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Back You are here: Home Opinion Opinion Section Editorials Editorial: Legislature Should Keeps Hands Off Local Revenues

Editorial: Legislature Should Keeps Hands Off Local Revenues

By WILLARD KILLOUGH III
Managing Editor

Pending State legislation has local city and county leaders concerned with the potential loss of revenues after recently adopting their own budgets for the 2013-2014 fiscal year. The concern focuses on House Bill 998, Tax Simplification and Reduction Act.
According to the Tax Foundation, bill 998 would "Reduce individual and corporate income taxes while broadening their bases, in addition to lowering the combined state-local sales tax and expanding the tax to some services. These changes move North Carolina away from income taxation and towards consumption taxes in an effort to increase future economic growth and make the state more rate-competitive with its neighbors. They would also reduce distortions and waste associated with a complicated and non-neutral tax code."
The last major reform of the State's tax code occurred in the 1930's and the code has since become outdated and complicated.
The North Carolina League of Municipalities says the House version of the bill is more protective of municipal revenues. Now in the Senate, the League opposes changes primarily due to the elimination of the local food tax, privilege license tax, and sales tax refund for cities.
The Senate did not take a final vote last week on its version of the bill. They sent the bill back to the Senate Finance Committee.
The North Carolina League of Municipalities expects that the bill will remain in committee until House and Senate leaders have reached an agreement with the Governor about what measures should be included in the tax bill. A bill embodying the agreement would then be brought before the committee for approval.
Last week the Wilmington City Council expressed concern about the impact it would have on revenues collected locally by municipalities.
The House version of the bill protected local revenue levels. When the bill got to the Senate that changed.
According to the League the Senate version would, "Cost cities approximately $160 million annually once fully phased in -- primarily due to the elimination of the food tax, privilege license tax, and sales tax refund for cities. Additionally, the proposed "replacement" revenue source in that plan is out of municipal officials' control -- it relies on counties to levy a new local food tax, which, if imposed, would be shared with cities."
The loss of revenues for Wilmington in the 2014-2015 fiscal year would be -$1,318,828 eventually leading to as much as a 7% increase in property tax bills. For Wrightsville Beach, the loss in the 2014-2015 budget year could be -$101,486. For Carolina Beach, that number is -$107,726 and for Kure Beach the anticipated reduction in revenues for 2014-2015 would be -$46,815.
Those figures continue to get worse over a number of years forecasted by the League through the 2018-2019 fiscal year.
The Senate should focus on a plan that would not strip local governments of revenues and shift the burden of funding "Tax Reform" to local governments.
That's like saying "Hey we reformed the tax code!" all in the name of making North Carolina more economically friendly for business growth while sometime later a homeowner opens their property tax bill and says, "What the #@#@!" when they find out that because of that reform, their local government had to make up the shortfall handed to them by state leaders and raise the property tax rate.
If a City or Town can't collect a food tax, privilege license tax, and depend upon sales tax refunds from the State and Counties, services will have to be cut or property taxes will have to be increased.
The State already imposes  "unfunded mandates" on local governments. It's common with the court system, social services and other state mandated programs that come with little or no funding.
And this comes at a time when coastal citizens are faced with drastic increases for flood insurance and homeowners insurance that will likely force many people out of the area.
Citizens should contact their state leaders and voice their opinion on HB 998 while the bill is in committee under discussion. You can visit www.ncleg.net and locate your local legislators on a map. There you'll find their email addresses and telephone numbers.
For New Hanover County:
House Members: 
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Senators:
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