We’ve written before, and wondered with something like despair, if we would ever be able to have a productive discussion about diversifying local revenue sources in North Carolina. The situation for local governments is only getting worse.
*The General Assembly continues to entertain bills that give tax breaks to favored groups. Everyone wants to make life easier for disabled veterans, for example. But the State-awarded tax breaks in question are reductions in local property taxes – no money’s coming out of the State’s hands.
*A version of the State budget proposes to use sales tax revenues otherwise destined for local governments to help pay what were expected to be State-borne costs of the VIPER system. It may not be much money now, but it sets a dangerous precedent of the legislature degrading a local revenue source. Once again, no skin off the State’s nose.
*The State-mandated return of back-to-school sales tax holidays will also take money away from local governments with no corresponding way to make it back. (At least this time, the State also takes a hit.)
*Federal Medicaid reform not only pushes down to counties a doubled burden of eligibility checks, but also makes the compliance testing more complicated.
*Enormous increases from post-COVID property revaluations are putting additional pressure on the local property tax.
There’s no reason to think North Carolina local governments would go crazy if given the option to levy additional sales taxes, to use occupancy taxes for a broader range of purposes, or to otherwise diversify their revenue streams (there are many tools in use around the country). But we don’t seem even to be able to have a discussion.
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