|
House
finally passes a tax package,
raising hopes that longest session
in state history may be nearing an end
 House
Democrats finally overcame their intra-party differences
Thursday and united behind a package of tax cuts and tax
hikes, offering the first real hope for a resolution of the
state’s two-month-old budget impasse and an end to the
longest legislative session in state history. The vote capped
one of the most turbulent weeks in the General Assembly in
recent memory, marked by a bomb scare that forced legislators
to flee the building and a close brush with a state government
shutdown.
Slight revisions to the Education Revenue Act we told you
about last week managed to win the support of eight liberal
Democrats and one Republican, allowing Speaker Jim Black to
cobble together a 62-56 majority for a plan that will generate
$706 million in new revenue over two years. While this is a
big step forward for the House, there’s still lots of work
to be done before the General Assembly adopts a budget for the
year that began July 1 and adjourns.
The Senate is expected to reject the House plan over
philosophical differences. A conference committee then would
be appointed to work out a compromise. That could take as
little as two weeks. But even if it happens that quickly, the
legislature still must deal with redistricting – the
year’s other big-ticket issue that has been back-burnered
during the budget dispute.
Black made three changes to the tax package to get it through
the House: He dropped the half-cent statewide sales tax
increase NCCBI supported, he bumped up (from a quarter-point
to a half-point) the increase in state income tax rates on the
wealthy, and he dropped the earned income tax credit for the
working poor because it wouldn’t be needed without the
higher sales taxes in the package.
During floor debate Thursday, one amendment was approved to
reduce the state excise tax on liquor, which now is 28
percent, to 25 percent. The move is intended to offset the
addition of the 6 percent sales tax on liquor.
Without the half-cent statewide sales tax increase, the
package raises abut $300 million less in new revenue than the
plan before the House last week. The new plan would produce
$305 million this year and $401 million next year in new
revenue, a level many observers said is barely enough to
produce a balanced budget without further drastic cuts in
state programs.
Up to now Black had been stymied by the eight liberal
Democrats (six of whom are African-American) led by Reps. Toby
Fitch of Wilson and Dan Blue of Raleigh. The group opposes
higher taxes on working people. Caving in on the half-cent
statewide sales tax got their votes. A bonus was the vote of
GOP Rep. Monroe Buchanan, who was booted out of the Republican
caucus earlier this month for siding with Black on other
issues. Otherwise, the vote was straight along party lines.
Senate leaders faulted the House’s new revenue plan, saying
it just doesn’t produce enough new revenue to solve the
state’s budget dilemma, particularly in the second year of
the biennium. The Senate supports NCCBI in calling for a
half-cent statewide sales tax, sunsetting in three years.
On Monday the previous version of the tax package
was on the House calendar for a vote when a bomb threat was called
in. The Legislative Building was evacuated while police and
dogs combed the building but found nothing. The building
reopened about three hours later. The incident again raised
concerns about lax security in the Legislative Building.
Return to Page One
|
