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Property Tax Hikes, Salary Freezes Considered to Make Up for Revenue Losses

April 22, 2015

April 22, 2015
Contact: Scott Mooneyham
(919) 715-9768
Survey Tracks Responses to Privilege License Tax Loss

Municipalities Consider Property Tax Hikes, Salary Freezes to Make up for Revenue Losses
(RALEIGH)  -- A recent survey of towns and cities conducted by the North Carolina League of Municipalities finds that one-quarter of responding municipalities suffering revenue losses due to the pending repeal of the business privilege license tax are considering property tax increases to make up the revenue.

The findings are based on a survey conducted by League staff from March 24 through April 17. Forty of 160 responding towns and cities said increasing property taxes are among the strategies being considered as municipal boards begin putting together annual budgets for the new fiscal year while having to address privilege license tax losses. Roughly the same percentage of municipalities indicated that they are examining reductions or the elimination of employee salary increases.
In total, North Carolina cities and towns face a $62 million fiscal cliff created by the pending loss of privilege license tax revenue after legislation approved last year set a July 1, 2015 repeal date for the tax. According to estimates from the General Assembly’s Fiscal Research Division, those losses include $16.9 million by Charlotte, $7.6 million by Raleigh, $559,000 by Pineville, $538,000 by Hendersonville, and $344,000 by Statesville.

“This survey shows that, without action from the General Assembly, some cities and towns will be forced to shift more of the tax burden onto property tax payers or damage their hiring competitiveness,” said League Executive Director Paul Meyer. “Municipal residents come to expect and rely on city services, and there is little taste among elected municipal officials to reduce services.”
At the time the 2014 law was approved, House and Senate leaders committed to working during the current legislative session to address the pending revenue loss. Among the bills filed this session that would give municipalities more revenue options is HB 903 County Tax Revenue/Municipal Rev Opts, allowing cities and towns to adopt a ¼ cent municipal-only sales tax. The bill language tracks a legislative goal adopted by League members in December calling for this authority.
About the League
The North Carolina League of Municipalities is a membership association of 540 great hometowns – representing nearly every municipality in the state. The League advocates for its members, from the largest city to the smallest village, on the full range of legislative issues that affect municipalities.
For more than 100 years, the League has promoted – and continues to promote – good government by offering non-partisan advocacy, insurance and other services – as directed by its membership.

Posted on April 22, 2015 by Scott Mooneyham