Senate wants choice between school, transit taxes

Jul. 16, 2014 @ 07:33 PM

A state Senate panel on Wednesday endorsed a revision of local-option sales-tax laws that could, if things break right, close the door on Wake County joining Durham and Orange counties in using such a levy to fund public transit.

The bill, reported favorably to the full Senate on a voice vote, restructures laws governing half-percent local-option levies for transit and quarter-percent levies for education.

If it passes, and receives Gov. Pat McCrory’s signature, counties would be able to call referenda on sales surcharges of up to a half percent, and be allowed to use them either for transit or education, not both.

Sen. Rick Gunn, R-Alamance, explained the intent is to force county boards to make a clear decision about priorities. And he hinted supporters of the change would prefer that they use any local-option levy tax for education.

“If you’re going to do and want to invest in the transportation, we’d like you to go ahead and make that decision,” Gunn told members of the Senate Finance Committee. “If you want to invest in education, we’d like you to go ahead and make that decision. We think this is the best application in this case.”

The measure was rolled out in a way that suggests Senate leaders are serious about seeing it become law.

Committee members attached it to a bill that’s already passed the House that would revamp a business-recruitment incentives program for rural counties. The pairing would make it politically difficult, perhaps even impossible, for either the House or McCrory to say no even if they were inclined to.

Senate President Pro Tem Phil Berger, R-Rockingham, also used his Twitter feed to call attention to the bill, directing followers to a news release that touted the measure’s business-recruitment angle and its potential benefits for education.

The news release again signaled a preference that counties use the revenue for education. “There is no greater investment we can make than in preparing our children for the future,” it quoted Sen. Bill Rabon, R-Brunswick, as saying.

The measure for now effectively exempts Durham and Orange counties from the either-or restriction on the use of sales tax money, and from an associated overall cap on local-option levies.

Voters in both counties have authorized in recent years three-quarters of a percent in local-option sales surcharges. In Durham, the money from a half-percent levy goes to transit and the remaining quarter-percent goes to education.

The measure also partially exempts three counties that have already scheduled tax referenda this year.

But that doesn’t cover Wake County, though media reports indicate that County Commissioners figure to decide next month whether to hold a referendum this fall on a quarter-percent surcharge for education.

Wake leaders in 2009 received the same authority as Durham and Orange to put a transit levy on the ballot, but to date have declined to use it. The Wake commission is majority Republican, like the General Assembly, and has voiced skepticism about existing planning for rail-based transit connections between the Triangle’s major cities.

Its chairman, Paul Coble, a Republican, has signaled he intends to float a new “transit investment strategy” next week. He faces opposition in Wake’s fall election from a Democrat, John D. Burns, who’s said he favors holding a referendum next year on a half-percent transit levy like Durham’s and Orange’s.

The Senate’s move appeared to catch transit advocates, local legislators and lobbyists for city and county governments by surprise.

The N.C. Association of County Commissioners and the N.C. League of Municipalities both urged the Finance Committee to hold off on acting this year, in favor of conducting a legislative study of the issue.

“This is a large change to be making so quickly,” Johanna Reese, the county association’s governmental-affairs director, told the senators.

“This is the first time we’ve seen this language,” added Erin Wynia, the league’s legislative and regulatory issues manager. “We haven’t had lot of time to digest it yet. What we worry about is the effect it could have on regions to raise funds for transportation.”

A Durham senator, Floyd McKissick, later downplayed the effect of the measure, though he said he’ll propose an amendment to allow counties to use the revenue for both purposes.

“I would hope and trust that in terms of Wake County’s participation, they would want to use it for transit,” said McKissick, a Democrat who added he thinks Coble and another Republican commissioner up for re-election this year are “leaning more towards” devoting any surcharge to that.

Triangle Transit General Manager David King said he and his colleagues are “still trying to figure out what’s going on” with the Senate’s move.

“We don’t know what the motive is here, what policy objective they’re trying to reach,” King said. “We’re not at all clear what the problem is it’s supposed to solve.”

The 2009 legislation that authorized transit levies passed the Senate with bipartisan support, but a couple of the Republicans who favored it have since departed the General Assembly.

Its opponents in 2009 included Sen. Bob Rucho, R-Mecklenburg, who now chairs the Finance Committee, and Sen. Harry Brown, R-Onslow, now the Senate’s majority leader. Berger also signaled opposition, though he did not actually vote on the bill.

Raleigh Mayor Nancy McFarlane, however, was in no doubt about the practical effect of the legislation.

Wake County "will have to choose between education and transportation," she said via Twitter, adding that in her view, the Senate's move is "devastating to a growing, thriving economy."