SB 622 2005 Appropriations Act
Now in its Seventh Edition
The Governor, the Senate and the House have each come up with their proposals for our state budget. The Senate budget is $56 Million larger than Easley’s; the House version is $3 Million more than the Senate and over $1 Billion larger than last year’s budget. Spending just keeps going up, where will it end?
We evaluated the tax package and broke it down into the following categories:
I. Shell Game Taxes
II. Broken Promises Taxes
III. Smoking for the Children Taxes
IV. Candy Taxes for Play Money
IV. Fees are not Taxes, aka We’ve got ocean view property in Wilkes County Taxes
I. Shell Game Taxes:
Conform or Not to Conform; therein lies the confusion
Death Tax Increase: $30.6 Million
Although the line item in both budgets reads “Conform Estate Tax to Federal Sunset”, leadership has chosen not to comply with federal law phasing out the estate tax. This results in an additional tax of over $30 Million this year and $121 Million next year that families will be paying on estates they inherit, including family farms and family small businesses. The North Carolina death tax was repealed in 1998. By choosing not to comply with federal law, the leadership re-imposes a death tax in North Carolina.
Streamlined Sales Tax Change Is a Tax Increase
Senate: $72.2 Million
House: $61.7 Million
Streamlined Sales Tax Change is a catch phrase for higher taxes. Budget writers say it’s an effort to conform tax laws so there is consistency in how goods and services are taxed across state lines. This effort has been under way for several years without any real conformity or agreement among the states that have agreed to do this. Under the streamlined tax changes, conformity means raising taxes.
School Construction Funding Cut
Senate: Corporate Tax Cut a Hoax
House: Raids Public School Capital Fund
Since the mid 1980’s part of the corporate income tax has been designated for school construction. Through a very confusing twist in this year’s budget that funding source has been eliminated. The Senate proposed a corporate tax cut for the exact amount that had gone into the Public School Capital Fund. They want to replace that money with funds from a lottery but only for one year. The House designated the school construction part of the corporate income tax to go straight into the State Public School Fund to “support public school operations,” leaving the Capital Fund $13 Million in the hole. The leadership claims we need to reduce the number of children per classroom, making more classrooms necessary. At the same time they have cut funding for school construction.
II. Broken Promise Tax Package:
Scheduled date to expire: July 1, 2005
Sales Tax Increase
Both Senate and House: $413.4 Million + $20 Million
The ½ cent sales tax will finally expire this year after several extensions, each time with a promise the extra tax was temporary to get the state through lean times. If left alone, a tax savings of $413 Million would be realized this year and $458 Million next year. Instead, the tax increase will become permanent and will cost extra every time citizens are at the checkout counter. Liberals are wrong when they say voting to extend a temporary tax increase is not a tax increase. In a recent statewide Civitas poll, 75% of respondents said that extending a temporary tax is a tax increase.
In addition, some things should just be off limits when the taxman comes calling. If the leadership has its way, we’ll soon be paying over $20 Million more for warranty agreements on computers and appliances, maintenance and repair agreements on things like cars and lawn mowers, to watch TV on cable or satellite, movie tickets, liquor, candy and even caskets.
Scheduled date to expire: January 1, 2006
Senate: Income Tax Increase of $20 Million House: Income Tax Increase of $ 40 Million
The temporary 8.25% personal income tax rate expires January 1, 2006, when it becomes 7.75%. The Senate increased the income tax from 7.5% to 8% in 2006 and then back to 7.75% in 2007, while lowering the qualifying income range, essentially raising taxes on the middle income families by moving them to a higher bracket. The Senate is telling voters it is cutting the income tax, but in reality, it is raising the tax on middle income earners by $20 Million. The House increased the income tax rate from 7.75% to 8.25% through January 1, 2006.
III. Smoking for the Children Taxes:
Senate: Cigarette Tax Increase of $201.3 Million
House: Cigarette Tax Increase of $142 Million
The General Assembly has told North Carolinians taxes on cigarettes must be raised in order to stop children from smoking. Under Article 39 in the North Carolina General Statutes entitled “Protection of Minors”, the law (NC Gen Stat 14-313) clearly prohibits the sale or use of tobacco products by anyone under 18 years of age. We already have a law in place to keep children from smoking. Why don’t we enforce the law instead of raising taxes? Surely the leadership wouldn’t use the health of our children as a scare tactic to raise taxes.
IV. Candy Taxes for Play Money
Senate and House: $11 Million
Leadership Slush Fund: $10 Million each
You may hear snickers about a new tax on candy. We don’t think that’s good humor. The estimated revenue from this tax is $11 Million, not exactly peanut brittle. For years, money has been set aside for a slush fund controlled by the leaders of the General Assembly. This provides $10 Million each for the Speaker, the Speaker Pro Tem and the President Pro Tem each biennium to give out to their friends and to help them make new friends. We’ve been hearing a lot about budget shortfalls and not enough money being available to fund all of the state’s needs. Perhaps the budget shortfall is all about priorities. It looks like they’ve solved this part of the budget crisis…like taking candy from a baby.
V. Fees Are Not Taxes aka We’ve Got Ocean View Property in Wilkes County Taxes
Senate: Fees = Tax Increases of $162.7 Million House: Fees = Tax Increases of $173.7 Million
Fees are another hidden tax. Budget writers don’t call them taxes, but they are monies that have to be paid to get services from state government. Don’t let them fool you. These are tax increases:
- Birth Certificates ($14.00) (and when a person dies, a new sales tax on caskets)
- Driver’s operator licenses (Class C – regular license, up 31%)
- Copies of Driver’s reports (up 60%)
- Restoration fee after license revocation (up 100%)
- Commercial operators license (up 50%)
- Truck licenses (up 26-38%)
- International Registration plan for interstate commerce trucks (up 26-38%)
- Automobile Title (increased from $35 to $40)
- Automobile registration (from $10 to $15)
- Regulatory fee for public utilities
- Annual registration fees for commercial feed, (from $3 -5)
- Inspection fee on seed
- Agronomic services like routine nematode samples ($3.00), waste samples ($5.00), Research soil and nematode samples ($12.00), Research plant, waste, and solution samples ($12.00) and others.
- Animal disease diagnostic tests and services
- Public weigh masters fee (from $12.00 to $19.00)
- Fees for weights that don’t meet American Society for Testing and Materials (ASTM) Standard
- Operator of a mine: $1,230 annual inspection and investigation fee
- Judicial fees totaling $142 Million this year and $148 Million next year including a $10.00 increase in court costs in criminal court, civil court and special proceedings, and estates.
- The Attorney General is setting up a Police Information Network and plans to charge state agencies a fee to use it.
- The House plan doubles the fee for a Coastal Area development permit
According to a recent statewide poll, 84% of respondents said that the single most important cause of the budget problems in North Carolina is due to high government spending. We are clearly headed down the wrong path. We need effective leadership seeking solid and efficient solutions, not broken promises, not shell games, and not word games disguising tax increases when it comes to running our state. This out of control spending has got to stop.
Tax Increases 2005-2006
$916.9 Million from Senate
$886 Million from House
Tax Cuts 2005-2006 Zero$
Over $1 Billion Spending Increase
2004-2005 $15.91 Billion Budget
2005-2006 Senate Budget: $16.95 Billion
2005-2006 House Budget: $17.25 Billion
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