State offers towns few specifics on fees, revenue

kjahner@newsobserver.comJune 10, 2014 

— Gov. Pat McCrory sought to reassure city and town officials Wednesday that his administration doesn’t want to take away municipal revenue and regulatory powers, but local leaders including Garner’s remain skeptical.

McCrory’s meeting with the N.C. League of Municipalities on annual Town Hall Day came at an awkward time this year – just days after he signed a bill to repeal local business taxes, a move that’s expected to cost cities and towns a total of $62 million ($49,000 in Garner) in 2015-16.

A temporary provision for the coming 2014-15 fiscal year will also prevent towns from collecting privilege taxes for merely doing business in a city; the business must be based in the city limits. That will cost Garner about $32,000.

“It doesn’t sound like a whole lot, but it is,” Garner councilwoman Kathy Behringer said. “They’re doing some things in other areas as well that take a little chunk here and a little chunk there with no definite plan about how to replace it.”

The governor promised local leaders that he’ll help them find a way to make up for the lost funding without raising property taxes on a day an army of municipal leaders came to lobby their local state representatives.

He didn’t offer specifics but said that leaders in the state legislature have also promised to find a solution before the repeal goes into effect next year. Council members Behringer and Ken Marshburn both said lawmakers listened politely and expressed understanding, but also offered little in the way of tangible options.

Opponents of the tax have claimed it was applied unevenly and hurt businesses.

“The business license tax was not a well-implemented program,” McCrory said. “Something needed to be done because the inconsistency was enormous.”

Though its defenders agreed it was applied unevenly, solutions existed aside from what League executive director Paul Meyer called “the nuclear option” of banishing the practice for all towns. The League advocates for a tiered structure allowing towns flexibility.

“The towns I represent were the ones doing it the right way and weren’t abusing it. A couple of the areas were abusing the privilege tax and now it’s going away for everybody,” said Democratic Rep. Darren Jackson, whose district includes much of Garner. “I hope we come back with something that modifies it so it can no longer be abused like it was. But at least let the towns pick up some kind of revenue so they don’t have to pass it along through property tax increases.”

The annual tax each business pays varies dramatically between industries and between towns. Garner’s fees include $400 for a daycare with over 200 children and $300 per screen for theaters, but most fees fall below $100, often well below.

“It seemed like there was a little less optimism from the audience,” Behringer said after the meeting. “We still don’t have an answer to where the revenues are coming from.”

Others expressed more optimism. “I was pleased that he’s looking for replacement revenue,” said Steve Rao, a town councilman in Morrisville, which takes in $855,000 annually from privilege licenses. “I still wish he didn’t sign the bill.”

Jahner: 919-829-4822; Twitter: @garnercleveland

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