Editorials

Lost privilege taxes are hurting Raleigh and other NC cities

As if to punish the cities of North Carolina just for being cities, Republican legislators last year banned cities from collecting “privilege taxes,” which were essentially operating fees on businesses. The fees varied depending upon the type and size of the business, and they were not prohibitive.

The greatest evidence of that is that Raleigh, for one example, continues to rank highly as a great place to do business. And more business is coming all the time. That’s why the Capital City is growing. That’s why the need for schools, housing, recreational venues and public transportation is growing as well.

But thanks to the Republicans’ obsession with ending the privilege tax, Raleigh is going to come up short on revenue, about $7 million a year. And that money, by the way, wasn’t going for frills. It helped with transportation and public safety and other services from which individuals and the businesses that paid the taxes reaped benefits.

So it was not surprising that Mayor Nancy McFarlane had to deliver the bad with the good in a State of the City speech Monday. Give her credit. She told it straight.

And straight is: Without that privilege tax money, Raleigh is going to have basically one of two choices: cut back on services, which people used to good service won’t like, or raise property taxes, which people use to lower property tax rates won’t like.

Selectively anti-tax

Once again, average citizens are paying the price for a Republican-led legislature that wants to cut all taxes, even the good and sensible ones ... not that there are any good ones according to the Republicans. Well, except for the little ones on good and services they slipped into the budget so they could cut income taxes on the wealthy and also on big business.

And some middle-class taxpayers are finding the cuts promised aren’t translating into much benefit for them as they pay their income taxes this year.

But back to the loss of those privilege taxes. The funny thing about that was that Gov. Pat McCrory, who seems next to invisible to his GOP mates in the General Assembly, said he and lawmakers would help cities find a replacement for the privilege tax money.

“We’re interested in figuring out how to make up that revenue and how to give you more options at the city and county level,” McCrory told a meeting of the North Carolina League of Municipalities last December. He said the Finance Committee chairmen in the House and Senate had agreed to provide such options.

Time running out

But they haven’t kept that promise, and McFarlane isn’t optimistic they will. This is where GOP tax-cutting rhetoric goes off the deep end. They cut a tax crucial to cities, then do a kind of “Oops” and say they’ll help make it up, when they could have just left it alone in the first place.

“We’re still hoping that the General Assembly will make good on their promise to find a way to fill the void left in our and other cities’ budgets, but time is running out. We don’t really see a solution coming,” McFarlane said Monday.

The mayor’s address, and this is a credit to her, was not just critical of the problems created by the governor and the General Assembly, nor was it a coming-up-roses review of the city’s accomplishments.

The mayor rightly, for example, said that while growth is good for the most part, it can make things harder on poor people and those of lower-middle-class incomes. Affordable housing is one of the mayor’s priorities, and she’s right. There are all sorts of expensive condos going up in town, but not much to help low-income people find good, sound housing in which to raise their families. The city council is going to have to address that with developers.

McFarlane’s had more hits than misses this year, with the Dorothea Dix property deal for a city park a highlight. But she’s right to want more: “As great as Raleigh is,” she said, “I believe in better.”

  Comments