July 29, 2015
Senate has other choices to help poorer counties
By STEVE FORD
NC Policy Watch
be surprised if, during the General Assembly’s closed-door negotiations
to craft a new state budget, enterprising reporters manage to pry loose
some of the juicy (or gory) details.
tight security on a process that involves 114 legislators – fully
two-thirds of the combined House and Senate roster – won’t be easy. Not
to mention that the Republicans who are running the show have actually
included a few Democrats!
even more to the point, the mega-sized conference committee begins its
work with members far apart on many key issues. Nothing has signaled
the gulf between House and Senate members as starkly as the House’s
unanimous June 23 vote to reject the Senate’s budget version.
Republicans and minority Democrats were united in their dislike of the
Senate’s decision to hold spending to a super-cautious 2 percent
increase. The House, taking advantage of an improved revenue picture
and mindful of a host of deferred needs, had pegged its overall
increase at 5 percent. It also had avoided stuffing its budget bill
with a raft of policy changes that by all rights should have been
the two sides will have to grope their way toward common ground.
They’ve set a working deadline of Aug. 14, but nobody would be shocked
to see the talking – and arguing – drag on toward Labor Day. Then,
Republican Gov. Pat McCrory, who’s already ripped one important
provision favored by the Senate, will get to decide whether it’s time
for a veto. Before things come to that, will someone blink?
CITY VS. COUNTRY
criticism was aimed at a Senate plan to alter the distribution of sales
tax revenues so as to benefit rural counties at the expense of urban
ones – an understandable perspective from the former mayor of Charlotte.
true that an urban county such as Mecklenburg or Wake faces additional
expense to support the retail zones where many folks who live in
outlying communities do their shopping. So from that standpoint, a
sales tax scheme favoring the counties where goods are sold makes
sense. It’s also true that rural counties, with little retail and
meager property tax bases, can use more money for schools and basic
services. Those counties favor tilting sales tax revenues more toward
where people live.
course, the Senate had a choice. Rather than helping smaller counties
at the expense of big ones – which then might be forced to raise
property taxes to make up the difference – the Senate could have called
a halt to the state’s series of income tax cuts. Then, it could have
taken the income tax revenue that it proposes to forgo and channeled it
into aid for rural counties in distress.
didn’t put it that way, but he did say enough with the tax cuts
already, or words to that effect. It was another example of how his
budget vision is aligned more closely with the House, which wants to
leave the personal income tax rate – reduced significantly since
Republicans took control in Raleigh – alone for now.
chief proponent of the sales tax redistribution is Republican Sen.
Harry Brown of Jacksonville in Onslow County, a top Senate
budget-writer as Appropriations Committee co-chair. Brown’s district
also includes ultra-rural Jones County, which he says loses out under
the current system. As it happens, a strong opponent of Brown’s plan is
one of the chamber’s leaders on tax policy -- Sen. Bob Rucho of
Matthews in Mecklenburg County, co-chair of the Finance Committee.
was the only Republican to vote against the Senate budget because, he
explained, the sales tax provision was bad for his constituents. That
didn’t go down well with the chamber leadership. When President Pro Tem
Phil Berger of Eden named budget conferees, he tapped all the other
Republican senators except Rucho. (The Senate group’s breakdown:
Republicans, 32, Democrats, 0.)
Rucho is perhaps the most outspoken Senate advocate, along with Berger,
of continuing to cut taxes. The idea, echoing theories long popular
with conservatives, is that lower taxes are the key to economic growth.
On that point, they’ll get an argument from those who think that strong
investment in state services, education especially, is even more
important. And those investments typically are shortchanged when tax
Senate budget would drop the personal income tax rate from 5.75 percent
to 5.5 percent beginning next year. Personal exemptions also would
increase, meaning that more low-end earners would escape income taxes
altogether. Most taxpayers would get a break – but the state’s General
Fund, already strained by previous tax cuts, would have to do without
another $800 million or so per year.
the kind of shortage that forces the Senate to call for eliminating the
jobs of at least 5,000 teacher assistants as a way to pay for
reductions in class sizes for grades K-3. Smaller classes are a worthy
goal, but why should it have to come at the expense of assistants who
do so much to keep classes running smoothly and give extra help to
students who need it?
cushion the revenue blow from lower income taxes, the Senate budget –
in another plan for which Rucho has been head cheerleader – would
broaden the sales tax base to cover a range of services. Many North
Carolinians, even if their income tax bills had shrunk a bit, doubtless
would find themselves saying, “Thanks a bunch!”
that maintenance and repairs on personal property now would be subject
to the state’s 4.75 percent general sales tax. What if the transmission
in your elderly vehicle gives out and you have to get it fixed because
you can’t afford to replace the car? You’d probably end up paying an
extra $150 or so. There might not be much left of your income-tax
sales tax also would be extended, in rather curious fashion, to cover
veterinary and pet care bills, and advertising expenses (a dig at those
pesky media companies and their ad customers?). In other words, a pet
lover with an old car and a business needing a little promotion would
stand to take beating.
82 House conferees on the budget bill (63 Republicans and 19 Democrats
appointed by Speaker Tim Moore of Kings Mountain) can be expected to
try to derail the sales tax extension, which wasn’t included in their
budget version. If they hold the line against further income tax cuts,
in league with McCrory, they’ll be in a better position to work toward
a final budget that at least, from the perspective of the N.C. Council
of Churches and its allies, doesn’t make matters worse.
the Council wants to see is a budget that allocates enough money for
the state to properly meet its responsibilities – in education, public
health, public safety, environmental protection and all the areas vital
to residents’ well-being, especially residents disadvantaged by
circumstances over which they have little control.
the same time, that money needs to be raised fairly, meaning that the
burden should be spread broadly and with an eye toward who is most able
to pay. Targeting folks trying to get by with vintage, repair-prone
cars and appliances is one move that hardly passes the test.
Ford, former editorial page editor at Raleigh’s News & Observer, is
now a Volunteer Program Associate at the North Carolina Council of
Policy Watch is a progressive, nonprofit and non-partisan public policy
organization and news outlet dedicated to informing elected
officials as they debate important issues and, ultimately, to improving
the quality of life for all North Carolinians. Read more commentary at www.ncpolicywatch.com.)