Counties Request Sales Tax Increase

Lawmakers in the N.C. General Assembly filed several bills Monday that would give the counties they represent the authority to impose a one-half cent or 1 cent local sales tax.

In addition, some lawmakers have proposed a trade-off between local and state governments. If such a deal is struck, counties would be allowed to levy 1 cent local sales taxes. In turn, state reimbursements usually given to counties, which total $330 million, would be canceled. The reimbursements come from taxes on stocks and manufacturing inventories.

Rep. Donald Davis, R-Harnett, said he proposed a bill specific to Harnett County at the request of county commissioners that allows a possible local sales tax, which would need to be passed by a referendum. "I wouldn't have put one in unless it had a referendum," Davis said.

He said Harnett County has lost 2,500 jobs in the last 2 1/2 years, causing a loss in tax revenue.

But Davis said he does not think the sales tax bills would pass the House.

Rep. Bill Hurley, D-Cumberland, said he put in a similar bill at request of Cumberland County officials.

"We have a lot of military in our county who do not share in property taxes that pay for public education and infrastructure," Hurley said, adding that Cumberland County does not have a broad tax base.

The revenues from the 1 cent increase would fund public schools and water and sewer capital projects.

Hurley also proposed the bill that would exchange a 1 cent sales tax increase for the elimination of state reimbursements to local government.

"It would save the state $330 million annually," he said. "It's very good for Cumberland County, and it's a good deal for the state."

But Hurley said he does not expect the trade-off between state and local governments to be discussed until next week.

UNC political science Professor Thad Beyle said the tax increase proposals are tied to the state's budget problem.

But Beyle said Senate President Pro Tem Marc Basnight and House Speaker James Black have discouraged the increases. "They don't want to have Democrats tagged as people who raised taxes with the 2002 elections coming up," he said. "They're afraid to use the 't-word.' If they lose two or three seats (in the House) they lose the majority or tie with the Republicans."

The House is split between 62 Democrats and 58 Republicans. In the Senate, Democrats outnumber Republicans 35 to 15.

Beyle said the problems facing the state are similar to problems found in other states.

"The national situation is that many other states are faced with budget problems -- they'll have to accept shortfalls or be forced to cut services."

The State & National Editor can be reached at stntdesk@unc.edu.