FOOD FOR THOUGHT

“Our children are leaving the county all the time, and what’s staying? Your land. … To me it’s a good tax. It’s a must tax.” - Washington County Board of Commissioner Chairman Billy Corey in the Washington Daily News on his support of a land transfer tax.

BEVY OF LOCAL-OPTION REVENUE BILLS FILED

Several bills authorizing counties to enact an additional local-option sales tax have been filed in recent weeks, and the first bills to give counties local-option land transfer taxing authority have also surfaced. Alexander, Lee and Pitt counties have seen bills filed to give them authority to levy a local-option one-cent sales tax. The bills for Lee (S568) and Alexander (S416, H230) counties give the boards of commissioners the option to enact the sales tax by resolution and do not restrict the use of the proceeds. Pitt County’s bill (H327, S237) requires a referendum and restricts use of the proceeds to “public school capital outlay purposes or community college plant fund purposes.” In addition, Sampson (S438) and Hoke (S451) counties have seen bills filed on their behalf for local-option one-half cent sales taxes. Sampson’s is by resolution while Hoke’s requires a referendum. Both are for public school capital needs, while Sampson’s can also be used for community college capital needs.

S551 would authorize Granville County to enact a land transfer tax of up to 1 percent if approved by voters of the county. The bill does not restrict use of the proceeds, and it allows for the Board of Commissioners to repeal or reduce the tax by resolution. S610 would give Wake County its own menu of local-option revenues – a 1 percent land transfer tax, a 1 percent sales tax and impact fee authority. The county would be required to hold referenda on all three options at the same time. The sales tax proceeds would be split 50/50 for public school capital and transportation needs. The land transfer tax proceeds would have no restriction.

In addition, Sen. Clark Jenkins filed S563 (Local-Option One-Cent Sales Tax) that would give all counties a local-option one-cent sales tax for infrastructure needs, such as “Public School Capital Outlay Purposes, Other Capital Infrastructure Needs, Road Construction, or Mental Health programs.”

LOTTERY MIGHT NOT BE OFF-LIMITS AFTER ALL

With so much controversy surrounding the creation of the lottery in 2005 and its less-than-stellar sales in its first full year, many observers felt legislators would be hesitant to make any changes to it this session. However, Sen. Tony Rand (Cumberland) filed S518 (“Lottery Act Changes”) this week. The bill consists primarily of technical changes to the original lottery legislation and does not implement any of the changes being pushed by Gov. Mike Easley. In his budget proposal, Gov. Easley reduced the county’s share of the proceeds for school construction from 40 percent to 30 percent and increased the amount of revenues going to prizes in an effort to generate additional ticket sales. While Rand’s bill does not address these issues, the presence of this bill may indicate that legislators will delve into some of the other issues with the lottery, including the distribution formula and the governor’s proposals. Stay tuned.

PROPERTY TAX RELIEF BILLS FILED

S412, “An act to provide for additional property tax benefits for lower income homeowners,” is sponsored by Sen. Harry Brown (Onslow). It would institute a “circuit breaker” type of property tax relief for low-income (annual income of $50,000 or less) property owners, meaning that the maximum amount of property tax they would be required to pay is limited to a fixed percentage of their income (e.g. a person with annual income between $25,000 and $50,000 would not have to pay more than 5 percent of their income in property taxes) regardless of the actual amount of property taxes owed. The bill would also establish a “permanent residence tax deferral” option for seniors or persons who are permanently or totally disabled. This option would enable qualifying owners to defer property taxes until their death or they sell the residence as long as they meet certain requirements. The deferment is limited to 85 percent of the residence’s assessed value. In addition, Rep. Robert Grady (Onslow) filed two property tax relief bills. H539 would increase the Homestead Exemption’s income limit to $49,000, and H540 would limit the annual increase in appraised value to the increase in the Consumer Price Index.