Politics & Government

At budget time, municipalities fear loss of revenue

Gov. Pat McCrory, second from right, speaks at a panel discussion with state municipal leaders at an event put on Wednesday by the N.C. League of Municipalities at the N.C. Museum of History in Raleigh. Listening are, from left, Paul Meyer, executive director of the N.C. League of Municipalities; Susan Kluttz, N.C. secretary of the Department of Cultural Resources; and Tony Tata, secretary of the N. C. Department of Transportation.
Gov. Pat McCrory, second from right, speaks at a panel discussion with state municipal leaders at an event put on Wednesday by the N.C. League of Municipalities at the N.C. Museum of History in Raleigh. Listening are, from left, Paul Meyer, executive director of the N.C. League of Municipalities; Susan Kluttz, N.C. secretary of the Department of Cultural Resources; and Tony Tata, secretary of the N. C. Department of Transportation. cseward@newsobserver.com

Facing the prospect of deep budget holes, municipal officials from across North Carolina swarmed the General Assembly Wednesday pressing for relief from policies they say are contributing to those shortfalls.

They found more uncertainty than answers.

“It’s becoming more and more difficult for us to plan our budgets when we don’t know what’s coming around the corner,” said Huntersville Mayor Jill Swain, who chairs the N.C. Metro Mayors Coalition.

sharon rim

The League of Municipalities brought scores of officials to Raleigh, including a half-dozen from Charlotte. Their visit came a day after Charlotte City Council members learned the city faces a shortfall of $15.6 million, in large part from revised figures from a countywide property valuation.

The city also is bracing for a shortfall of $18 million from loss of the business privilege tax, which the legislature ended last year, and the possible redistribution of money from the sales tax. Officials say that could mean a $29 million hit.

From those three revenues alone, they’re looking at a potential loss of more than $60 million. That’s equivalent to 6.8 cents on the property tax rate, or about 14 percent.

When legislators repealed the privilege tax last year, there were promises to replace it.

Gov. Pat McCrory did not include a replacement in his budget this month. But speaking to municipal leaders Wednesday afternoon, he said he got that commitment from legislative leaders to replace it when he signed the repeal bill.

“They have yet to revisit it,” said McCrory.

A Republican senator from Onslow County, meanwhile, is planning to introduce a bill that would shift millions in sales tax revenues from urban and coastal counties to rural areas. Senate Majority Leader Harry Brown told The (Raleigh) News & Observer he expects to file legislation to distribute sales tax proceeds on a formula that would benefit rural areas.

The lack of a specific bill left local leaders in the dark. Nor were their details of how lawmakers might replace the privilege tax.

On that revenue source, Republican House Speaker Tim Moore of Kings Mountain told league members that lawmakers could address it in a “more comprehensive bill.” GOP Senate leader Phil Berger of Eden told them the issue would be addressed by chairs of the legislative finance committees.

One of those chairs, Republican Sen. Bob Rucho of Matthews, said he’s heard of no plans to replace the lost revenue.

Charlotte officials have said revenue losses could force them to make cuts, including a pay freeze and an across-the-board 1 percent cut. Some municipal officials say they might have to raise taxes.

“We’re looking at a variety of contingencies, and all of them are negative for us,” said Republican City Council member Ed Driggs of Charlotte.

Driggs joined a half-dozen other council members in making their case to various legislators. He found lawmakers who shared their concerns. But, he said, “it looks as if the decisions are being made by leadership.”

Swain of the Metro Mayors group said the revenue loss hurts towns and cities in a number of ways.

“When we’re talking about pulling these funding mechanisms away from us, it’s not just affecting municipalities,” she said, “it’s affecting our entire state. It makes us less competitive with other states and other regions.”

Municipal officials are beginning to draw up budgets that have to be approved in June. Uncertainty over future revenues makes that hard.

“That’s scary for everybody,” said Swain. “It shouldn’t be this hard of a fight. … We’re all in this together.” Steve Harrison contributed to this story.

Morrill: 704-358-5059

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