Raleigh, N.C. — Local governments suffered a double blow in Raleigh this week, as state lawmakers passed bills that limit their power to raise money and control land use.
Republican legislative leaders say the limits are needed because some local governments have abused their powers, but city and county leaders say they feel like they're under siege.
As part of a tax bill the House passed on Wednesday, privilege licenses are capped at $100. Cities and counties calculated privilege licenses, essentially a tax on businesses that operate within their jurisdictions, through a variety of methods, from square footage to employees to revenue, and business owners have complained that the tax isn't always applied fairly.
The proposed cap, which still must be approved by the Senate and Gov. Pat McCrory, would save businesses a lot of money, but it could cost cities and counties as much as $45 million.
Raleigh Mayor Nancy McFarlane said her city stands to lose $5 million to $6 million in privilege license fees. The city's annual budget is about $750 million.
McFarlane, who is chairwoman of the Metropolitan Mayors Coalition, said some cities may have no choice but to cut services or raise property taxes to make up the difference.
"When we lose that amount of money because businesses aren't paying, then the only tool we have is to raise personal property tax, and we don't want to do that," she said.
Republican lawmakers said cities should tighten their belts.
"We're told that, if the privilege license goes away, services must be cut. I would submit that's not really accurate," said Rep. William Brawley, R-Mecklenburg. "Priorities have to change.
"It does not require the loss of a single firefighter, a single policeman, a single ambulance," Brawley said. "This is a manageable situation for a fiscally prudent city council.”
McFarlane said cities "just want to be part of the conversation."
"We want (lawmakers) to listen to us, to understand, and hopefully we can come up with something that works for everybody,” she said.
Meanwhile, the Senate passed a bill Thursday saying cities and counties cannot use zoning regulations to limit natural gas drilling. Supporters of the legislation say the rules for drilling should be the same statewide and not a mix of local ordinances.
"I think our local governments need input into this whole process," said Sen. Gene McLaurin, D-Richmond, who was unsuccessful in his attempt to amend the bill to give cities and towns more control over drilling operations.
McLaurin, who is in the petroleum business, said he supports the hydraulic fracturing drilling process, known as "fracking," if it's done right. But he also served as Rockingham mayor for 15 years, and he said cities and counties deserve more respect.
Last year, the General Assembly removed both the Charlotte Douglas International Airport and Asheville water system from municipal control and restructured the voting districts for the Wake County Board of Education. Other moves, such as voiding Raleigh's lease of the Dorothea Dix property and legislation limiting cities' ability to dictate design standards for new homes, are still unresolved.
"I think we need to be very, very careful about what we do in Raleigh that impacts them," McLaurin said. "State government does not necessarily know what's best. Our local governments really are on the front lines of serving the public."