Major Tax Reform on Agenda for Next Legislative Session
of paying state income taxes and corporate income tax? Well, maybe soon you won’t have to if the NC
General Assembly enacts legislation that would eliminate both. According to legislative leaders, they are
looking for ways to eliminate these taxes and replace the revenue (about $12
billion out of a $20 billion budget) by broadening the sales tax base to
include taxes on services.
the 50 states, NC is on the low end of services that are taxed – we currently
tax 35 services. This number would not
only have to dramatically increase to include professional services, but the
sales tax would also need to be raised to over 9%. (currently at 6.75%).
4 years ago legislators in a Democratic controlled state legislature were
thinking of doing the same thing and looked to the Institute of Emerging Issues
to help study the issues. At that time,
here’s what they found:
1) The volatility of the
personal income tax makes NC’s revenue base more vulnerable in bad times.
2) Sales tax is a more
stable source of revenue than income tax but growing more volatile as durable
goods make up a large fraction of the sales tax base.
3) At the time of the study,
only 11 states had a higher sales tax rate than NC
4) Ways to expand the sales
tax base include eliminating current exemptions, eliminating refunds,
eliminating preferential tax rates and including additional services in the
5) For professional services
which included land surveying, accounting, bookkeeping, legal, architectural,
engineering, dental, medical, labs and out of hospital nursing, most tax experts do not recommend because these are primarily
consumed by business.
6) At the time of the study
only 5 other states imposed a sales tax on architectural and engineering
7) Revenue impact of a tax
on professional services for Architectural and Engineering was $62.3 million
State; $26.2 million local. The largest
revenue impact was in the medical profession.
8) Because many of these
professional services are also purchased by government, the revenue impact
could be lower than anticipated because government would be exempt.
leaders have been adamant that major tax reform is coming but, unless the data
has changed drastically since the original study, making this a “revenue
neutral” plan with possible exemptions for medical services and business to
business transactions (one of the rumors) will be almost impossible to
Energy Shutting Down Coal-Burning Power Plant
Energy Carolinas is shutting down a coal-burning power plant near
it shifts to generating power with cleaner natural gas. The utility
closed its Lee power plant on Saturday. New gas-fueled units will begin
operating early next year. The subsidiary of Duke Energy opened the
its three coal units there in 1951 as one of Progress' first major
projects after World War II. Progress says it plans to close all of its
coal-fired plants lacking advanced environmental controls by the end of
year. Progress retired one coal-fired power plant near Lumberton last
It also aims to shut down plants near Moncure, Wilmington and
by the end of 2013.(THE ASSOCIATED PRESS, 9/15/12).
officials met with at least two state legislators last Tuesday to
possible transfer of the city water system to the Metropolitan Sewerage
District. But the legislator who has played the biggest role in forcing
issue, Rep. Tim Moffitt, R-Buncombe, is not expected to be there. City
Manager Philip Kleisler said only two legislators the city has invited
expected to attend Tuesday: Rep. Susan Fisher, D-Buncombe, and Rep.
McGrady, R-Henderson. The city has proposed several meeting dates over
few weeks only to drop plans because of anticipated poor attendance
legislators. Moffitt had either not responded or declined to attend
proposed dates. On Tuesday, he is scheduled to be in Raleigh for a
the Joint Legislative Program Evaluation Oversight Committee that he
City officials have said they wanted to get feedback from legislators
best to follow the recommendations of a legislative study committee
headed that advocated that the water system be transferred to MSD.(Mark
Barrett, ASHEVILLE CITIZEN-TIMES, 9/17/12).
Replacement for I240/I-26
state Department of Transportation has awarded an $11.9 million
contract to a
Michigan company to replace the pair of bridges on I-240/I-26 eastbound
westbound near Asheville, according to a news release from N.C. DOT.
contract was awarded to DeVere Construction Co. of Alpena, Mich. The
were constructed in 1966 and are considered structurally deficient.
bridge is still safe, it requires extensive maintenance and repair and
to be replaced. Work can begin as early as Oct. 1 and should be
2015.(ASHEVILLE CITIZEN-TIMES, 9/17/12).
Lines Replaced in Pinehurst
will get $683,200 in federal funds to run sewer lines to 16 homes, Gov.
Perdue announced Tuesday. The Community Development Block Grant will be
provided by the U.S. Department of Housing and Urban Development. The
Carolina Department of Commerce's Division of Community Assistance
the grants, which are dedicated for projects serving low- and
people. The Pinehurst grant is among 18 in the state that will be used
improve water and sewer lines. The money will pay for the installation
1,950-foot sewer line that will serve homes on the east side of N.C. 5,
Arnette and Olivia streets. Bladen County also will get $400,000 in
Site Housing funds to improve housing conditions for low-income
FAYETTEVILLE OBSERVER, 9/18/12).
Project in Eastern NC – U.S. 17
of eastern North Carolina have another chance to tell state
officials what they think of plans to widen U.S. 17 between New Bern
Jacksonville. The state Department of Transportation is holding the
two public hearings on the proposal to widen the highway to four lanes
south of Belgrade to the New Bern bypass in Craven County. The next
scheduled for Tuesday. DOT representatives will be on hand to provide
information and receive comments from the public. Plans call for
16-mile stretch of the highway. The project would convert the two-lane
a four-lane divided highway.(JACKSONVILLE DAILY NEWS, 9/18/12).
