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Tues: Deal or no deal?
posted at 2009-07-21 22:39 | Last modified 2009-07-21 22:39
House and Senate Finance chairs swear they’re <--this--> close to a deal on a $990M tax package. They say they’ve agreed to the general structure. But as always, the devil’s in the details.
House Finance co-chair Paul Luebke is calling the deal the “Third Way,” a semi-mystical title that earned him a ribbing today from statehouse reporters. He took the ribbing good-naturedly, but as he explains it, it’s actually pretty pedestrian:
"The Senate had a set of priorities, and we had a set of priorities. And really neither chamber has prevailed in terms of what’s a priority. So we’re mixing and matching, is I think the best way to put it."
The mix and match includes a sales tax increase of either ¾ or 1 cent, plus a 2 percent surcharge on state income tax bills for the next two years, and a yet-to-be-determined tobacco and alcohol “sin tax” package. It does NOT expand the sales tax base to services like car repairs and entertainment (though digital downloads are still on the hook). It doesn’t include combined reporting, and it doesn’t go after corporate loopholes with the gusto the House and Senate had both professed.
House and Senate Dems will caucus Wednesday to talk though the sales tax and sin tax issues. If they can reach agreement, Finance could have a package to send Approps by the end of the day. By all accounts, Approps can have the final details pinned down in a day or two, so the budget could be finished by the July 31st deadline.
"It’s electric!"
The ¾ vs 1 cent sales tax debate hinges on another tax question involving electricity. Under current law, your electric power bill is taxed at 3 percent – far lower than competing fuel sources like natural gas or propane. The tax package offers two options –if lawmakers are willing to raise the tax on electricity to 5.5%. they can get by with a ¾ cent sales tax increase. If not, then natural gas tax rates would be cut to 3% to compete with electric rates, and the sales tax increase would have to increase 1% to make up the difference.
This dichotomy has some House Dems up in arms. As they see it, the poorest citizens lose either way –through higher power bills or through a higher sales tax increase, both of which they consider regressive. There’s also some hostility over what they see as a manufactured dichotomy. It’s a fair criticism, I think. Tax rates on fuels have been uneven for years. So why, when the state’s facing its worst budget shortfall in decades, is this the right time for natural gas dealers to push for tax equity?
Twitterati
A fake Twitter account in the governor’s name – BevEavesPerdue – has been shut down after just two days of pithy postings like “It’s five o’clock somewhere.” Perdue spokesman David Kochman confirmed her office was in touch with Twitter earlier today to ask them to shut down the fake account, but says they didn’t ask about the twitterjacker’s identity.
So will the real Perdue be tweeting anytime soon? Kochman says the Gov will likely set up an account sometime in the near future, but “not immediately.”
Comings and goings
After a brief sojourn in the Treasurer’s office, former Asheville reporter Kerra Bolton is back in her old digs at the NC Democratic Party. When I asked her about the switch, she simply replied, “It’s good to be home.”
Top N&O business reporter Jonathan Cox is departing Team McClatchy for a new gig at self-publishing outfit Lulu. We’ll miss you, Jonathan – best of luck!
N&O photographer Ethan Hyman and Fay-O/TBJ alum Kim Nilsen welcomed their first child yesterday. With Ethan for a dad, little Eli’s bound to be in the running for most- (and best-) photographed child EVER. Congrats!
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