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ACTION ALERT: Senate Passes Tax Reform Bill That Would Reduce Municipal Revenue

July 03, 2013

This morning the Senate gave final approval to its version of HB 998 Tax Reduction Act. While the new version would have less of an impact on municipal revenues than the Senate’s previous tax plan, it would still result in a revenue loss for cities and towns, as shown below:
 

HB 998 Version

 FY 13-14

FY 14-15

FY 15-16

 FY 16-17

 FY 17-18

 FY 18-19

House Passed

2.2

32.0

34.2

36.5 

 38.7

 40.9

Original Senate Version

3.3

-69.0

-130.0

-112.3 

-99.8 

-163.9 

Senate Passed

3.6

25.0

13.7

-25.5

-9.5

-10.1

In millions of dollars

 

Contact your House members as soon as possible to let them know that the Senate version of HB 998 is not revenue neutral for cities and towns and urge them to insist that cities continue to receive sales tax refunds under any final tax plan. Negotiations between the House and Senate about the tax plan are ongoing and will most certainly be taking place this weekend, so time is of the essence.

 

Speaker Tillis has stated that the tax reduction plan must be revenue neutral to cities. He also indicated that the State should not place a financial burden on cities by shifting tax requirements to them in order to balance the State budget. The Senate version of the bill would make such a shift by eliminating the ability of local governments to seek refunds of State sales taxes, thereby increasing State revenues while hiking costs for local governments. The House version of the bill did not eliminate refunds to local governments. A chart comparing the version passed by the House, the previous Senate version of the bill, and the Senate-passed version is available here. The projections of the amount of local revenue raised by some of the Senate measures are far from certain, leaving open the possibility that revenue losses could be greater than those shown above.

Posted on July 03, 2013 by Paul Meyer