Rejecting a push from Gov. Pat McCrory and Speaker Thom Tillis, the Republican-majority House voted Tuesday to kill a two-part bill that would have expanded job incentives for some companies while restricting Wake County’s authority to raise local sales taxes.
Twenty-eight Republicans joined a majority of Democrats to defeat House Bill 1224 by 54 to 47. The vote also appeared to end prospects for a separate measure, linked by Senate leaders, that would have given local school boards more flexibility in spending state dollars to pay teacher assistants.
The vote served as a rebuke of the state’s GOP leaders and provided the latest glimpse into a deepening chasm splitting Republican lawmakers in Raleigh – one that colored the entire legislative session in just the second year the party controlled the entire lawmaking process.
It cast a particular glare on Tillis, who is trying to demonstrate his leadership ability as he makes a bid for the U.S. Senate against Democratic incumbent Kay Hagan.
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“The divide over HB 1224 reflects a larger divide within the Republican caucus over policy and leadership,” said David McLennan, a political science expert at Meredith College. “The pragmatists are interested in jobs and the ideologues are interested in keeping spending low and focused on fundamental services.”
In the one-hour debate, a bipartisan coalition of lawmakers protested the Senate’s move to link the economic incentives bill to the teaching assistant measure, saying the House should not yield to “extortion.”
The critics said the measure would give the McCrory administration too much discretion in how it would spend up to $20 million in up-front cash incentives, or “walking-around money,” to lure new jobs or keep existing jobs from leaving the state.
Republicans lawmakers said they had opposed such incentives in the past, when Democrats controlled state government.
“I used to think, if only the Republicans were in charge, they would quit doing this,” said Rep. Michael Speciale, a first-term Republican from New Bern. “This is the very thing we argued year after year about (former Gov. Mike) Easley, about (former Gov. Bev) Perdue having this fund.”
Rep. Paul Stam of Apex, the No. 2 House Republican, attacked a provision that would spend $12 million to help the owners of the Evergreen paper mill in Haywood County, a major mountain employer, comply with new EPA emissions rules.
“I feel sorry for Evergreen that EPA has harassed them with this new rule change,” Stam said. “But they’re not going anywhere. This is not saving jobs, because those jobs are not going anywhere.”
Rep. David R. Lewis, a Dunn Republican, championed provisions that would expand options for most rural counties to raise new local sales taxes – while adding restrictions to Wake County’s sales tax authority. As he has in other debates on the bill, Lewis argued that rural counties have been unfairly denied some of the opportunities enjoyed by urban counties.
“This bill treats all counties the same,” Lewis said. “Every county will have more flexibility, more opportunities, to meet the obligations that they have.”
The Senate-approved measure would have let Wake keep its current authority to increase the local sales tax from the current 2 percent to a total 2.75 percent – but only if county commissioners and voters exercised part of that option before the end of 2014, by levying a one-quarter-cent sales tax for education. Wake leaders have said they are not ready to do that this year. Wake also retains its authority to levy a half-cent tax for bus and rail transit investments.
In a complex arrangement between House and Senate leaders, Tillis promised Tuesday that the economic incentives and sales tax bill would not become law unless both chambers also passed two separate bills that would change some of its provisions. One of them, House Bill 189, would extend Wake County’s deadline for levying the quarter-cent tax for an extra two years, until the end of 2016.
That was still unacceptable, said Rep. Nelson Dollar, a Cary Republican.
“This would put Wake County in the position, if they want to do something about transit over the next two years, to either have to vote for a three-quarter-cent increase in sales tax in 2016, or do a quarter-cent in 2016 and not be able to address transit until 2018,” Dollar said. “That is just not fair to the now 1 million citizens who live in Wake County.”
Wake’s Democrats voted against the bill, along with Republicans Stam and Dollar. Republican Rep. Tom Murry of Morrisville attended the session earlier in the day but was listed as an excused absence for the vote. Voting for House Bill 1224 were Wake Republican Reps. Marilyn Avila of Raleigh and Chris Malone of Wake Forest.
House leaders could resurrect the legislation again Wednesday and get a different result if some of the 18 absent members return. But it’s unclear whether supporters would push for another vote.
The legislation delayed adjournment of the prolonged legislation – once expected to adjourn at the end of June – until this week. Tillis said the House would adjourn for good Thursday, though the Senate wants to return in November to consider an overhaul of Medicaid and other lingering issues.
The ordeal and disorder in the GOP caucus has put Tillis in a tough spot as he campaigns for higher office.
“He is one of the most criticized speakers in modern times and, because of redistricting, does not hold the same degree of power over caucus members through controlling huge amounts of campaign money that people need for reelection,” McLennan said.
Dee Stewart, a Republican strategist, dismissed any suggestion that it reflects badly on Tillis.
“The Republican Party is a large enough party to have leaders who share core conservative principles but may not share the same approach on public policy,” Stewart said.