There may be some movement on the North Carolina budget. House and Senate leaders agreed to a $21.7 billion compromise figure—an amount much closer to the Senate’s original amount.
However, there are still considerable hurdles to overcome. The compromise figure does not say how the money will be spent and the various committees are just now getting the details of the agreement.
The biggest hurdle may continue to be a sales tax reallocation plan that Senate Majority Leader Harry Brown has been championing. Representing Jones and Onslow Counties, two of the poorer counties in the state, Browns plan calls for changing how sales tax is allocated to the counties, taking revenue from counties with higher earnings and redistributing it to the state’s less wealthy counties.
His original proposal is dead. Contained within the Senate’s budget, Governor McCrory threatened a veto, and the House indicated they would not support it.
In another form, though, it lives on.
Recognizing that the House would not vote to support his reallocation proposal in the budget, Senator Brown tacked a new plan on to a popular House Bill, the “North Carolina Competes Act” (HR117), that is in committee in the Senate, and has indicated that no final budget will pass without the provision.
The new proposal would allocate funds based on a 50/50 split of taxes. Under the new plan more counties would be paying into the state coffers and the effect on local budgets would be less dramatic. But the impact on the Outer Banks, Dare and Currituck Counties, would still be painful, and county officials are adamant that additional revenue will be needed—most likely from ad valorem taxes.
Senator Brown’s proposal seems problematic. Governor Pat McCrory is opposed to any reallocation plan and has indicated he will veto it. His home district, Mecklenburg County, stands to lose the most funds of any jurisdiction in the state, and legislators in the House continue to oppose the provision.