Town Not Devastated By No Tax

The primary purpose for the proposed sales tax was to replace the reimbursements from the state that the counties might not receive for the third year in a row.

The money from reimbursements will be used to help balance the state budget, which is suffering due to the decline of both the state and national economies.

The governor is constitutionally mandated to turn in a balanced budget at the end of the fiscal year, and withholding the reimbursements was one of the steps he has chosen to take to fill the fiscal hole.

Chapel Hill will not be directly affected by the legislature's decision to refuse the sales tax.

The town did not expect the sales tax or state reimbursements, so its budget was proposed excluding the revenue from both, said Jim Baker, finance director for the town.

"It would have been nice to get that money, but it didn't happen," Baker said.

Rep. Verla Insko, D-Orange, voted for the sales tax increase but said the bill did not pass because the state passed its own half-cent increase last year.

The majority of Republican representatives -- and a few Democrats -- did not think a one-cent increase in sales tax over one year would be fair to state residents.

This development has left many counties and towns, aside from Chapel Hill, in a bind because they had planned for the reimbursements or the sales tax increase in their budget proposals.

"The counties had every right to expect the reimbursements because they were in the state budget," said Todd McGee, the director of communications for the North Carolina Association of County Commissioners.

McGee says the only way to make up for the loss is for counties to cut back.

Those counties that projected the revenue in their budgets will have to delay capital projects, such as building new schools or limit contributions to certain funds, such as the affordable housing fund.

Insko said there will be a compromise package proposed to the House in which the state sales tax will be rolled over, as previously planned, to the counties in January.

The City Editor can be reached at citydesk@unc.edu.