A state Senate committee passed a bill Wednesday that would prevent counties from raising sales taxes to pay for both public education and public transportation.
A revised version of House Bill 1224 backed by the Senate Finance Committee says that counties can raise sales taxes specifically for transit or for education, but not for both. The bill, which goes to the full Senate on Thursday, would also cap the local sales tax rate at 2.5 cents.
The bill comes as the Wake County Board of Commissioners will vote Aug. 4 on putting a referendum on the November ballot asking voters’ permission to raises sales taxes by a quarter-cent to increase funding for education.
“This means that if Wake were to pass an education sales tax, as is being considered right now, it would eliminate the possibility of a transit sales tax,” Karen Rindge, executive director of WakeUP Wake County, wrote in a message Wednesday urging her members to lobby lawmakers to oppose the bill.
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“If this bill passes, it could very easily cripple Wake County’s plans for transit and prevent us from being able to ever raise local funding to support a comprehensive transit system.”
The legislation’s supporters defended the bill, particularly the limit it would set on how much counties can raise taxes in addition to the state’s 4.75-cent sales tax rate.
The bill would also force Wake, whose local sales tax rate is 2 cents, to change the proposed November referendum to a half-cent tax increase. The bill says counties that hold referendums to raise sales taxes for education or transit must bring their local tax rate to 2.5 cents.
“This is all about trying to make the tax system simple and consistent,” said Sen. Bob Rucho, co-chairman of the Finance Committee and a Mecklenburg County Republican.
But Raleigh Mayor Nancy McFarlane tweeted Wednesday that the bill would be “devastating to a growing, thriving economy.”
John Burns, a Democratic candidate for the Wake County Board of Commissioners, said all elected politicians in the county should oppose the bill because it would take away the ability of voters to decide how to use their money.
Rucho said the idea for the cap came out of the Republican Senate caucus. “My job was to set it as a cap,” he said.
The bill allows Durham and Orange counties to continue charging a local sales tax rate of 2.75 cents. But the counties would fall under the cap of 2.5 cents if they repeal any of their local sales taxes.
The bill would prevent Mecklenburg County from proceeding with a Nov. 4 referendum to raise sales taxes by a quarter-cent, largely to raise teacher pay. The county is already at the maximum local sales tax rate of 2.5 cents.
Some Democratic commissioners in Wake have argued the county needs its own sales tax referendum to raise teacher pay to keep pace with Mecklenburg’s referendum.
Charlotte Observer reporters David Perlmutt and Jim Morrill contributed to this report.