NC Lawmakers Override Gov. Vetoes, Advance Cap On Income Tax

Jun 20, 2018

The sponsors of the proposed constitutional amendment to cap North Carolina's personal income tax at 5.5 percent present the measure to the House Rules committee. Pictured are Rep. Jason Saine (R-Lincoln), at the podium, and Sen. Tommy Tucker (R-Union), standing just behind him.
Credit Rusty Jacobs / WUNC

Lawmakers put in a busy day in Raleigh Wednesday, completing the override of two gubernatorial vetoes and advancing proposed constitutional amendments.

The state House completed the overrides, with Republican legislators using their super-majority to steamroll two vetoes issued by Governor Roy Cooper late last week. These were the Democrat's 13th and 14th vetoes overridden since he took office last year.

One measure reconfigures judicial voting districts in Wake, Mecklenburg and some smaller counties. Cooper assailed the new law as part of a continued GOP effort to politicize the judiciary and get right-leaning judges elected. The other law contains a "sore loser" provision preventing candidates who lose a primary from re-entering races by switching parties.

While waiting for more expected vetoes from the governor, the Republican-controlled legislature has been working on proposed amendments to the state constitution, measures they hope will boost voter turnout in their favor this fall.

One of those proposals received preliminary approval Wednesday from the House Rules committee.

The amendment would cap North Carolina's personal income tax at 5.5 percent--it's currently capped at 10 percent.

The measure underwent considerable debate in committee, with supporters like bill sponsor Sen. Tommy Tucker (R-Union) saying it will impose fiscal discipline on state government.

"We've cut $4 billion in taxes in the last six years," Tucker said in a presentation before the rules committee. "

"We have $2 billion in savings," he continued. "I think the facts speak for themselves that creating an environment that is good for business, good for jobs, and good for North Carolina. It puts us in great shape."

Tucker argued that capping the income tax will not constrain the state's ability to raise revenues if necessary, as opponents of the measure say.

"You do have the flexibility, again, to raise the standard reduction on families. You can raise the taxes on alcohol and tobacco which, in some studies, say really impact the poor and the middle-income folks. You know, there's all kinds of ways you could raise revenue if you need to," Tucker said.

As they considered the proposal, committee members asked what impacts various tax increases could have on state revenue.

Fiscal Research Division staff said a quarter-percent increase on the personal income tax, which is scheduled to be cut to 5.25 percent in the next fiscal year, would raise about $575 million.

A one percent increase in the sales tax would generate $1.6 billion and a one percent increase in the corporate tax would generate $240 million.

Democrats on the committee argued that a cap on the income tax would be better dealt with in a statute, which could more easily be adjusted than a constitutional amendment.

Opponents of the proposed amendment said it could hurt North Carolina's triple-A bond rating and impede the state's ability to raise funds for critical needs.

"I would ask you to really think about the effects something like this can have long term," said Ardis Watkins, Director of Governmental Relations with the State Employees Association of North Carolina, as she addressed the committee hearing.

Watkins cited staff shortages and recent violent incidents in state prisons in urging the committee members to vote against the proposed amendment.

"It can leave a lot of long-lasting hurt. So we're asking you not to do this, we think y'all are plenty disciplined," she said.

The proposed amendment would need the support of three-fifths of all members in both chambers to make it onto the fall ballot, where voters would have the final say.