NC House committee spurns Senate bill that would curb urban sales tax authority

07/30/2014 11:33 AM

07/30/2014 11:35 AM

Following a unanimous rejection Wednesday in the House Finance Committee, the full House is expected Thursday to appoint a conference committee to seek changes in a Senate-passed bill that would reduce the authority of Wake and three other urban counties to raise the local sales tax.

The Senate version of House Bill 1224 would change the options all counties have for levying new local sales taxes, and it would set the tax rate limit at 2.5 percent. Most rural counties would get broader flexibility to levy sales taxes.

But the bill would reduce the authority for local sales taxes in Wake and three other urban counties, now set at 2.75 percent, and it would constrain tax options being planned or discussed in Mecklenburg and Wake.

There was talk among Republican House leaders this week of an amendment that would either remove the 2.5 percent ceiling for the urban counties or give these counties a few years to raise their rates as high as 2.75 percent - as Orange and Durham counties have done in the past three years.

"We would take that part out and grandfather Wake and Mecklenburg counties," said Rep. Paul Stam, a Wake County Republican.

Wake collects a 2 percent local sales tax now. Wake County commissioners have discussed the possibility of asking voters to approve a one-quarter percent sales tax to boost teacher salaries this year, and a one-half percent tax for major investments in bus and rail transit service next year. Mecklenburg collects a 2.5 percent tax and has plans for a referendum this fall on an additional quarter-cent tax.

Most of the committee debate on House Bill 1224 Wednesday focused on unrelated provisions to expand economic development options, primarily for rural counties.

The Greater Raleigh Chamber of Commerce is lobbying legislators to protect Wake County's option to levy a half-cent sales tax for transit and another quarter-cent for other needs. The Wake County commmissioners have not taken a position on the legislation.

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