Under the Dome

May 15, 2014

House tax bill marked by political gamesmanship

It didn’t take long for the political gamesmanship to hit full speed in Raleigh. The political theater was evident in the first House committee meeting this legislative session.

It didn’t take long for the political gamesmanship to hit full speed in Raleigh.

In the first House committee of the legislative session:

• A major tax measure was dubbed a largely “technical bill.”
• A Republican whip worked the room, counting votes.
• A Democrat left the room, missing the vote on a major amendment that failed in a tie.
• And a top state senator to left the meeting in a huff.

All this political theater in one meeting of the Finance Committee.

The panel gathered to hear House bill 1050, an omnibus tax measure that features three major provisions likely to generate controversy and appears a leadership priority. House GOP whip Mike Hager made the rounds during the meeting talking to key members.

In the end, an amended version passed along mostly partisan lines and now moves to the full House.

The bill originally was scheduled for a vote Monday, but the speaker’s office pulled back, leaving the timing indefinite. The House will meet at 4 p.m. Monday but won’t take any votes.

The main obstacle in the bill is a provision capping local privilege taxes on business at $100 – a move that would cost local governments across the state between $11.4 million and $24.6 million combined.

“It’s something that is definitely hurting economic development inside the cities,” said Rep. Julia Howard, the Republican committee chairwoman and bill sponsor.

Opponents pushed back, saying it could hurt local governments’ ability to provide services. “That’s a substantial hit in addition to loss of revenue based on economic downturn that the city has already felt,” said Rep. Susi Hamilton, a Wilmington Democrat.

But moments later, when an amendment addressing the e-cigarette tax in the bill came to a vote, Hamilton was nowhere to be found.

Rep. Becky Carney, a fellow Democrat, put forward an amendment to remove a section of the bill that imposes a modest tax on e-cigarettes or vapor products. She said the bill reclassifies them as a non-tobacco product, a move that could limit the ability to regulate them in the future. Carney from Charlotte wants e-cigarettes to be considered as a separate bill and opposes taking any action until the FDA finalizes its regulation of them.

Put to a vote, it met a rare tie – 14-14 – with some Republicans backing the Democratic amendment. Hamilton entered the room after the vote. She asked to vote in favor of the amendment, which would have stripped that section of the bill, but it was too late, the Republican committee leaders ruled.

The next amendment did pass by an overwhelming vote. It stripped from the bill a section that would modify how corporations located in multiple states are taxed, a measure pushed by top Senate Republicans. But the bill would cut state revenues by $91 million over four years at a time when lawmakers are trying to scrape together pennies for a teacher pay raise.

House Republican leader Edgar Starnes objected to the provision and pushed the amendment to remove it from the bill.

“I think it’s not prudent for us to take additional revenue off the table at this time,” he said. “This is not just a technical change. This is a major change in tax policy that deserves a bigger discussion than we have time for in this room today.”

Senate Finance Committee Co-Chairman Bob Rucho watched from the back. When the vote took place, he quickly gathered his papers and left the room visibly frustrated.

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