Archive for June, 2016


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The House version of the state budget removes the tax on manufacturing equipment. The Hosiery and Textile Governmental Affairs Council has worked to remove this tax over the past several sessions. The Senate budget leaders kept the machinery tax in the budget. House leaders say they will stand firm to eliminate the assessments. HTGAC argues the mill punishes companies that are re-tooling for 21st century manufacturing in the U.S. Entrepreneur start-up companies also are helped with removal of the tax.


House and Senate Committees are grinding out a long list of bills as talk of a June 30 adjournment date circulates in the Legislature. But the 800-pound gorilla—the budget bill—has yet to make an appearance. Some legislators expected reports from appropriations subcommittees to be released this week, with top leaders working over the weekend to thrash out a final version. With no new money allocated to some committees the negotiations are expected to focus on public schools, salaries, retirement reserves, and policies.


The North Carolina Senate want voters to adopt an amendment to the state constitution that would limit any future income tax to 5.5 per cent.

The bill to put the proposal on the November ballot was introduced by Sen. William Rabon of Southport and strongly endorsed by Finance Committee Chairman Sen. Robert Rucho of Charlotte.

The movement from income taxes as a leading source of state budget revenue was touted by Rucho and Rabon at the Finance Committee meeting Tuesday. Both argued that the cap will make the state more competitive with Southern states, i.e. Tennessee and Florida. The proponents also argued that in case of emergencies, it is quicker for government to raise money from sales taxes than income tax increases.

Rabon gave a clue as to where future new revenue will be raised if the GOP-sponsored constitutional amendment is approved by voters in the fall elections. He referred to “white collar services” as targets for sales tax assessments—lawyers, accountants, healthcare specialists, financial services etc.

The bill was approved by the Senate Wednesday, June 15, with Democrats opposing the concept. The future of the bill in the House is uncertain.


Members of the House Finance Committee acknowledged that General Assembly leadership is moving to move the state toward consumption-driven revenues. Cuts are made to income tax schedules (couples filing jointly have not tax liability on income up to $17,500). But sales tax fees are being extended to numerous services from home repairs, to service contracts, to market-based sourcing ranging from ATM fees, interest and dividends and corporate-level distribution.

Lawmakers are looking at Tennessee and other states that do not have income taxes for concepts that generate revenue. North Carolina’s budget requires $22.6 billion and that figure will grow by 2 or 3 percent a year as the population and level of services increase.


The Senate also repealed a House provision that would eliminate a sales tax on the purchase of manufacturing equipment. Insiders reported that retiring Senate Finance Chair Robert Rucho of Charlotte opposes elimination of the tax, as does Sen. William Rabon, a Southport veterinarian. The HTGAC is working with Sen. Jerry Tillman, and House Finance Chairman Jason Saine to get the repeal back in the budget during conference sessions.


Today (Wednesday) the N.C. House of Representatives rejected the Senate version of a 2016-17 budget for North Carolina. It is a formality. Now conferees from both Chambers will hammer out compromises and agree on special provisions where surprises often are tucked away and that includes appropriations that used to be called “pork barrel.”

The House Finance Committee earlier this week reviewed revenue proposals from the Senate and learned the $17.2 sales taxes provision to hold harmless counties who would lose money under a new re-distribution formula has been repealed. Last session agreed to a new formula for the rebate of 2 percent sales taxes to help poorer counties BUT this was to involve revenue collected beginning in 2018.

Rep. Mitchell Setzer of Catawba County, a Finance Committee chair, said the Senate version is like a Mexican pinata. “You punch it and you don’t know what is going to fall out,” Rep. Setzer asserted.

Lawmakers in both Chambers this week seemed resigned to an extended time frame for budget deliberations as the hot days of July and August approach. The state’s fiscal year starts July 1.