It’s unclear why those options didn’t make the final version.
House lawmakers are expected to vote on the conference committee report Friday morning. The chamber convenes at 10 a.m. It must agree to the final version to send the measure to Gov. Pat McCrory, otherwise the chambers will have to wait until mid-August to revisit the issue. Lawmakers plan to reconvene then to consider any vetoes from the governor. They will also return Nov. 17 for a session focused on Medicaid reform and coal ash regulations.
Wake levies a 2 percent local sales tax now and county commissioners have discussed the possibility of putting a one-quarter percent sales tax to boost teacher salaries on the fall ballot along with a one-half percent tax for transit projects.
The final version of the bill also includes measures added at the last minute from other bills. One would allow local counties to use the local sales taxes to rehabilitate historic buildings for public, but not private use.
A broader effort to extend the historic preservation tax credits appears to have failed for now. It didn’t make the bill and the Senate adjourned.
The film tax credits set to expire at the end of the year likely will meet the same fate. The House added it to a bill Thursday that didn’t make it to the Senate in time. Senators didn’t want to add it to the local tax bill, as they did with other provisions, because they want the current incentives ended and converted to a much smaller grant program.
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