Politics & Government

Vote delayed on NC Senate bill that could stop sales tax hike

A bill that could scuttle Mecklenburg County’s planned referendum on raising the sales tax was delayed Thursday when Republican senators couldn’t agree on the proposed wording.

Meanwhile in Charlotte, county commissioners Chairman Trevor Fuller on Thursday continued to speak out against the bill, telling reporters it would silence county residents.

“It takes away from the people the ability to decide for themselves what to do with their own money,” said Fuller, a co-sponsor of the move to get the referendum on the November ballot. It would raise the county’s sales by a quarter-cent, largely for raising pay of Charlotte-Mecklenburg Schools employees.

New tax revenue would also help Central Piedmont Community College, the arts and libraries. In June, five of six Democrats on the board approved the referendum.

“If Mecklenburg County residents want to invest in paying for teacher raises out of a sales tax they ought to have that ability to do so,” Fuller continued.

The bill would cap each county’s sales tax levy at 2.5 cents per dollar and comes as the clock winds down on the current legislative session. It still requires full Senate and House approval and the governor’s signature. The session could end as early as next Friday and the legislature still has big issues such as teacher pay raises and Medicaid to resolve.

Democrats in the legislature also continued to criticize the measure. Sen. Josh Stein of Raleigh said the Senate “thinks it should be the county commission and town council of North Carolina.”

Republican senators recessed for an hour Thursday morning to talk about the bill behind closed doors. They couldn’t agree on details of the tax provision and postponed a vote until at least Monday night.

In addition to the sales tax cap, the bill would give counties more flexibility on how to use sales tax revenue, but it also spells out how much could be for education and how much for transit. The bill also creates a new state fund to attract jobs and expands eligibility for grants under an existing program.

Supporters call it an economic development bill, because that’s what it originally was when it was drafted in the House and sent to the Senate. Senators took the bill and attached the sales tax proposals to it this week.

‘Devastating to thriving economy’

Those proposals have stirred the most controversy – particularly in Mecklenburg.

The state’s largest county already levies 2.5 cents for nearly every dollar spent in the county. With the state’s levy of 4.75 cents, the county has among the highest sales tax in the state. Capping the local sales tax statewide would effectively nullify the Mecklenburg referendum, pushing the county’s tax a quarter-penny past the limit to 2.75 cents.

And in Wake County, commissioners plan to vote Aug. 4 on putting a referendum on the November ballot that would raise sales taxes by a quarter-cent to increase money for education. If the proposal and Senate bill pass, critics say that would prevent Wake County from adding a transit sales tax in the future.

Raleigh Mayor Nancy McFarlane tweeted Wednesday that the bill would be “devastating to a growing, thriving economy.”

“It’s another example of Senate Republicans telling local communities why they don’t have the wisdom to govern themselves,” Stein said. “It is particularly directed at Wake and Mecklenburg counties. This body thinks it should be the county commission and town council of the state. And that’s just not right.”

For their part, Republican senators couldn’t agree on the tax formulas in the bill.

Sen. Jeff Tarte, a Cornelius Republican, said there was discussion about splitting the bill into two: one for the economic development and the other for the sales tax. He said they don’t want to vote on it until the language is more specific. It could be later next week before the bill comes to a vote – if then. He said it could also be pushed to the long session.

Tarte said he would vote against the bill as it is currently written because it wouldn’t allow Mecklenburg the flexibility to raise the sales tax for education. “It would look like we’re getting picked on, and I couldn’t support that,” he said. “Local control and local decision-making on whether to tax yourself for education is how it should be done.”

He said the bill would likely pass the Senate because most counties would benefit from it.

No alternate plan

Yet it’s unclear whether the bill, even if it passes the Senate, would pass in the House and be signed by the governor before the session adjourns.

Anna Roberts, a spokeswoman for House Speaker Thom Tillis of Huntersville, said House Republicans will consider the bill if and when it passes the Senate.

Senators and House members began to get some pressure from the N.C. Association of County Commissioners on Thursday to at least delay the bill until the long session next year.

“We’re trying to slow it down,” said association spokesman Todd McGee. “We’re asking the members of the General Assembly to put it in a study committee so everyone has more time to look at it and digest it between the short and long sessions.”

Fuller and Mecklenburg commissioner Dumont Clarke said the commissioners who supported the referendum don’t have an alternate plan if the bill does become law.

Fuller said the county would have only two other options for funding teacher raises: raising property rates, or diverting money from other services to boost teacher raises.

“We’d be stuck,” Fuller said, “and at the same time pressure for increasing teacher compensation is not going away.”

T. Keung Hui of The (Raleigh) News & Observer contributed.

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