Rural-urban divide rears its head in sales tax debate

Posted July 23, 2014

— The Senate has given tentative approval to a package of sales tax and economic development changes, but not before laying bare simmering resentments between senators from rural and urban areas.

Much of the bill concerns giving the Commerce Department new ways to lure businesses. For example, it pours more money into the state's Job Development Investment Grant fund, which provides grants to new and expanding companies, as well as a creating a new job catalyst fund, aimed a helping job recruiters close deals with major new employers. Another provision would allow small investors to provide crowd-funding to small companies. 

Those economic development provisions were mainly uncontroversial, but an attached sales tax measure that has been the focus over controversy over the past week once again sparked debate. 

For all but six of North Carolina's 100 counties, the measure would make it easier to raise their local sales tax rate as high as 2.5 percent. Most counties are below that cap and unable to use existing authority to raises taxes for transportation project. The proposed law would allow them to put referenda before voters asking to raise sales taxes in quarter-cent increments for either education, transportation, general purposes or some combination of the three. 

Two counties – Durham and Orange – already have local sales tax rates of 2.75 percent and would be grandfathered in under the bill. 

Four other large, urban counties – Wake, Mecklenburg, Forsyth and Guilford counties – currently have the authority to ask voters to raise local sales taxes up to that 2.75 percent limit but would be limited to a 2.5 percent under this bill. 

"You are trying to slow down the economic engines of North Carolina," Sen. Josh Stein, D-Wake, told his colleagues during debate on the Senate floor on Wednesday.

The measure would force Wake County to choose between keeping its commitment of dedicating a half-cent of sales tax to a local transportation consortium or following through with a quarter-cent sales tax increase to help fund education. 

"This bill levels the playing field for all counties," said Sen. Rick Gunn, R-Alamance.

Gunn and other Republicans made the case that allowing big counties to have access to extra sales taxes would not only slow down economic growth generally but would also make it unfair to smaller counties with small tax bases. 

"It's becoming two North Carolinas, where the rich continue to get richer and the poor get poorer," said Sen. Harry Brown, R-Onslow.

But senators from urban counties argued that the success of big cities ultimately helps everyone, allowing the state to send more money to low-wealth, rural school districts for example.

"This doesn't have to be a rural-urban fight," said Sen. Mike Woodard, D-Durham. 

"Urban areas have different issues to deal with," Raleigh Mayor Nancy McFarlane said.

McFarlane said she has no problem making sales tax options equal for all counties, but she doesn't feel growth options should be taken away from Wake County.

"They're even denying the county the ability to ask the voters what they're priorities are," she said. "So, it's not even a matter of imposing taxes. It's a matter of letting voters decide."

Sen. Jeff Jackson, D-Mecklenburg, pointed out that Mecklenburg County has scheduled a sales tax referendum this fall but would be prevented from going to the voters if this bill passes. 

"If you're for local control, you have to be against this bill," Jackson said. 

Sen. Neal Hunt, R-Wake, said he was inclined to vote against the measure, but disagreed with the criticism being leveled by Democrats. He left the chamber before a final vote was taken on the measure. Senate President Pro Tem Phil Berger said that Hunt left to attend Rep. Jim Fulghum's funeral, however Hunt left 30 minutes before the funeral began at a church that is only two blocks from the Legislative Building. 

Senators voted 33-16 to give the bill tentative approval, but it was not along party lines. Five Democrats, including Sen. Floyd McKissick, D-Durham, voted for the measure. Four Republicans, including Sens. Chad Barefoot, R-Wake, and Tamara Barringer, R-Wake, voted against the measure.

Barringer said on the floor that she opposed the crowd-funding measure, saying she believed it runs afoul of federal law. 

The Senate must take a second floor vote to confirm its approval before sending the measure to the House, where its fate is less certain.


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  • Terry Watts Jul 24, 2014
    user avatar

    "This bill levels the playing field for all counties"

    That sounds downright COMMUNIST!

  • NYtoNC81 Jul 24, 2014

    View quoted thread

    Duh. They want their constituents to be happy. Just like the Dems they don't care about anything put perpetuating their power. If that means redistributing to their rural voters, that's what they'll do. Same stuff, different side.

  • hiko Jul 24, 2014

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    These are the projected population maps for each NC county for the year 2030. Add up the populations in Wake, Durham, and Orange counties. We're going to be much larger than the 2030 Charlotte metro area in the next 15 years. Consider that, and think about how the Triangle was NOT built to handle this population. Now, we can either wait until things get bad and spend more money or we can conserve by building infrastructure early for what we know is going to happen. As it is our roads aren't even up to par with where they need to be with our current population. Living in the past is not going to help us at all, as much as I miss being a small city I've realized that it is time to move past this because we are not a small cities anymore.

  • bill0 Jul 24, 2014

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    Property owners don't really "carry the load". Everybody sits on a piece of land when they go to bed at night. They pay for it directly or indirectly whether they own the land or not. eg if you rent, your landlord is building those taxes into the rent.

  • Red Sox Nation Jul 24, 2014

    NOMOREOFTHAT - Stating that Raleigh doesn't need rail service shows how out of touch you really are with what is happening around you and as such kind of throws out everything you're saying. Have you seen the traffic around here? Do you realize the economic development that a rail system would spur? It would create so many jobs. I'm all for gutting some programs as you stated, but to say Raleigh doesn't need a rail system is very short sighted.

  • pamwilliamson Jul 24, 2014

    But this is classic Socialism.

  • heelhawk Jul 24, 2014

    the GOP can't seem to make up it's mind. Are you for local governance (as in state's rights over the federal government) or are you for larger oversight (as in the General Assembly ruling over counties and municipal governments). Seems you're in favor of the ruling body being whichever one you have a majority control over. Typical Hypocrisy!

  • rand321 Jul 24, 2014

    The voters in each of the counties should be able to decide for themselves for the new sales taxes. The General Assembly does not need to do dictate this functioning at the local level.

  • miseem Jul 23, 2014

    View quoted thread

    He did not state his opposition openly. He hedged. He stated he was inclined to be against it. But not for the reasons the Democrats gave. Sounds like he was trying to cover both sides on this. Try a campaign ad against him using the fact he did not vote for local control of sales tax (a no vote), he'll say I was on record against the law. Try a campaign ad saying he was in favor of raising taxes, he'll say he was on record disagreeing with the Democrats. As every Republican knows, saying the word Democrat means raising taxes. Or so they think.

  • Alexia Proper Jul 23, 2014
    user avatar

    Do they really *need* to increase taxes? It's not as if we don't all already pay more then we should. There are basic things from which we all benefit, like roads and police, but I'd argue that most money is just wasted. We'd all do better to have a few percent back in our pockets.