Raleigh, N.C. — Hours after state lawmakers gave final approval Thursday to a package of adjustments to last year's sweeping tax reform measure, Gov. Pat McCrory signed the legislation into law.
"The provisions in this bill will continue to spur economic growth and development in our state and position North Carolina to lead the nation in job creation," McCrory said in a statement.
The state Senate adopted House Bill 1050 on a 38-7 vote Thursday morning, and the House added it to its afternoon calendar and voted 79-37 to concur with the Senate's version of the bill.
House Democrats questioned why the bill was being rushed through, saying they needed time to review the changes made by the Senate.
House Rules Chairman Tim Moore said the bill included a "time-sensitive matter" involving sales tax on rental properties during the upcoming U.S. Open Golf Tournament in Pinehurst, so it needed to be signed into law as quickly as possible.
"The bill has been thoroughly vetted," said Moore, R-Cleveland.
"It doesn’t do anything really harmful to the bill, and doesn’t have a great impact," Rep. Julia Howard, R-Davie, the chairwoman of the House Finance Committee, said of the Senate amendments.
Rep. Paul Luebke, D-Durham, disagreed with Howard's assessment of the bill, pointing to the impact on modular home buyers and municipal governments.
The House version of the tax bill exempted half the purchase price of a modular home from sales tax, while the Senate version applies sales tax to the full price. House members voted to cap the privilege license taxes that cities and counties levy on businesses at $100, while the Senate eliminates the tax on July 1, 2015.
"Our cities are losing even more," Luebke said. "It's wrong not to go to conference (committee). It's wrong to take it up right now."
Howard said modular home taxes would be addressed in the budget, and she said lawmakers might address the privilege license issue next year before they are phased out.
McCrory, a longtime mayor in Charlotte, said Howard and Senate Finance Committee Chairman Bill Rabon have promised him that something will be negotiated next year so cities don't take a financial hit from the loss of the privilege license tax. Some estimates say the losses could be as much as $45 million statewide.
"There’s no debate that the privilege tax has been applied inconsistently, creating confusion and expense for our businesses. Therefore, I support needed reform," he said.
House Minority Leader Larry Hall noted that House members had passed a separate bill dealing with sales tax on rental properties so that it could be fast-tracked and the main tax bill could be handled more deliberately. The Senate's decision to combine the two put the House "in a vise," he said.
"It appears we're being pushed up against the wall by the Senate again," said Hall, D-Durham.
The tax bill also includes an excise tax of 5 cents per milliliter on the liquid used in e-cigarettes.