No fix in sight for Charlotte’s lost business tax income

Local leaders are still hoping North Carolina lawmakers will find a way to replace money lost from the elimination of the business license tax.

Gov. Pat McCrory reiterated his support for that Monday. But after more than a year, prospects in Raleigh remain uncertain.

Lawmakers all generally agree that the business privilege license tax, which businesses paid to operate in cities and towns, was as cumbersome as its name. But the $65 million in revenue it brought to local governments before its elimination last year was a different story.

McCrory said at that time, and again Monday, that he wants to find another way to give local governments that money.

“I have specifically asked the mayors of the metropolitan areas, including the mayors of (the Charlotte) region, to come up with some proposals on what we can do to close that gap,” McCrory said. “I made that commitment to them last year, and I hope the legislature also follows through. So that’s my goal.”

McCrory said he is working with Jill Swain, the mayor of Huntersville and head of the state Metropolitan Mayors Coalition. She has a slightly different take on her talks with the governor.

“I think the way I would phrase it is that we have both been lamenting about the privilege license tax and hoping that it would come up in this session (of the N.C. General Assembly),” Swain said.

Instead of developing proposals, Swain says she’s looking for a legislator to spearhead the push. Next year’s budgets begin this summer, and Swain says uncertainty is as much a problem as the lost revenue.

“Right now, this is all an unknown for all of us,” Swain said. “And, it’s really, really, really hard to plan ahead.”

With progress stalled at such an early stage in the legislative process and so late in the budget season, it’s unclear whether a fix will be reached.

“I’m a little anxious at this point,” Charlotte Mayor Dan Clodfelter said. “I just don’t know whether to be optimistic or not.”

But Clodfelter says there’s not much time to push a measure through the General Assembly.

“It can be done, but it will take an awful lot of work in a very short time,” Clodfelter said. “It’s not simply a matter of drafting a proposal and rolling it out there. You have to then analyze the effect of that proposal on some 500 different local cities and 100 different counties.”

N.C. League of Municipalities lobbyist Scott Mooneyham says talks are continuing despite the lack of new legislation.

“It would be a mistake to conclude that just because a bill hasn’t been filed that that’s not the case,” Mooneyham said.

The league is shopping four proposals:

▪ Giving cities and counties a cut of a state business tax.

▪ Making more services taxable.

▪ Creating a local option to raise sales taxes.

▪ Stalling for more time with a year-extension of the old tax.

If no fix is found, Charlotte will lose $18 million, or 3 percent of its total budget.

This story was originally published March 31, 2015 at 9:00 AM with the headline "No fix in sight for Charlotte’s lost business tax income."