Wake County

August 1, 2014

Bill bans 2015 Wake tax vote; NC Senate pushes to limit local elections and sales taxes

Gov. Pat McCrory will decide whether to sign a law passed early Friday that would bar Wake County from considering a transit sales tax referendum in 2015. House leaders were cool to a separate Senate measure that would constrain Wake and other urban county sales tax rates.

Some Wake County commissioners are vexed by a bill that cleared the General Assembly Friday, and a second one still under review in the House, that would place new limits on local decisions to hold elections and raise taxes.

The Senate concurred with the House early Friday on statewide election law changes that would let counties schedule special elections – such as a referendum on a bond issue or tax increase – only in even-numbered years or during regular countywide elections.

In Wake, where regular county elections are held only in even-numbered years, the new law would kill prospects for a half-cent sales tax vote being considered for November 2015. It also would have outlawed Wake’s most recent bond vote in the fall of 2013, which coincided with several town and city elections.

While Gov. Pat McCrory decides whether to sign the elections bill, House leaders are considering limits on local sales taxes that were approved by the Senate in a separate bill early Friday. An earlier version of the measure would have set the limit on local sales tax rates at 2.5 percent – offering new tax options for most rural counties, but a step down from the current limit of 2.75 percent in Wake and five other urban counties.

The Senate sought to soften the impact by adding a use-it-or-lose-it provision. The urban counties would keep their authority to raise local sales tax rates to 2.75 percent – but only if they exercise part of that power quickly, acting before the last day of 2014 to levy 0.25 percent of that taxing authority.

The Senate approved the sales tax measure 32-11 in the early morning hours Friday, but in the light of day, the House showed no willingness to consider it. By an overwhelming 102-8 vote, the House removed it from the calendar and parked it in the House Rules Committee, often a place where bills go to die.

The committee will meet Saturday morning before a 10 a.m. session of the House. But Rules Chairman Tim Moore said Friday that the measure was not on the calendar for consideration.

Wake vote scheduled Monday

The Senate’s decision to allow quarter-cent sales tax votes this year offered relief for Mecklenburg and Guilford counties, which faced having to cancel quarter-cent tax referendums already scheduled for November to raise money for teacher salaries.

But not for Wake County, where there has been only fleeting discussion about a similar tax hike for teachers. County leaders have agreed that it will soon be too late in the year to consider a November sales-tax referendum. Still, Wake commissioners are scheduled to vote on it at their meeting Monday.

Some Wake commissioners are worried that the Senate action would pressure them to make a hasty decision.

“It’s not normally done in a day or two,” said commissioner Joe Bryan, a Knightdale Republican. “You’d have to say, ‘OK, we’re going to make a decision to have a referendum,’ when it clearly hasn’t been vetted that much by the public.”

Commissioner James West, a Raleigh Democrat who favors the quarter-cent tax referendum, said he can count on support only from the board’s two other Democrats. If the Senate bill became law, “it would add a sense of urgency” to hold the quarter-cent tax referendum this fall, he said.

“Now it looks like we would have no choice but to move on it quickly, and hopefully we will get an additional vote or maybe two or three” at Monday’s meeting, West said.

Wake’s current sales tax rate is 2 percent, and the county could still raise it to 2.5 percent if it doesn’t exercise its option for the extra quarter cent.

A quarter-cent sales tax could generate an estimated $27 million a year to increase salaries for teachers and other Wake school employees. Commissioner Caroline Sullivan, also a Raleigh Democrat, said Wake will be at a competitive disadvantage if Mecklenburg and Guilford voters agree to levy the higher taxes and raise their teachers’ salaries.

“If they succeed, they’re going to be able to give their teachers substantially more support than we can,” Sullivan said.

Bryan said he had urged Wake County legislators to oppose the provisions in both bills that would constrain the commissioners’ authority on elections and taxes. But Phil Matthews, a Garner Republican and chairman of the Wake commissioners, said he was simply waiting to see what the legislature would decide.

“It’ll be interesting to see how it all shakes out,” Matthews said. “What they do on Jones Street is what we’ll have to live with.”

‘Too fast’ for Wake

Sen. Dan Blue, a Raleigh Democrat, argued against the election and sales tax bills in Senate floor debates Thursday night and Friday morning. He said civic and political leaders in Wake County had agreed that the fall of 2013, when towns and cities held municipal elections, was the right time for Wake’s most recent bond vote.

“It was the consensus across the community that the most appropriate time to put the referendum on the ballot was as soon as possible,” Blue said in an interview. “They also thought they would get a better voter turnout at that time. This law would have prevented that kind of effort.

“It’s consistent with all this other crap they (Republican legislative leaders) have been heaping on Wake County,” Blue said. “It just seems to be some inbred resentment toward things that have proven to be successful in this county.”

Rep. Marilyn Avila, a Raleigh Republican, objected to the Senate’s last-minute requirement for a November referendum.

“It's too fast in regards to what it wanted to do in Wake County,” Avila said. “We don't have enough time to explain to people what it is. But secondly, they didn't have enough time to explain it to us.

“It came from the Senate, and those significant types of tax policies or policy changes have to be vetted by both chambers. It just makes good legislative sense, so we truly understand what we are doing.”

Sen. Bob Rucho, a Matthews Republican who helped push the elections and sales tax bills through the Senate, said it was wrong to say the legislation would put restrictions on local government.

“That’s not a restriction,” Rucho said of the even-year elections rule. “You’re talking about having the elections at times when people come to vote. That’s a good plan.”

It’s wrong to hold a countywide referendum when some towns or unincorporated areas are not voting on elected officials, he said.

Rucho said the Senate had improved options for the urban counties when it added the provision Friday allowing commissioners in Guilford and Mecklenburg – and in Wake, if they choose to go along – to schedule quarter-cent tax votes this fall.

“Actually, we allowed them the opportunity,” Rucho said. “It is a fact that they have access now to the one-quarter point they said they wanted. Otherwise, the bill had said they would not have it at all.”

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