Town officials are worried that state lawmakers will continue changing the tax codes in the upcoming legislative sesssion and leave them with millions of dollars less to work with.
The Republican-controlled General Assembly passed a law this year that eliminates the privilege tax next summer, which will cost Cary about $1.5 million. Municipalities across North Carolina are lobbying legislators to open new revenue streams to make up for a total of about $60 million in privilege tax losses.
Meanwhile, recent comments made by an influential Republican lawmaker give Cary leaders a reason to believe the legislative session will bring more losses, said Jack Cozort, a lobbyist for the town, at a recent meeting.
Sen. Bob Rucho, a Mecklenburg County Republican and co-chair of the Senate Finance Committee, said in mid-November that lawmakers may change the way the state distributes sales tax revenues. The state currently distributes some of the revenues back to the municipalities where they originated, and some based on the population of each county. Lawmakers are considering distributing all of the revenues based on population in order to benefit the smaller, poorer municipalities across the state.
No bill has been put forth because the legislative session hasn’t started yet, so it’s hard to calculate the effects of Rucho’s idea for redistributing sales tax revenues.
But Cary could lose $4.5 million if lawmakers passed such a bill, said Karl Knapp, Cary’s budget director.
“They’re creating a rural, urban divide,” Cozort said.
After Cozort finished speaking at the Nov. 18 meeting, Cary council members joked that they would need all the help they can get from Councilwoman Gale Adcock. She was recently elected to the state House of Representatives to represent District 41.
“It’s all very concerning,” Mayor Harold Weinbrecht said.
He pointed out that the loss of privilege tax revenues are equal to a penny on the town’s property tax rate.
“Hopefully, the legislature will make the municipalities whole. Otherwise, it will really harm communities all across the state.”
Weinbrecht said he heard from other mayors that state lawmakers may also shift the responsibility of state roads to local municipalities.
“The (cost) of maintenance alone would be tremendous,” he said. “I can’t imagine how other towns would be able to handle it.”
Councilman Jack Smith said he’s “really frightened” for Cary regarding potential legislation that would hur local governments.
“I think it’s gonna come fast ... and we’re gonna get hammered,” Smith said.
The Cary Town Council at its Nov. 18 work session also assembled a list of legislative priorities that they hope the N.C. League of Municipalities will lobby for in the upcoming legislative session.
Council members hope to keep their authority to govern the aesthetics of residential development. Officials have been worried about losing control of regulating residential development since 2013 when state lawmakers introduced House Bill 150. The bill would prohibit municipalities from withholding building permits based on a builder’s design elements, such as his building materials or garage size.
Council members also want to seek legislation that would allow municipalities to collect fees from developers in order to pay for growth-related infrastructure and services.
Cary used to charge what was known as “impact fees” and set the funds aside for school construction. But the N.C. Supreme Court ruled in 2011 that Cary didn’t have the legal authority to require developers to pay such fees after developers sued the town.
Cary council members are concerned that residential growth is outpacing school and road construction in west Cary, so they’re looking for new ways to fund infrastructure improvements. Mills Park Middle School, for instance, is 272 students over capacity, and the county school system doesn’t plan to open a middle school in the area until 2018.
The council’s ambitions to find new ways to fund infrastructure extends to transportation as well. Council members want their lobbyists to seek legislation that would generate additional revenues to “address growing transportation needs,” according to their list of priorities.