Uncertain Progress For NC Cities, Counties Seeking Lost Tax Revenue

Mar 30, 2015

Local leaders are still hoping North Carolina lawmakers will find a way to replace money lost from the elimination of the business license tax. Governor Pat McCrory reiterated his support for that Monday.  But after more than a year and despite that talk, prospects in Raleigh remain uncertain.


An earlier draft of last year's legislation that removed the local business privilege license tax.
Credit NC General Assembly

Local and state lawmakers all generally agree that the business privilege license tax was as cumbersome as its name. But the $65 million in revenue it brought in to local governments before its elimination last year was a different story. Governor Pat McCrory said at that time, and again Monday, that he wants to find another way to give local governments that money.

“I have specifically asked the mayors of the metropolitan areas, including the mayors of [the Charlotte] region, to come up with some proposals on what we can do to close that gap,” says McCrory.  “I made that commitment to them last year, and I hope the legislature also follows through. So that’s my goal.”

McCrory said he is working with Jill Swain, the mayor of Huntersville and head of the state Metropolitan Mayors Coalition. She has a slightly different take on her talks with the governor.

“I think the way I would phrase it is that we have both been lamenting about the privilege license tax and hoping that it would come up in this session,” Swain says.

Instead of developing proposals, Swain says she’s looking for—but hasn’t found—a legislator to spearhead the push, and fast. Next year’s budgets begin this summer, and Swain says uncertainty is as much a problem as the lost revenue.

“Right now this is all an unknown for all of us,” Swain says. “And, it’s really, really, really hard to plan ahead.”

With progress stalled at such an early stage in the legislative process and so late in the budget season, it’s unclear if a fix will be reached, or even if will for it exists in the General Assembly.

“I’m a little anxious at this point,” says Charlotte mayor Dan Clodfelter. “I just don’t know whether to be optimistic or not.”

But Clodfelter says there’s not much time to push a measure through the General Assembly.

“It can be done, but it will take an awful lot of work in a very short time,” Clodfelter says. “It’s not simply a matter of drafting a proposal and rolling it out there. You have to then analyze the effect of that proposal on some 500 different local cities and 100 different counties.”

Talks are occurring, says North Carolina League of Municipalities lobbyist Scott Mooneyham.

“It would be a mistake to conclude that just because a bill hasn’t been filed that that’s not the case,” Mooneyham says.

The league is shopping four proposals.

View the N.C. League of Municipalities proposals and draft language they have pitched to legislators.

Those include giving cities and counties a cut of a state business tax, the option to raise local sales taxes, or to stall for more time with a year-extension of the old tax.

If no fix is found, Charlotte will lose $18 million, or 3 percent of its total budget.