NC Gov. Josh Stein warns of ‘awful’ budget cuts, questions data center tax break
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- Gov. Josh Stein urged freezing planned individual income tax cuts in new budget.
- Stein warns if General Assembly doesn’t adjust tax cut triggers, painful cuts possible
- Stein said data centers could receive about $450 million a year in sales tax exemptions
If you haven’t filed your taxes yet, it’s time to get busy. Tax Day is April 15.
Good morning and welcome to the Under the Dome newsletter focusing on the governor. I’m Capitol bureau chief Dawn Vaughan. Happy Halifax Resolves Day, celebrating the moment when, on April 12, 1776, North Carolina declared months before the Declaration of Independence that it wanted its independence from Great Britain, which of course included paying taxes to the crown.
More on the Halifax Resolves in a moment.
Let’s talk more about taxes.
Democratic Gov. Josh Stein and Republican leaders are generally at odds over tax cuts. Simply put, Senate Republicans want to keep planned individual income tax cuts, House Republicans want to slow those cuts unless there’s enough revenue, and Stein wants tax cuts to just freeze.
Stein told his fellow elected officials on the Council of State that “painful cuts” may be ahead if the General Assembly doesn’t adjust the levels of state revenue that trigger tax cuts. These triggers have been at the center of the budget stalemate.
“Things are going very well in the state, but if we don’t have a fiscally responsible budget, we’re all going to have to make exceedingly painful cuts to the work that we do as a state,” Stein said.
Stein was in the Senate in 2009 when lawmakers had to cut 20-25% of the state budget, Stein said.
“It was awful,” he said. “We either had to cut it or raise taxes to do that.”
Stein told The News & Observer he plans to make another budget proposal to lawmakers as they come back to Raleigh for the short session that begins April 21.
Beyond income tax rates, both Stein and state lawmakers are looking at other policy that impacts revenue: tax exemptions.
Stein questioned the tax breaks data centers receive, saying that, “If all planned data centers in North Carolina are built, developers would receive an estimated $450 million in sales tax exemptions each and every year. And with the state’s impending fiscal cliff and the federal government retreating on longstanding commitments, state revenue is especially precious.”
He went on to say that “we should spend taxpayer dollars only when it adds value to our people. And do we really want to subsidize energy consumption by data centers when they are making everyone else’s power bills go up? It doesn’t make much sense to me.”
Beyond scrutinizing sales tax exemptions, lawmakers are taking a very close look at property tax exemptions. The House Select Committee on Property Tax Reduction and Reform will meet again this week — on Tax Day. Representatives have been considering whether to reduce some exemptions, including for affordable housing and hospitals.
Lawmakers on that committee plan to vote on moving proposed legislation ahead that would let voters decide if there should be a cap on property tax rates, which are set by local governments. Over on the Senate side, leader Phil Berger appointed some senators to look at the issue, but there is no committee or action yet.
Stein will be at Halifax ceremony, inducted into Sons of American Revolution
Stein will be inducted into the Raleigh chapter of the Sons of the American Revolution today in Halifax. A member of the local chapter made the announcement during a legislative committee meeting this week about celebrating America’s 250th birthday.
The Council of State’s monthly meeting was held at the visitor center at the historic Halifax site, and statewide elected officials had a chance to see the actual, original 1776 Halifax Resolves up close. I wrote about why it’s here and what else is being planned to celebrate America250 this year in North Carolina, including a Fourth of July Parade in Raleigh.
Sunday, when Stein returns to Halifax, is the last of three Halifax Resolves Days, which includes living history demonstrations, music, tours and the resolves on display.
- North Carolina’s Halifax Resolves will be back home for America250 celebration
- ‘Huge celebration’ in NC for Fourth of July with Raleigh parade, America250 events
And for our new Under the Dome podcast episode posting Tuesday, you can hear more about the Halifax Resolves, passed on the date commemorated on our state flag and state seal.
Thanks for reading. Reach me at dvaughan@newsobserver.com or the entire politics team at dome@newsobserver.com.
