One of the most interesting debates of this General Assembly session is about the proposal by Senate Majority Leader Harry Brown to redistribute local sales tax revenue among counties by increasing the share allocated to rural areas and decreasing how much urban areas receive, even though most of the sales happen in the state’s metropolitan areas.
Brown says that there are now two North Carolinas, one rich and one poor, and that the General Assembly needs to do something to help the struggling counties and the people who live there.
Two North Carolinas is a phrase straight from Democratic politicians like former Gov. Mike Easley and former Sen. John Edwards, who talked about two Americas in his presidential campaign.
It’s prompted critics of the plan to call the arch conservative Sen. Brown everything from Robin Hood to a socialist, and it’s also the latest evidence of the well-documented war on cities in the General Assembly in recent years and the increasing divide between the interests of the rural and urban areas of the state.
But there’s another aspect to the issue and Brown’s insistence on diverting more revenue to struggling smaller counties that is more important.
It’s an explicit admission by a key conservative legislative leader that public investments play an important role in a healthy economy and the quality of life for North Carolinians.
That’s the government that Brown and other right-wing legislators routinely rail against, insisting instead that the best way to create jobs is to slash taxes and government spending to let people keep more of their hard-earned money.
Here’s what Brown said a news conference last week to release his sales tax redistribution plan.
“Reforming our state’s sales tax system will help ensure that all North Carolina counties benefit from tax dollars their own citizens pay so they have the local resources necessary to strengthen public education, attract new jobs and contribute to our state’s economy.”
Brown now believes that government investment helps the schools, creates jobs and helps the overall economy of North Carolina.
He also apparently believes that many local governments across the state are not spending enough and wants them to have additional tax dollars to invest.
Brown and the senators who support his plan are not saying that local governments in rural areas need the additional revenue to lower their taxes. They are saying that rural counties need the tax money to improve their communities.
That’s quite a noticeable shift in philosophy, claiming that public investments are important and that schools in many areas are underfunded.
And while it is nice that Brown is finally coming to grips
with the fact that government plays an important role in North Carolina’s economy, it’s not like he’s seen the light completely.
The Senate leadership recently rolled out an economic development plan that included another round of unwise cuts in the corporate income tax and a huge tax break for out-of-state corporations that, combined, could cost the state hundreds of millions of dollars a year.
And that’s on top of the tax shift of 2013 that gave huge windfalls to big companies and wealthy individuals at a cost that’s grown to more than $700 million this year, forcing more cuts to human services and the schools that Brown thinks are underfunded.
Gov. Pat McCrory said the Senate’s latest plan for more corporate tax cuts would break the bank. He’s right, but the bank is already cracked thanks to the 2013 tax changes that McCrory initially pledged would be revenue neutral.
Lawmakers also ended the business privilege license tax, which will cost cities more than $60 million, hurting urban centers and the small towns Brown is worried about.
Legislative leaders and McCrory promised to come up with a plan to replace that lost revenue, but no proposals have been introduced, and nobody at the General Assembly seems too concerned about it.
Now their priority, at least among Senate leaders, is to reallocate sales tax proceeds to help rural counties because, as they now situationally believe, tax revenue and public investments make a difference.
It’s a maddeningly inconsistent view, but maybe it’s a start. Government isn’t always the enemy. Just ask Sen. Brown.
Chris Fitzsimon is executive director of N.C. Policy Watch, from which this is reprinted.