Under the Dome

‘Alliance’ of local governments, businesses blasts sales tax change

Emily Atkinson of the Greater Raleigh Chamber of Commerce speaks during a House budget hearing last month. Her group has joined the “Alliance For A Prosperous North Carolina” to oppose a proposed change in how sales tax revenues are distributed.
Emily Atkinson of the Greater Raleigh Chamber of Commerce speaks during a House budget hearing last month. Her group has joined the “Alliance For A Prosperous North Carolina” to oppose a proposed change in how sales tax revenues are distributed. cseward@newsobserver.com

A group representing dozens of counties, municipalities and businesses has formed to oppose a controversial change in how sales tax revenues are distributed among counties.

The “Alliance For A Prosperous North Carolina” sent a two-page letter to legislators blasting the plan. Favored by Senate Republican leaders, the change would shift from a point-of-sale revenue allocation to a population-based system, which would help rural counties but result in less money for some urban and tourism counties.

The proposal passed the Senate Monday night as part of a larger economic development bill; a final vote is set for Tuesday afternoon before the proposal heads to the House.

Members of the group represent communities of various sizes spread across the state, from the Blowing Rock Chamber of Commerce in the mountains to the Town of Nags Head on the Outer Banks. On the list from the Triangle: the Wake County Board of Commissioners, the City of Durham, Durham County, the Greater Raleigh Chamber of Commerce, the Greater Durham Chamber of Commerce, the Town of Chapel Hill, and Raleigh bow tie retailer High Cotton.

“We share a common concern,” the letter says. “We have concerns about how proposals to change the distribution of sales tax revenues will harm our communities and our state.”

Most of the counties represented by the group would lose revenue or see sales tax receipts stagnate under the plan. The roughly 80 counties projected to gain revenue aren’t part of the group.

“We are concerned because a change in the formula could negatively affect the attraction of economic development prospects due to already higher-than-average costs of housing in many of the affected counties,” the letter says. “Having to increase property taxes to compensate for the shifting sales taxes will place us at a further disadvantage, harming the jobs market for entire regions.”

Proponents of the sales tax distribution plan offered a new argument this week: They say the change would rob Attorney General Roy Cooper of the ability to make the state’s urban-rural divide into a gubernatorial campaign theme.

Bob Harris of the Carolina Partnership for Reform – a conservative advocacy group with ties to Senate Republicans – said Cooper might try a “One North Carolina” campaign similar to former Democratic Gov. Mike Easley. Harris said the sales tax changes could keep Cooper from gaining momentum in suburban and rural counties that would benefit from the Republican-led plan.

“Just looking at the politics, the Senate’s compromise plan might be the last chance to stop Roy Cooper and the Democrats before they sweep to victory next year under the Easley ‘One North Carolina’ strategy,” Harris wrote.

The problem with using sales tax distribution in a campaign for governor? Gov. Pat McCrory strongly opposes the change and has vowed to veto it.

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