A transportation sales tax would face hurdles with lawmakers — and with voters
Speaking to the City Council last month, Charlotte lobbyist Dana Fenton was blunt in describing the prospect of getting state lawmakers to sign off on a new transportation tax.
“I can’t sugarcoat it,” he said. “There are going to be challenges in trying to get a tax increase.”
On Monday, the council will begin to hear the proposal, which if passed would be the largest tax increase in decades.
Council members will hear from a task force that last week recommended putting a 1-cent sales tax hike on the November 2021 Mecklenburg County ballot. Officials say the tax would raise $6 billion over 30 years, enough to cover half the projected cost of a host of transportation projects, including light rail, buses, road improvements, bike lanes and greenways.
Former Mayor Harvey Gantt, the task force chairman, said the proposal “has the potential to shape our community for generations to come.”
If the council accepts it, the city would face challenges not only with legislators in Raleigh but with voters at a time when the economy may still be recovering from 2020’s pandemic body blow.
Mayor Vi Lyles said while the council will review the proposal, transportation options are essential for workers, employers and residents in a city that continues to grow. Nearly 400,000 people are expected to move to the city by 2040, according to UNC Charlotte’s Urban Institute.
“The sales tax is the best option we have to move it forward in a way that’s successful,” she told the Observer. “I see this as stewardship.”
Hurdle in Raleigh
Lawmakers first would have to authorize a hike in the sales tax.
Mecklenburg’s 7.25% tax is one of the state’s highest. Only two counties have higher rates, of 7.5%. Legislators could authorize the full 1-cent increase or a smaller amount, say a half- or quarter-cent. Then they would have to approve a referendum.
“The mayor evidently sees a need for her city,” said John Torbett, a Gaston County Republican who chairs the House Transportation Committee. “And the mayor’s elected by the people of the city and she’s looking for a way to fund needs. … (But) I’m more for funding a specific project than just a blanket tax.”
He cited York County’s “Pennies for Progress” program. In 1997, voters there raised their sales tax by a penny for specified road improvement projects. They’ve since passed three similar referenda, each with more than 73% support.
A spokesman for Republican Senate Leader Phil Berger said it was too soon to comment on a potential city request.
Charlotte and Mecklenburg already face a disadvantage in Raleigh. While the General Assembly is controlled by Republicans, all but one of the county’s 18 lawmakers are Democrats — as are most Charlotte City Council members and all nine Mecklenburg commissioners.
“The most optimistic case you can make for it is we have members of the majority party in surrounding counties who would also see this as being beneficial to them,” said Sen. Jeff Jackson, a Charlotte Democrat.
At this point many lawmakers are reluctant to commit.
“If it’s totally Mecklenburg County . . . I might consider it,” said GOP Sen. Ted Alexander, who represents Cleveland and Lincoln counties and part of Gaston. “I’m really not in favor of raising taxes for any reason. But I’d look at it.”
But Rep. Jason Saine, a Lincoln County Republican who chairs the House Appropriations Committee, said “the timing is incredibly bad” if the county wants to ask the state for money.
“We will most certainly face revenue shortfalls next year because of the pandemic,” he said in a text.
Persuading voters
The last time Mecklenburg voters weighed in on a sales tax hike, they rejected it. Last year proponents sought a quarter-cent increase to fund the arts and parks.
But November’s transportation referendum for $102 million in transportation bonds passed with 77% support.
Advocates of the unsuccessful 2019 sales tax referendum say it failed for several reasons:
State law didn’t allow the referendum to say what the money would be used for; it just asked voters if they supported a tax hike. That left open the possibility that future commissioners could use it for another purpose. And county commissioners didn’t decide to put it on the ballot until mid-summer, leaving little time for advocates to make their case.
“Those were three significant handicaps,” said Michael Marsicano, president and CEO of the Foundation for the Carolinas. He said he believes a transportation tax “has a lot of potential to pass.”
Fenton, the city lobbyist, said the ballot for a transportation tax referendum would likely spell out the purpose of the tax.
Mecklenburg voters have supported transportation taxes before.
In 1998, 58% of voters approved a half-cent sales tax to pay for a light-rail system. Nine years later, 70% rejected an effort to repeal it. The light rail now spans 19 miles from UNC Charlotte to Pineville. It’s generated more than $3.5 billion in economic development along its corridor.
“When we presented a plan to the voters, we were very specific about what the plan was,” said former mayor — and N.C. governor — Pat McCrory. “We gave details on the governance and the decision-making for the future. All future transportation was supposed to be approved by the (Metropolitan Transit Commission).”
McCrory said he hasn’t reviewed the task force proposal. But, he added, “Overall the current transportation plan has been successful beyond my expectations, especially the investment along the corridor.”
Tariq Bokhari, one of the City Council’s two Republicans, said he’s still evaluating the tax proposal. He said one consideration will be the potential effect of technologies like autonomous vehicles.
“Are we making a large wager on light rail as a solution that gets disrupted?” he said.
Some experts say it could be decades before there’s widespread use of driver-less vehicles.
Lyles said the money from the sales tax, coupled with state and federal funds, offers the best way for the city to build for the future.
“My goal was to help people of all walks of life be able to live in our city, and we’re getting there,” she said.
This story was originally published December 9, 2020 at 5:45 AM.
