State News

Vote on State Budget Likely This Weekend

Posted July 26, 2007
Updated July 27, 2007

State budget

— A $20 billion state budget deal remained intact Thursday, with Democratic leaders able to deflect complaints from some colleagues and real estate agents that it allows counties to raise land transfer taxes.

House and Senate negotiators tentatively agreed late Wednesday to a tax-and-spending plan for the next two years that also would phase out county Medicaid expenses, make permanent a "temporary" sales tax increase and spend or borrow $860 million for state buildings, sewer lines and land conservation.

House Democrats, who got most of what they wanted on tax issues, were confident Thursday that more than 61 of their members - a majority in the chamber - would vote for the final plan. Senators, in return, get the top income tax rate lowered, a long-term solution to Medicaid and a dedicated cancer research fund.

"I think it's a fair compromise," House Speaker Joe Hackney, D-Orange, said shortly after a House Democratic Caucus meeting.

But it took Senate Democratic leaders a little longer to make similar statements.

They had to deal with colleagues still unhappy with a provision that would let counties, with local voter approval, collect an additional 0.4 percentage point on the value of land and home sales. Senate Democrats rejected a nearly identical tax deal late last month largely due to the transfer tax, which was sought strongly by the House.

Senate Leader Marc Basnight, D-Dare, said late last week that as many as 24 of the Senate's 31 Democratic members support the transfer tax idea. Emerging from a 90-minute caucus meeting Thursday night, Basnight said he now had enough support for a majority in his chamber.

"It will be voted on and the budget bill will pass," Basnight told reporters.

Sen. David Hoyle, D-Gaston, co-chairman of the Senate Finance Committee, said he would probably vote for the budget, although he's averse to the transfer tax idea.

"I don't like it, but that's what it's going to be," he said.

Time is running out for lawmakers to pass the final budget, as a stopgap spending measure for state government expires Tuesday. Negotiators were working out final details late Thursday. The budget bill will likely be ready for the first of two required votes in each chamber Saturday, with the final votes coming after midnight.

The deal would let counties raise either sales taxes by a quarter of a cent or the land transfer tax from 0.2 percent of the sales price to 0.6 percent - an additional $800 on a $200,000 home. Proceeds could be used for school construction or other infrastructure needs.

The North Carolina Association of Realtors scrambled Thursday to try to get lawmakers to reconsider their inclusion of the transfer tax. The association has spent nearly $600,000 this year on a public campaign opposing what it called the "NC Home Tax," arguing it would whittle down the affordability of homes.

"We feel confident that if the ... General Assembly were allowed to consider this issue as a stand-alone issue, it would fail," association chief executive Tim Kent said.

"What we're trying to do is give the counties an option so they can cover their costs," said Rep. Jim Crawford, D-Granville.

Incorporating the local tax options in the budget may give political cover to undecided lawmakers who would find it difficult to vote against the most important bill of the year.

"Some people are not going to be happy, but they go home and say, 'I didn't want this, but how could I vote against my university getting a new building they so desperately needed or I supported teacher raises and I support insurance for children,'" said Sen. Linda Garrou, D-Forsyth, one of the chief budget negotiators.

Gov. Mike Easley, another Democrat, sounds like he would sign the deal into law. Easley spokesman Seth Effron referred to the agreement as "an outstanding budget."

Easley got several items he wanted, including money to pay for 10,000 additional children in More at Four and flexibility to let lottery commission officials raise prize payouts to boost lagging ticket sales.

Under the tentative agreement, a quarter penny of the sales tax originally set to expire in 2003 would become permanent, while the top income tax bracket of 8 percent for the highest wage-earners would expire as scheduled at the end of the year, making the top rate 7.75 percent.

The deal would mean the sales tax most consumers pay would remain at 6.75 percent, although counties could raise the overall rate to 7 percent. A state version of the earned income tax credit also would be enacted.

Republican legislators, the minority party in both chambers, sound ready to oppose the budget because of what they consider to be tax increases.

"It may be a different pocket, but it's still coming out of the same pants of the taxpayer," said Rep. Nelson Dollar, R-Wake.


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  • beenc2 Jul 27, 2007

    Does this mean in a perfect world that there are no taxes, we all pay nothing, and everyone still gets along and pays their bills on time? I think not. To quote a patriotic movie (Platoon), "The poor always being screwed by the rich. Always have, always will." (I changed a word because it's inappropriate).

