Avery, Watauga No Increase in Sales Tax With Current Budget Plan Moving Toward Passage

Published Thursday, September 17, 2015 at 9:47 am

By Kirk Ross / Carolina Public Press

State budget moving toward approval

Madison, Graham and Polk counties are among the big Western North Carolina winners in sales tax revisions detailed in the current state budget plan now moving quickly toward passage by the N.C. General Assembly.

A final House and Senate conference report reached the Senate floor on Tuesday morning and was adopted, 33-16 along party lines, roughly eight hours later. A final vote was scheduled for (Wednesday).

The House, which requires a longer time to review the bill, is expected to hold its first key vote Thursday and a final vote after midnight Friday morning.

Among the compromises is a boost in sales tax revenue for 79 mostly rural and economically distressed counties across the state. Unlike previous versions of the plan, the money does not come directly from urban counties, but by making repairs — such as auto repairs — and installations subject to sales taxes and then targeting those revenues on a county-by-county basis.

Among the 18 westernmost counties of the state, Madison County would see the biggest increase, with a 28.3 percent jump in sales tax revenue. Its municipalities — Hot Springs, Mars Hill and Marshall — would see an increase of nearly 18 percent.

In all, 13 WNC counties would see an increase. In addition to Madison County, they include Cherokee (3), Clay (13.1), Graham (16.3), Haywood (3), Henderson (2.2), McDowell (6.1), Mitchell (6.8), Polk (18.1), Rutherford, (10.4), Swain (8.8), Transylvania (1.6) and Yancey (13).

By contrast, Avery, Buncombe, Jackson, Macon and Watauga counties and their respective municipalities would not receive any additional revenue from the tax increase on services.

The plan has won tentative approval of a coalition of mayors that had opposed a previous effort to move funds from urban counties and cities through a revision in the sales tax distribution. [See the entire distribution below.]

Asheville Mayor Esther Manheimer said she is among the mayors who signed off on the compromise. The city alone would have lost more than $1.1 million annually by 2019 under the previous proposal. Manheimer told Carolina Public Press Tuesday that the idea was similar to one of the alternatives proposed by the mayors group.

What the proposed state budget does, doesn’t do

The budget bill — the product of a large-scale negotiation between a House and Senate that were sharply divided over pivotal policy issues such as Medicaid, tax changes and economic incentives — runs 429 pages. It is accompanied by a 207 page “money report” with specific budget numbers and adjustments.

While some of the policy provisions were peeled off and turned into separate bills, House and Senate leaders agreed to language that would bind both chambers to passing those bills.

The $21.734 billion spending plan includes a one-time bonus of $750 for state employees and teachers, with an additional bump in salary for first-year teachers to set the starting pay at $35,000.

The bill authorizes another round of decreases in the corporate tax rate, cuts the personal income tax rate to 5.499 percent and increases the standard deduction from $15,000 to $15,500.

The compromise also provides funds for teaching assistants at current levels and money for driver education training, two major sticking points in the education funding negotiations.

Other key tax provisions in the bill include the removal of the cap on medical and charitable deductions, allowing the solar tax credit to expire at year’s end and approving $30 million in one-time funds for the state film and entertainment grants.

State government changes detailed

The budget also makes key structural changes in state government.

The largest change would be the move of the state park system and more than 1,000 employees to what would be called the Department of Cultural and Natural Resources. The park system would also shift to a dynamic pricing system allowing it more seasonal flexibility in prices.

The move also includes a name change for the Department of Environment and Natural Resources to the Department of Environmental Quality, a reflection of the legislature’s push in recent years to narrow DENR’s role to a purely regulatory agency.

The budget also creates two new departments, a consolidated Department of Military and Veterans Affairs and a new state Department of Information Technology to coordinate electronic records, infrastructure and services between all departments.

Key WNC funding and provisions

The budget caps state appropriations for campus advancement activities for UNC Asheville, Appalachian State University and other larger UNC campuses at $1 million. Western Carolina University is one of five schools currently below the cap.

The budget also directs spending for $2.24 million from the Tennessee Valley Authority Settlement funds to Avery, Buncombe, Burke, Cherokee, Clay, Graham, Haywood, Henderson, Jackson, Macon, Madison, McDowell, Mitchell, Swain, Transylvania, Watauga and Yancey counties.

Most of the funds would go toward energy efficiency improvements for schools and an agricultural cost share program. The provision also directs that $750,000 be used for “municipalities with a population less than 1,000 located in counties within the Tennessee Valley Authority Service area that are classified as distressed by the Appalachian Regional Commission, for higher efficiency upgrades to electrical transmission and distribution equipment and facilities.”

Towns that fit that criteria are Newland in Avery County, Rhodiss in Burke County, Montreat in Buncombe County, Hayesville in Clay County, Old Fort in McDowell County and Beech Mountain and Seven Devils in Watauga County.

Other key provisions for WNC would:

• Allow $2 million in bonds to be issued for improvements to McGough Arena and other facilities at the Western North Carolina Agricultural Center

• Create a new Save the Honey Bee license plate with part of the proceeds going to the Grandfather Mountain Stewardship Foundation for the Honey Bee Haven; and

• Add $123,000 for an additional administrative law judge in Waynesville.

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