TAX NEWS - 2010

North Carolina Tax: Not much support for sales tax hike

A majority of county commissioners said Wednesday they don't think now is the time to ask Mecklenburg voters to consider a quarter-cent hike to the local sales tax.

But as the county is faces teacher layoffs, library closings and deep cuts to other services, commissioner George Dunlap said the board should consider putting the issue before voters in November.

Dunlap brought up the possibility at Tuesday's board meeting and wants the county board to discuss the tax on Aug. 3.

But seven other commissioners told the Observer on Wednesday they either won't support a higher sales tax, or are leaning heavily against the idea.

"I think the last thing the taxpayers in Mecklenburg County need is another tax on them," said Neil Cooksey. He said the county needs to live within its means.

Chair Jennifer Roberts said she also is leaning against the tax, but wants to hear where the public stands.

At least one organization, the grassroots group Friends of Education, has come out in support of a referendum to help reduce future cuts to schools.

Mecklenburg currently has a sales tax rate of 8.25 percent, the highest in the state.

A quarter-cent increase could raise about $28 million a year, said Finance Director Dena Diorio. Under a state bill awaiting signature from Gov. Bev Perdue, the county could begin collecting money from a tax increase as soon as next April, if approved by voters in November.

State lawmakers gave counties the ability to pursue the additional quarter-cent tax three years ago to help support local services. About half of the state's 100 counties have brought the issue before voters. But so far, only 16 tax hikes have been approved, some after multiple tries.

Mecklenburg commissioners considered the levy in spring 2008 as a way to generate more money for crime-fighting. But after initially declaring their intent to put the tax on the ballot, commissioners abandoned the idea. They cited community opposition and uncertainty about whether state lawmakers would agree to let the money be designated for a specific purpose.

Dumont Clarke, the commissioner who pitched the crime fighting tax in 2008, is among those now saying the board should wait before pursuing the levy again. Among his reasons: the current sales tax is already "fairly high," he said, and he doesn't think there's broad support in the community for it.

The executive committee of the Charlotte Chamber – typically an influential voice in ballot referendums – hasn't taken a position on the quarter-cent tax hike, said Natalie English, senior vice president for public policy.

Still, English said Chamber members have said they want to see taxes lowered, not raised. They "feel like they're carrying a pretty heavy tax burden right now," English said.

Larry Bosc, a teacher and member of Friends of Education, said he knows raising taxes is politically difficult. But he said he is particularly concerned about further cuts to Charlotte-Mecklenburg Schools next year as federal stimulus money runs out.

Bosc said he knows there is no guarantee that money raised by a sales tax hike would go to schools. But he said, "I think the voters should be given the opportunity to decide…whether this is an appropriate way to deal with the budget shortfall."

Dunlap raised the issue of a tax referendum at Tuesday's board meeting, but there wasn't much discussion on the idea because the item hadn't been added to the night's agenda. On Wednesday, he said the tax could be a new revenue source for the libraries and he thinks the community could back the idea because of the outcry over budget cuts in recent months.

In addition to Roberts, Clarke and Cooksey, other commissioners voicing opposition or hesitation to a higher tax were Karen Bentley, Bill James, Vilma Leake and Dan Murrey. Vice Chair Harold Cogdell did not return calls seeking comment.

Murrey said, in part, that the "sales tax is a regressive tax and is going to hit hardest the people who are least able to afford it."

Reached later Wednesday, Dunlap said he understands why some commissioners may be hesitant to put the tax on the ballot.

"That doesn't mean it shouldn't be discussed," he said. "I don't decide what I want to discuss based on a survey of board members."