FOOD FOR THOUGHT

“They’ve got their budgeting priorities out of whack.” – Tim Kent, executive vice president of the North Carolina Association of Realtors, on why counties are struggling to deal with the state’s rapid growth.

REALTORS BEGIN MEDIA CAMPAIGN AGAINST LAND TRANSFER TAX

As expected, the Raleigh-based lobbyists for the North Carolina Association of Realtors (NCAR) began a media blitz this week aimed at stopping the General Assembly from granting counties the authority for a land transfer tax, which would be used to fund infrastructure needs. The campaign includes television and radio commercials, yard signs, bumper stickers and a Web site centered around the theme that the “N.C. home tax” is a “bad idea.”

According to Tim Kent, executive vice president of NCAR, the fiscal struggles being faced by counties are not due to the state’s explosive growth, but are rather due to county commissioners’ poor budgeting practices. “Taxing and budgeting, whether it’s on the state level or whether it’s on the local level, it’s a matter of priorities,” Kent said in an interview broadcast March 29 on State Government Radio. When asked what message he would say to commissioners who are struggling to fund new infrastructure needs caused by their growing communities, Kent said: “To those county commissioners, I would say you need to summon up the collective courage to create the kind of budget that creates the kind of priorities you need for your system. We’ve done a number of studies across the state in places like Mecklenburg County and Union County which shows not only that growth more than pays for itself, but we’ve also been able to establish that the cost of government, the administration of government, is exceeding the rate of growth and inflation. So they’ve got their budgeting priorities out of whack.”

BILL GRANTS COUNTIES LOCAL-OPTION 1 PERCENT LAND TRANSFER TAX, MORE LOCAL BILLS

Sen. Bob Atwater (Chatham) filed S1516, Local Option Land Transfer Taxes, to grant land transfer tax authority of up to 1 percent to all counties who do not already have a land transfer tax by a local act. The tax could only be levied if voters approve it in a local referendum. The bill does not require counties to share any of the proceeds with municipalities. Several local revenue bills were filed this week, including local-option land transfer taxes for Tyrrell County (H1175) and Avery County (H1180), a half-cent sales tax for Sampson County (H1158) and New Hanover County (H1212), and a 1-cent sales tax for Wayne County (H1216). All bills require a voter referendum except for Sampson’s, which grants the board of commissioners the authority to implement the respective tax with a resolution. H1218 would grant Brunswick County impact fee authority.

FISCAL MODERNIZATION COMMISSION RECOMMENDATIONS SHOW UP IN BILL

How does no Medicaid burden, a local-option 0.1 percent land transfer tax and authority for a prepared meals tax and room occupancy taxes sound? Sen. Dan Clodfelter (Mecklenburg) filed S1529 this week, representing the findings of the State-Local Fiscal Modernization Study Commission’s efforts. The bill grants counties several new revenue authorities and relieves counties of their Medicaid burden. To help the state meet its increased Medicaid obligation, counties would forfeit to the state the Article 44 sales tax and the state would also increase the cigarette tax from 1.75 cents per cigarette to 3.75 cents.

RAND FILES MEDICAID RELIEF PLAN

Sen. Tony Rand (Cumberland) filed his long-anticipated Medicaid relief plan earlier this week. S1484 calls for counties to give up the Article 40 (half-cent, per capita) sales tax and half of the Article 39 (1-cent, point-of-distribution) to the state in exchange for the state taking over the county Medicaid burden. If passed, this would generate approximately $1 billion of new revenue for the state to assume an estimated $517 million of Medicaid costs. Under the proposed legislation, the state allows the quarter-cent sales tax that is set to expire on June 30 actually expire, and counties must hold cities harmless for lost revenues based on how much revenue the cities received in 2006-07 from the lost sales taxes. In addition, counties would be given the authority to enact – by resolution – a replacement sales tax of up to 1 cent in quarter-cent increments. This new sales tax would be distributed by point of distribution. Counties would not have to share the revenue from the new sales tax with cities. Rand’s bill has a companion in the House, H1140, filed by Rep. Pryor Gibson (Anson).