N.C. transportation secretary says a new economic analysis of tolling
Interstate 95 has been ordered in the wake of public opposition this
Secretary Gene Conti said the analysis will involve input from the
industry, retailers and other groups that would be affected by a
install tolls to pay for a proposed $4.5 billion makeover and widening
The analysis is due next spring, when more public hearings will be
said. "Everybody wants a better highway, but nobody wants to pay for
it," Conti said during a visit Tuesday with the editorial board of The
Fayetteville Observer. Opposition to the toll proposal sprung up
year from many people, including congressmen and county commissioners.
said there is no current alternate plan to making the improvements
relying on existing revenues that fall way short of what's needed. He
existing revenues for improving I-95 total about $450 million over 10
well short of the $4.5 billion price to widen the entire 182-mile
South Carolina to Virginia.
turn the highway into eight lanes between mile markers 31 and 81. Under
proposal, electronic tolls would be placed every 20 miles, making the
travel the entire length of I-95 in the state almost $20 starting in
Construction would start in 2016 and take nearly a decade to complete.
proposed tolls would be automated, like those used in Raleigh. There,
with toll transponders are charged as they pass through overhead
20-mile intervals; owners of vehicles without transponders are mailed
higher toll rates, based on pictures taken of their license plate
numbers.(Andrew Barksdale, THE FAYETTEVILLE OBSERVER, 9/18/12).
state of North Carolina has approved more than $100 million to build
section of Interstate 295 into western Fayetteville. The road known as
outer loop is being built in sections. Transportation department
Burns says the nearly 6-mile stretch of road is expected to cost nearly
million. Bids are expected for the work in May 2014. Gov. Beverly
announced last year that the state would accelerate construction of the
highway. Officials say the new road will help ease traffic congestion
Fort Bragg, which has almost 60,000 soldiers and airmen.(THE
Economic Development Project – State Ports Authority
Ports Authority wants the N.C. Railroad
Co. to pay $7 million per year over the next decade for an undisclosed
development project. It was unclear Thursday whether the project is
driven by the ports or an outside company seeking incentives or
improvements. The ports authority's request for cash is spelled out in
4 letter from Ports Authority Executive Director Tom Bradshaw to John
III, chairman of the N.C. Railroad Board. "The intent of this request
to work toward ensuring that the Railroad Company remains an active and
participant in the state's on-going logistics efforts," Bradshaw wrote
the letter. Two members of the ports authority board of directors would
only in vague terms about what the money could be used for. George
III, a Wilmington lawyer and member of both the ports authority and
Co. boards, said the Ports Authority was working on a "legitimate,
long-term, genuine, lawful business activity" and that the $7 million a
year would be used as seed money to help obtain additional dollars. The
Railroad Co. owns and manages the 317-mile rail corridor from the Port
Morehead City to Charlotte, which carries up to 60 freight trains and
passenger trains a day. It was originally chartered as a private
1849 and financed primarily with state funds. In 1998, the remaining
were bought out by the state, making North Carolina the sole
shareholder. It is
overseen by a 13-member board appointed by the governor and
McComas, who is now chairman of the ports authority board, said the
be used for rail infrastructure improvements at the ports of Wilmington
Morehead City. He said both that ports lack adequate rail service and
repairs and upgrades are needed. Asking the Railroad Co. to participate
partner in improving rail service to the ports makes sense to McComas.
"Things are calling for a little attention, so this is a way to do
it," he said. Gov. Beverly Perdue is aware of the situation, but a
wouldn't disclose details on Wednesday. "The Governor knows that the
are critical to the economy in North Carolina. She supports their
create jobs and economic development," Perdue spokeswoman Chris Mackey
said in an email. "Beyond that, we can't discuss potential economic
development projects."(Patrick Gannon, WILMINGTON STAR-NEWS, 9/20/12).
regulators have approved a plan by Alcoa Inc. to cover a lake bottom to
a health-harming contaminant near its closed aluminum smelter from
state Division of Waste Management said Thursday it is allowing Alcoa
PCB-contaminated sediments in two areas of Badin Lake. Federal
must approve the plan after a public-comment deadline in two weeks. The
involves lowering water levels in Badin Lake by up to 20 feet, digging
much contaminated sediment as possible, and covering the rest with sand
rocks. Work is scheduled to start in November. Environmental groups
criticized the plan for not doing enough to clean the lake of PCBs.
PCB-contaminated stormwater polluted the lake from Alcoa's now idle
smelting plant.(THE ASSOCIATED PRESS, 9/20/12).
Replacement at Oregon Inlet and Hatteras Island
environmental regulators have signed off on
a plan to replace the nearly 50-year-old bridge spanning Oregon Inlet
linking Hatteras Island to points north such as Nags Head and Kill
The Division of Coastal Management announced Thursday its decision to
permit to the state Department of Transportation to build the 2.8-mile
Bridge replacement and demolish the existing bridge when the new
complete. The permit followed a public comment period and reviews by
a dozen federal and state agencies. Other permits are still required
construction can begin early next year on the $200 million-plus
Environmental groups have sued to try to prevent the replacement plans
going forward. They prefer a longer bridge going out into Pamlico
ASSOCIATED PRESS, 9/20/12).
Economic Development Grant
has won a $1 million economic
development grant, acting U.S. Commerce Secretary Rebecca Blank
week. With the money, the city will host a competition to generate
economic development plans. Greensboro will be one of three cities to
new program. “This is a big deal folks,” Mayor Robbie Perkins said at a
announcement at city hall. “because this administration is coming up
with a way
to create jobs. They’re gonna let us be a part of that strategy.”
comments at the event were part stump speech for President Barack
touting the recent job growth. “Our challenge is to make sure cities
Greensboro lead that growth, create more good jobs and strengthen the
security for their middle class,” Blank said. Details of how the
work and what types of jobs might be created at the have not yet been
determined.(Amanda Lehmert, THE NEWS & RECORD, 9/20/12).