In a new “committee substitute” bill introduced by the Senate Finance Committee yesterday, the state would authorize local governments to raise their sales taxes by 1/2 cent to fund education (but create a cap on the local tax rate), and a new corporate welfare program would be created. A summary on the local sales tax provision from WRAL:
The legislation, unveiled as a Senate substitute in the Senate Finance Committee on Wednesday, would allow counties to raise sales taxes by a half-cent, rather than a quarter-cent, to pay for education funding. It would cap the local rate at a maximum of 2.5 percent, which, when added to the current state sales tax of 4.75 percent, would mean a maximum sales tax of 7.25 percent in any county.
Counties would still need to obtain voter approval for any increase.
However, the proposal require counties seeking an increase to raise their local rate all the way to 2.5 percent, disallowing counties currently at 2 percent from seeking a smaller quarter-cent increase. It would also require counties to use all new revenue generated by a hike for either education needs or transportation needs but not both.
Counties would not be allowed to have a quarter-cent sales tax for transportation and another quarter-cent for schools. If they have or institute a sales surtax for schools, they would have to repeal it or allow it to expire before going to voters for a new increase for transportation needs.
That change would most immediately affect Mecklenburg County, where commissioners are backing a quarter-cent sales tax increase on the ballot this fall. The money would mostly go to supplement teacher salaries. But the county would have to scuttle that plan, since it has already enacted a half-cent transit tax, bringing it to the cap of 2.5 percent.
It could also affect Wake County, where Democratic commissioners have proposed a quarter-cent sales tax increase to pay for teacher raises. The county Board of Commissioners is expected to vote Aug. 4 on whether to put the referendum on the ballot in November.
Also included in the bill is an expansion of the state’s corporate welfare efforts. It creates a new “Job Catalyst Fund” which, similar to other already existing funds, would award taxpayer dollars to select businesses meeting certain “job creation” requirements. Unfortunately, there is no provision to track whether the workers hired by these new firms are actually coming from the ranks of the unemployed and thus creating new jobs, or merely being hired away from their current jobs in which case there wouldn’t be “new” jobs being created but just a shift in the mix of jobs toward the politically-privileged company. And there is also no way to determine the loss of jobs and investment suffered by those businesses being placed at a competitive disadvantage, or the jobs never created because tax rates remain higher than they otherwise would be without the corporate welfare programs.
Moreover, the bill would expand the eligibility for the JMAC (Job Maintenance and Capital Development) fund, and also increase funding for the JDIG (Job Development Investment Grant) fund. Both of these programs are corporate welfare schemes that have been in place for several years.