Eroding local control

Apr. 21, 2014 @ 06:15 PM

We’ve been alarmed at many threads coursing through the General Assembly, but one of the more ironic has been the Republican majority’s efforts to circumscribe and undermine city governments.

The legislative leaders make no secret of their intent to shift the balance of power in many areas more forcibly toward Raleigh – the capital, that is. The city of Raleigh is just as much in the crosshairs as Durham, Asheville, High Point – name pretty much any mid- to major city in the state.

The latest assault emerged in the legislature’s Revenue Laws Study Committee last week. The committee is crafting legislation to severely limit cities’ flexibility in assessing a business privilege tax.  While widening the types of businesses covered by the tax, the committee would cap the tax at a flat, almost token $100.

That could cost Durham up to $2.3 million in revenue -- and could mean a revenue hit of up to $25 million or more for cities across the state.  

The loss in Durham would be relatively light given an overall general fund budget to $178.5 million. But in an annual struggle to meet demands for city services while acknowledging disdain for taxes, that $2.3 million is “real money,” as City Manager Tom Bonfield told The Herald-Sun’s Ray Gronberg last week. “Obviously it’s a concern.”

There are, to be sure, issues with the privilege tax. It is uneven from one city to another, and too many business operations are exempt.

But part of that unevenness relates to differing views of taxation. Critics of the tax would assess it as a flat rate -- and far lower than many businesses in some cities such as Durham now pay. But to many people, the notion that a mom-and-pop shoe repair shop should pay the same as a big-box retailer like Target is unfair. Target no doubt contributes more to the city’s economy – but so, too, does it put greater demands on local infrastructure. The privilege tax has not stopped the retailer from opening two big-box locations in Durham.

The largest issue at play here is the legislature’s efforts to steamroller traditional local authority. We saw it last session in the legislature’s inexcusable override of the city’s authority in ordering approval of the 751 South development. We’ve seen it in eviscerating annexation authority and billboard regulation. The legislature has wrested control of Charlotte’s airport from that city, and has gone after Asheville’s airport and water system.

These moves are driven by a party that has long argued for keeping big government, whether in Raleigh, or in Washington at bay.

Anthony Foxx, now U.S. secretary of transportation, noted the irony in a BloombergBusinessWeek story last spring when he still was mayor of Charlotte.

“I think the legislature would be concerned if the feds started dictating to them,” he said. “Yet they’re doing to us what they claim they dislike.”

The business privilege tax would be a good place for that trend to stop.