A last gasp, we hope, on sales tax grab

Editorial by Charlotte Observer, July 22, 2015.

Things must not be going too well for Sen. Harry Brown in private negotiations over what to do with North Carolina’s sales tax – which is good news for Mecklenburg County residents and millions of others.

The Republican from Onslow County has been leading Senate negotiators in closed-door talks with the House about a budget for the new fiscal year, which began three weeks ago. One of the key elements Brown wants: Taking hundreds of millions of dollars from North Carolina’s fastest-growing counties and giving it to poor, rural counties.

Brown took a break from those talks Tuesday to hold a press conference designed to drum up support for his plan. Surrounded by officials from rural counties, Brown, normally a conservative, made his case for redistribution of wealth.

The plan would take up to $200 million from Mecklenburg over the next four years and sprinkle it – along with many millions more from other large counties like Wake and Guilford – to poor counties around the state. Mecklenburg would have little choice other than to considerably raise property taxes to make up that money.

“We understand there are rural areas that are hurting and there needs to be a way to help them. But we don’t think taking fuel from the commercial engines of the state is the right way to do that,” Brian Francis, Mecklenburg County’s legislative lobbyist, told the Observer editorial board on Tuesday.

It’s not like Mecklenburg and other counties horde their sales tax collections now. Some $29 million a year of sales taxes generated in Mecklenburg are redistributed to other counties already.

Under the current formula, a quarter of local sales tax is distributed statewide and three-quarters is kept where it was generated. Under Brown’s plan, 80 percent would be taken for distribution statewide by October 2019, with just 20 percent staying at the point of sale.

It is ironic that the tax-cutters leading the N.C. Senate are pushing a plan that would lead to dramatic tax hikes on about half the state’s residents. Backers of the plan say the rural counties can’t continue to just raise property taxes. But a number of them actually have lower property tax rates than Mecklenburg. And the plan would drive Mecklenburg’s property tax rate even higher.

No one questions that North Carolina’s rural counties are struggling. But the best way to help them is to make infrastructure investments and devise economic development strategies that create jobs there, not to undercut the very counties that most drive North Carolina’s economic growth.

Thankfully, Gov. Pat McCrory and – more importantly – House members of both parties object to Brown’s plan. McCrory raised the specter of a veto Tuesday. Let’s hope that Brown’s last-minute stab at publicity doesn’t change their minds.