  • NeverSurrender Jul 27, 2007

    "Anyhow, when 99.9 percent of the populace is not keeping up with all of their out-of-state purchases and paying tax on them, I think you'd be a fool to pay them."


    Unfortunately, compliance statistics for consumer use tax are not available but I'd be surprised if it were at 99.9% non-compliance. TurboTax will apply the percentage of income method unless you specifically override it by saying you've kept full records and then record $0 owed.

    Do keep in mind that if you file electronically, the state system is provided a copy of your Federal 1040 which lists your occupation. Occupations that suggest heavy use of computers listing $0 use tax is a big red flag to DOR...they know it's the rare geek that doesn't order something over the Internet! Just something to keep in mind if you're of the mind to fudge the figures in your favour... ;)

  • NeverSurrender Jul 27, 2007

    "I respectfully disagree with you, even though you seem to know your stuff (with the exception of yard sales --you ARE expected to pay sales tax on 2nd hand purchases, regardless of whether tax has already been paid on them)."


    I took the liberty of perusing the General Statutes concerning sales tax...the relevant section is 105-164.4 (4b) reproduced in part below:

    "(4b) A person who sells tangible personal property at a specialty market, other than the person's own household personal property, is considered a retailer under this Article."

    I think you might have confused sellers at a flea market (which are required to register and remit sales tax on sales, they're considered a business) compared to someone doing a yard sale which is specifically exempted by this provision.

    BTW, NC rather hopes you won't keep track of every purchase. Then you'll be expected to use the use tax percentage of income method which may be higher than what you actually owe... :)

  • Nancy Jul 27, 2007

    "Easley has the programs for kids under 5 because their parents don't have the resources to get them ready for school."

    What did we do, those of us who never had preschool? Who taught us colors, numbers, letters, respect, good behavior? Why, I know! It was our parents!

    Please, this is a paid babysitting program that does nothing more than any parent can do. And one does not need to be rich to teach a young child their colors, letters, numbers, behavior.

    But apparently you enjoy give away programs for people because they're not capable of doing these simple things after giving birth?

  • Nancy Jul 27, 2007

    "Because doctors make 6 digit salaries, lawyers always threaten litigation, and drug companies want to be rich. Go after the super rich...the ones with REAL power.

    Well, there ya go! All the answers.

    How simple that is huh?

    Tell me you don't vote, please?

  • flipit Jul 27, 2007

    Yes. The kids are a little self-centered, which comes from the parents.....poor parenting skills. "Don't you dare diss my kid" said the momma. Public schools fear litigation, that's because we are a nation of laws......too many. The kids need to be taught humility at an early age ( don't harm animals-don't talk back-lower your self asteem-and eat those darn veggies)!! Now do your homework.

  • beenc2 Jul 27, 2007

    Have you been in a classroom to see how messed up these kids are? Oh by the way, paddling is only as effective as the parents who back it up.

  • flipit Jul 27, 2007

    Oh Aunt BeeNC, don't know know, they've proven that this program does nothing to keep kids out of trouble in later life. They are influenced by the yute culture and home environment. Take away the electronics ( TV and music ) and the problems will vanish. Oh yeah, let the educators use the paddle again.

  • beenc2 Jul 27, 2007

    Easley has the programs for kids under 5 because their parents don't have the resources to get them ready for school. Believe me, go into a kindergarten class during the first week of school and you'll quickly see who's ready and who isn't. If you don't educate those kids, they become burdens on society, eventually ending up in corrections, welfare, or both. It's still cheaper to educate them and hope for the best. Want real reform? Demand that people have licenses to have children!

  • beenc2 Jul 27, 2007

    It is amazing how people complain bitterly about paying taxes. I don't like paying them either, but lets assume for a moment that every penny we paid into the state was refunded. Then what?

    1. No schools. No babysitting services. Uh oh, that means parents actually have to be parents.
    2. No prisons. Guess we'll let child molesters, murderers, rapists, and everyone else go free. Let's not forget people committing fraud...they hurt all of us.
    3. No roads. Guess we can get our own hummers and go 4 wheeling to work.
    4. No unemployment. Guess if you lose your job you're screwed.
    5. No parks.
    6. No judicial system.

    The real people to be upset at is not democrats, or even republicans, but the lobbyists and the people who have the money. They are the ones who buy votes. Ever wonder why medicine is so high? Because doctors make 6 digit salaries, lawyers always threaten litigation, and drug companies want to be rich. Go after the super rich...the ones with REAL power.