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Senate Gives Initial Approval to 2015 Privilege License Repeal

May 28, 2014

This afternoon, the Senate gave its initial approval to HB 1050 Omnibus Tax Law Changes, which alters the local privilege license statutes. The bill as passed repeals the privilege license entirely as of July 2015, setting up a $62 million fiscal cliff for cities and towns next year. For the upcoming year, it also limits application of the privilege license tax only to those businesses with a physical location within the city or town, and prevents municipalities from changing their current privilege license tax rates. The League estimates this will result in at least an $8 million loss statewide for cities and towns in the coming fiscal year. This impact would be felt in budgets that are under consideration now and are set to go into effect in 33 days.

HB 1050 was debated and ultimately approved by the Senate Finance Committee last night. Both co-chairs of that committee appeared receptive to helping develop alternative revenue sources or reinstating a reformed version of the privilege license tax. Sen. Bill Rabon, R-Brunswick, said reaching common ground had been difficult, “And so we said, let’s reinstate it, and give ourselves time to come up with something that will be a little bit more palatable to the cities.” Sen. Bob Rucho, R-Mecklenburg, said the Senate version gives state legislators until next year to “come up with a plan that will allow us to move forward.”

The Senate must give HB 1050 one more vote of approval before sending the bill back to the House. Assuming it passes and the House rejects the Senate changes, the two chambers would have conferees work out the differences.

Posted on May 28, 2014 by Cara Bridges