House shuns Senate budget

By Adam Lawson | Lincoln Times-News

North Carolina’s House of Representatives made its opinion of the Senate’s budget plan perfectly clear on Tuesday afternoon, voting 112-0 to not concur with its proposal and setting the stage for what Rep. Jason Saine said could make for a long summer.

“There’s some vast differences, so this probably will take a while,” Saine said. “The Senate has put a great deal of policy in their budget and a lot of tax reform in their budget. The House does not have that. That’s something that’ll be very contentious.”

The Senate’s plan called for cuts on funding to teaching assistants and driver’s education, a cap on nonprofit sales tax refunds, Medicaid reform, an implementation of sales tax on things like advertising and veterinary services and a redistribution of local sales tax revenue.

It’s that last policy that seems to be getting the most House opposition. Under current law, 75 percent of local sales tax revenue goes to the county in which a sale is made and the other 25 percent is redistributed to all other counties in the state, based on population. The Senate’s plan would gradually flip that and, in four years, only 20 percent would go to the county that collected it.

Saine, a Republican who represents Lincoln County, said this plan, which would clearly hurt larger counties like Mecklenburg and Wake, is not the way to help rural counties like Lincoln.

“You can think of Mecklenburg County as the anchor for a 16-county economic superpower and we’re a part of that,” Saine said. “To hurt Mecklenburg audibly hurts us because we do rely on them for their infrastructure, for the restaurants that come there because of the high density of the population. When it’s a 30-minute drive from Lincoln County or a 20-minute drive depending on where you’re at to a nice restaurant in downtown Charlotte, that’s important. That’s an economic driver because corporations locate, and they build, in the shadows of cities.”

Saine, a senior co-chair on the House’s Finance Committee, said nobody in the House supported the tax plan. He also criticized a provision of the Senate’s plan that would enable counties to put quarter-cent interval sales tax increases up for approval via a voter referendum.

According to a North Carolina General Assembly document, potential sales tax revenue in Lincoln County would project to increase 51 percent from current law between the 2013-14 fiscal year and 2019-20 under the Senate’s plan, though that’s assuming the county implements a half-cent tax increase.

Lincolnton would see a 20 percent increase in total potential revenue. Meanwhile, large cities like Charlotte (3 percent), Durham (8 percent), Asheville (11 percent) and Greensboro (1 percent) would all see steep decreases in the same period.

The figures account for inflation and population growth, but assume that half-cent sales tax increase that county voters may vote not to approve. The document doesn’t mention corporations that could leave North Carolina cities or decide not to start business in the state because of the tax hike counties could implement as a result of the plan.

“To hurt and to basically handicap the city of Charlotte or Mecklenburg County, that does not in my view help Lincoln County,” Saine said. “We are dependent. We are interconnected. So many of our folks do travel to Charlotte for jobs. Or Gastonia, where they go in the region. This type of tax scheme could be really dangerous or really hurtful to our local economy.”

Saine said he’s against cuts to driver’s education and teaching assistant funding. The House’s budget plan, which got significant bipartisan support when it was approved 93-23 in May, called for none of those cuts but came at a heftier price tag. While the Senate’s plan rang in at $21.7 billion, the House’s sat at $22.2 billion.

Recently, Sen. David Curtis (R-Gaston, Iredell, Lincoln) said the Senate plans on cutting some funding to put money into the Rainy Day Fund and the Repairs and Renovations Reserve. Saine said that with recent projections showing a $400 million surplus, North Carolina should fund things that have taken hits in recent years.

“We’ve got some needs and some things that have gone underfunded and we’re going to fund those things,” he said.

Legislators from the House and Senate will soon meet to try to hammer out an agreeable plan, but Saine doesn’t foresee a resolution occurring prior to the new fiscal year on July 1. If a quick deal isn’t reached, a continuing resolution will likely be installed to keep government funding at its current levels.

Saine said members of the House are prepared to stay in session as long as necessary to get a budget hammered out, though that may take a while.

“We are going to be miles apart for a long time,” Saine said.