Local News

State Leaders Still At Odds Over Permanent Half-Cent Sales Tax Hike

Posted June 29, 2005 6:43 a.m. EDT

— The state's budget battle could mean good news for taxpayers' pockets if a proposal to make a temporary half-cent tax increase permanent expires.

The half-cent of North Carolina's sales tax is just one potential casualty in the struggle to keep the government running when the fiscal ends Thursday.

Neither House nor Senate negotiators want to see the proposal expire, but that could happen if it is the only way to pass a measure to keep the government from shutting down.

As the clock ticks toward the end of the fiscal year, frustration between House and Senate Democrats is reaching a fever pitch.

"If we concede to the House bill and what they want, the Senate is giving up everything that we feel is important," said Sen. David Hoyle, D-Gaston. "Everything."

What Senate negotiators have already given up is their effort to make a temporary half-cent sales tax increase permanent. They went along with the House plan to simply extend it.

What senators are not willing give up is a reduction in a temporary income tax hike for the wealthiest North Carolinians.

For House negotiators, it is a deal-breaker. They say without a commitment to keep the higher income tax, there may not be enough votes to extend the half-cent sales tax.

"The sales tax and the income tax came in together and are linked in the minds of a number of our members," said House Majority Leader Rep. Joe Hackney

While the state would lose out on the revenue from the higher sales tax, Senate Majority Leader Tony Rand said it does not have to be that way.

"There are a lot of different ways this can be accomplished," Rand said. "A lot of things that could be done. And so which one will happen, I have no idea."

Time is running out to pass the so-called "continuing resolution." The fiscal year ends at midnight Thursday.