Senate bill would scuttle November sales tax referendum
07/16/2014 12:29 PM
08/31/2014 5:38 PM
A state Senate committee passed a bill on Wednesday that would scuttle a November referendum to raise Mecklenburg County’s sales tax rate by a quarter-penny, largely for teacher pay raises.
County commissioners Chairman Trevor Fuller derided the measure as “anti-democratic, anti-teacher and anti-Mecklenburg.”
On a voice vote, the Senate Finance Committee passed the bill, which would cap local sales taxes at 2.5 cents – the current level in Mecklenburg. With Mecklenburg already at the maximum, the bill would effectively bar the nonbinding referendum that county commissioners approved 5-4 in June.
The bill is scheduled for a Senate vote Thursday. If passed, it also would need House approval and Gov. Pat McCrory’s signature.
The sales tax cap is part of a much larger measure that would not only give counties more flexibility in the use of sales tax revenues but would expand state funds to attract jobs.
But the cap would have an immediate impact in Mecklenburg.
An additional quarter-penny per $1 could raise as much as $35 million, Fuller and commissioners Vice Chairman Dumont Clarke have said.
Under a policy passed by commissioners, 80 percent of that would go to raising the pay of Charlotte-Mecklenburg Schools employees. An additional 7.5 percent would go to Central Piedmont Community College to raise faculty salaries, 7.5 percent would go to the Arts & Science Council and the remaining 5 percent to the public library system.
‘Aimed at Mecklenburg’
Fuller agreed the bill was broader in scope but said it was “clearly aimed at Mecklenburg.”
“I don’t know why anybody in government would think it’s a good idea to take a matter like this out of the hands of the people,” he said. “The (Republican) majority in the legislature preached for years that local government is the best government but now they’re saying they know what’s best for us.
“They, with their big hand, reached down to grab away this opportunity to implement a solution that would better compensate our teachers and improve our quality of life.”
Clarke, who co-sponsored the referendum with Fuller, called the legislation – which few saw before Wednesday – another “slap down” by state legislators.
“No one has consulted me about this bill. It’s all been done in secret meeting in which we’ve had no notice or any information about it,” Clarke said. “It looks like they want to change the law so people, the voters, can’t make a decision about this issue, about whether they want us to generate more revenue so we can give teachers a badly needed raise.”
Finance Committee Chairman Bob Rucho, a Matthews Republican, said the cap is designed to create uniformity in a state where sales taxes differ by county.
Mecklenburg’s sales tax is currently 7.25 percent – with the state levying 4.75 cents of that. Of the remaining 2.5 cents already levied by Mecklenburg, a full cent goes into the county’s general fund, a half-cent goes to transit and the remaining penny pays for school construction projects or to pay off CMS debt and other county needs.
Even if allowed, the referendum’s not certain to pass.
In 2007, state legislators gave counties the ability to levy a quarter-cent sales tax, but it must be approved by voters in a referendum. Since then, of the 92 referendums introduced in 59 counties, 27 were approved, according to the N.C. Association of County Commissioners.
Around the state, 73 of 100 N.C. counties levy sales tax rates of 2 percent; 24 have taxes of 2.25 percent.
‘Simple and consistent’
“This is all about trying to make the tax system simple and consistent,” Rucho said. He said the idea for the cap came out of the Senate’s Republican caucus. “My job was to set it as a cap,” he said.
Rucho said it wasn’t aimed at Mecklenburg, where Republican county commissioners and Democratic commissioner Pat Cotham opposed the sales tax referendum.
However, some were skeptical.
“It sure feels like it,” said Sen. Jeff Tarte, a Cornelius Republican on the finance panel.
Sen. Malcolm Graham, a Charlotte Democrat and outspoken critic of the General Assembly’s effort to create an authority and commission to run Charlotte’s airport, said it’s another example of legislative overreach.
“We’ve got to let local governments make local decisions without interference from Big Brother in Raleigh,” Graham said.
Democratic Sen. Joel Ford of Charlotte has chided commissioners for not talking to lawmakers before introducing the referendum proposal. He said he doesn’t mind the sales tax cap as long as Senate leaders make good on a promise to boost local revenues in the future.
As for the bill, he said it’s hard to oppose what is largely an economic development measure.
“How do you vote against economic development at the expense of capping the sales tax?” he said.
Some left in the dark
Cotham, the lone Democrat on a board of six to vote against the referendum, said she was surprised by the bill, but only because she didn’t think the legislature had time to tackle the measure.
She wasn’t surprised by the sentiment behind the bill, complaining that she and the board’s three Republicans had to read about the referendum in a newspaper story before Fuller and Clarke told the rest of the board about it.
“I fully support teachers receiving better pay, but this decision was made in a vacuum,” she said. “They didn’t tell anybody about it. Not legislators, the Chamber, CMS. They felt dissed. I felt dissed.
“You need to be more respectful than that.”
Republican Commissioner Matthew Ridenhour said legislators – Republicans and Democrats – were reacting to the five Democrats’ “go-it-alone approach.”
“My issue from the get-go has been the process they (Democrats) used,” Ridenhour said. “The full board wasn’t at the table to discuss this and provide input.”
He, Cotham and Commissioner Bill James, another Republican, said the board couldn’t guarantee that revenues from the sales tax would be used as advertised in the future.
James sent emails to legislators expressing concerns about the referendum after American Airlines said the quarter-cent hike could cost the airline $500,000 a year in taxes for fuel and parts.
Wednesday, James said the referendum was a “ruse” by Democrats to get voters to the polls in November to “support Democratic candidates.”
“This was not about teachers or CPCC or the arts,” James said. “It was the Democrats’ model to get out the vote and hurt Republican candidates.”
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