With Bond Rating In Jeopardy, State Looks To Raise Revenue
Posted July 11, 2001 8:18 a.m. EDT
RALEIGH — Support for a tax hike is growing in the North Carolina House and Senate as lawmakers try to figure out how to get the state out of the red. It seems the task of balancing the budget gets tougher every day.
House members have started talking about raising revenue. Raising taxes is politically unpopular on Jones Street, but concern over the state's credit rating has moved to the front burner.
As a consumer, we can relate to credit ratings. When you buy a car and have it financed, your credit rating depends on the interest rate you will pay.
The state's AAA credit rating, which is the best rating, is in danger because of declining revenues.
State Treasurer Richard Moore showed lawmakers a letter from the agency, Moody Investors Service, that determines the state's credit rating.
"They just look at the numbers, and right now they don't like what they see," says Moore.
The agency does not like that North Carolina does not have a lot of spending money, its savings account is getting low, and there is no plan to dramatically improve how taxes are collected.
Moore says a drop in the AAA rating of just one point would mean it will cost the state hundreds of millions more to borrow money for big items like bonds.
The bleak revenue picture, plus prodding from Governor Easley, may have turned the tide.
Now, the house tax raising committee is focused on new ways to bring in more money. The finance committee approved a measure Tuesday to close three corporate loopholes for out-of-state operations which will bring in more than $50 million.
"I want to see those folks paying those taxes like the rest of us do," says Rep. Jennifer Weiss, D-Wake County.
"Good corporate citizens will understand and get a good clear message and then pay their taxes like other good corporate citizens. If we need to help them along to do that then that's what we need to do," says Rep. Phil Baddour, D-Wayne County.