NC Senate gives initial approval to sales-tax cap

The N.C. Senate gave tentative approval Wednesday to a 2.5 percent cap on local sales taxes that would deny Mecklenburg County a fall referendum on increasing teacher pay.

The measure passed 33-16 after passionate debate that pitted North Carolina’s urban counties against smaller, and often struggling, rural places.

Urban legislators argued the cap punishes large counties that want to schedule referenda on public transit or, as in Mecklenburg’s case, education. Mecklenburg’s local sales tax rate is already at 2.5 percent. The county had scheduled a November vote on a quarter-cent increase.

“This is the centralization of local politics,” said Sen. Jeff Jackson, a Mecklenburg Democrat who cited Republicans’ efforts to name a commission to oversee Charlotte’s airport. “No matter what a county’s needs are, it doesn’t matter.”

Rules committee Chairman Tom Apodaca, a Republican from Hendersonville, scoffed at the “righteous indignation” of Democrats, who are in the minority. “Politics look a little different from the back row than from this (front) row,” he said.

The measure began in the House as an economic development incentive. The Senate added the sales tax provision.

“What I can’t understand is how can anyone think that making it easier for some of the low-rung counties to take part in the economic growth of the state is wrong,” said Sen. Bob Rucho, a Mecklenburg Republican and co-chairman of the finance committee.

Rucho recited jobs growth under Republican control of the legislature, which began in 2011, contrasted with Democratic control he depicted as one of growing unemployment and government dependence and falling incomes.

“You’ve got two North Carolinas, really,” said Sen. Harry Brown, R-Onslow. “You’ve got the outlying counties with high property taxes because they don’t have much tax base, and then the rich counties that have more options.”

Democrats pointed out that those urban counties also have the state’s fastest jobs growth. Limiting local options to pay for transit and education will hurt job generators, they said.

“If North Carolina is a body, then certainly the urban areas are the heart,” said Sen. Malcolm Graham of Charlotte. “And if the the heart stops beating, the body dies.”

The bill will need final approval by the Senate and concurrence by the House, whose version did not include the tax cap. The office of House Speaker Thom Tillis, who lives in Huntersville, said he won’t have a position on the bill until it emerges in final form from the Senate.

Speaking after a jobs announcement in Charlotte on Wednesday, Gov. Pat McCrory said he was still reviewing the bill and didn’t have a position on it. He said he was concerned about how rapidly it had been introduced and pushed forward.

But he also said that Mecklenburg’s desire to broaden the definition of what could be done with county sales tax money gave Raleigh pause.

As mayor of Charlotte, McCrory successfully lobbied the state legislature to give counties the ability to raise the sales tax to pay for transit in the late 1990s. Mecklenburg ultimately used the money raised to build the light-rail line. Andrew Dunn contributed.

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