Opinion

LIGHTNING EDITORIAL: GOP raises city dwellers' taxes

By Bill Moss, Published: June 17, 2014

When they were in the minority, back bench Republicans used to howl at interference from Raleigh.

Now the starting lineup has taken the "Dillon rule" prerogatives and raised them to a stunning heights. Elected city leaders have less power than ever, and the Legislature is forcing higher taxes by city dwellers.
Annexation? Out. Fees? No can do. Eminent domain for certain kinds of urban redevelopment? Unconstitutional. (In a bill sponsored by state Rep. Chuck McGrady). A business tax based on gross receipts? God forbid!
The home rule caucus of the Republican conference has had a radical change of allegiance. Now they think centralized power in Raleigh is just fine. Their lockdown anti-tax pledge is ringing a little hollow, too.
The city of Hendersonville, like many cities in North Carolina, stands to lose $300,000 in tax revenue on July 1, 2015, unless the General Assembly makes changes. State Sen. Tom Apodaca says the Legislature's action to delay the repeal of the privilege tax by one year actually saved cities from a worse fate. Legislators say they will work with the League of Municipalities on a compromise that could lessen the financial blow.
We'll see. There is more reason to believe that relief for big business will trump relief for cities when negotiators sit down to bargain, if they bargain at all.
The criticism from business has been that the privilege tax based on gross receipts is simply too costly for large retailers, especially supermarkets, which have high overall sales but very thin margins. The tax is a progressive one, a small bite for a small business. In Hendersonville, businesses that generate less than $250,000 in sales pay just $35 and businesses that make up to $500,000 pay $70. A business with $1 million in sales would pay $370.
The privilege tax is one of the only revenue sources available to North Carolina cities to offset property taxes. If nothing changes, the city of Hendersonville will collect roughly $300,000 less in the 2015-16 budget year, a loss equal to 2 cents on the property tax rate. And where will the City Council go for the money — after raising taxes by 3 cents this year? To the property taxpayer. It's the only place to go.
The Republican leaders can call the privilege tax repeal a tax cut if they want. Their claim does have the benefit of being true — for businesses, and especially large businesses. What they won't tell you is that the repeal will result in a tax shift from business to homeowners.
Don't look now. While they're patting themselves in the back for cutting taxes, the legislators are forcing city councils across North Carolina to reach in the pockets of the middle class to balance the budget.