NC Lawmakers Propose Sales Tax Redistribution And Job Incentives

Aug 7, 2015

Credit Jorge Valencia

Leading state senators proposed a compromise plan Thursday that redistributes tax revenue and creates job incentives.

They say the measure simplifies the corporate income tax rate, and is similar to the model in neighboring states South Carolina, Virginia and Georgia.

The new plan seeks to set aside $60 million over the next three years for a job incentive program. It also aims to redistribute sales tax revenue. This bill would split revenues evenly between where people live with where a sale takes place.

This proposal would generate increased revenue for 82 counties and cut money from 18 counties, according to the non-partisan fiscal research department. Supporters say it helps rural areas and returns to a system that was in place for 25 years.

Opponents say the change will leave some urban areas facing a multi-million dollar hole next summer.  Rep. William Brawley (R-Mecklenburg) said his constituents in Mecklenburg County would suffer a $12 million loss next summer.

"They are negotiating this and I can understand that it is very attractive to a lot of people, but the sales tax redistribution has got to come out. We can’t compromise it at any level," he said.

The current sales tax distribution system tends to favor urban counties, and some House members have been reluctant to change it.

This is a scaled back version of a similar proposal senators rolled out earlier this year, though it's not clear if it is enough of a middle ground to please Representatives in the House.

"That is still a work in progress on this side of the building," said Speaker of the House Tim Moore. "We have not done a firm count to see where our members are."

Governor McCrory threatened to veto an earlier version of the Senate plan.  The proposal now heads to the Senate floor. These proposals came out of the proposed state budget in an effort to expedite fiscal negotiations. Both chambers continue are working on a state spending plan, now more than five weeks late. Lawmakers passed a continuing resolution in late June which extends the budget dealing until August 14th. Another continuing resolution is expected.