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Legislature Focuses on Tax Proposals in Busy Week
Members of the North Carolina General Assembly had a full schedule this week, considering bills on everything from providing taxincentives for historic preservation projects to cutting both personal and corporate tax rates. The Senate’s bill filing deadlinepassed on Thursday, with the House deadline to follow in a few weeks. Both chambers are slated to return to action on Monday.
Senate Republicans Propose More Tax Cuts
Republican leaders in the Senate are pushing once again this year to lower personal and corporate income rates, taking a step furtherthan the comprehensive overhaul that was passed two years ago. Republicans filed a bill Thursday that they say will amount to over $1billion in additional tax cuts for the state. Senate Bill 526, “Job Creation and Tax Relief Act of 2015,” will lower personal incometax rates to 5.625 percent in 2016 and 5.5 percent in 2017. The current rate is 5.75 percent, which is down from the 7.75 percent ratethat was cut in the tax reform package from 2013. The proposal also gives tax payers options about the taxes they pay.
Under SB 256, taxpayers could choose to use a “zero percent” bracket that would apply to some income, or they could choose to itemizedeductions. Those who file as single would pay no tax on the first $8,750 of their income in 2016 and on the first $10,000 of theirincome in 2017. For married couples filing jointly, the exemption would be for the first $17,500 of their income in 2016 and the first$20,000 of their income in 2017.
Read SB 526 here
House, Senate Reach Gas Tax Deal
House and Senate leaders announced a deal this week to gradually cut a few cents off of the state gas tax over the next two years.North Carolina’s fuel tax is currently 37.5 cents per gallon and for years ranked among the highest in the nation. Under the compromiseproposal reached this week, the gas tax would see an immediate drop to 36 cents per gallon and would fall to 34 cents in July 2016,providing that the compromise is approved by both chambers and signed by Gov. Pat McCrory (R-NC).
Under the deal, a new formula will take effect in January 2017 to adjust the state rate based on changes in two new measures: NC’srapidly-growing population and the national Consumer Price Index for energy costs. The energy inflation measure rises and falls fromyear to year, but House and Senate leaders say it is less volatile than the wholesale fuel price. Gas and diesel fuel consumption areexpected to decline over the next 25 years, even as NC adds an expected 3.5 million, leading legislative leaders to look for stablerevenue sources to reduce the state’s reliance on the gas tax.
The conference committee report for Senate Bill 20, IRC Update/Motor Fuel tax Changes, is on both the House and Senate calendars forMonday night.
House O.K.’s Historic Preservation Tax Credit
The House gave final approval this week to House Bill 152, New Historic Preservation Tax Credit, a bill that will replace a widely usedprogram recently allowed to expire. The vote was 98-15 and the proposal will now be sent to the Senate, where its prospects seemanything but certain. Sen. Bob Rucho, (R-Mecklenburg) Co-Chairman of the Senate Finance Committee, said that the first round of taxreform passed by the legislature two years ago supported the elimination of “special loopholes and preferences,” including the historicpreservation tax credit. Sen. Rucho stated that the General Assembly was able to lower tax rates precisely because the body chose toeliminate the kind of tax exemptions and credits contained in the new proposal.
In passing the measure on Thursday, the House voted down three Republican-sponsored amendments to the bill that would have requiredlocal governments to split the cost of credits with the state and eliminate credits for non-income-producing projects.
Read HB 152here
Senate Bill Would Sell Dorothea Dix Site to Highest Bidder
A proposal filed late Thursday afternoon by three Republican senators would put the 308-acre Dorothea Dix property up for public bid,likely revoking a deal that was reached last year between Raleigh Mayor Nancy McFarland and Gov. Pat McCrory. Senate Bill 705, EnsureFair Sale of Dorothea Dix Property, asks for “the fair sale” of the former psychiatric hospital campus by utilizing the state’sstandard procedure for surplus property. The bidding for the property would start at just over $52 million, which is the amount theCity of Raleigh had agreed to pay following months of negotiations with the McCrory administration.
The bill is sponsored by Sens. Ralph Hise (R-Yancey), Louis Pate (R-Lenior) and Tommy Tucker (R-Union), the same trio who sponsored abill two years ago which resulted in Raleigh’s original lease on the property being revoked. Speaking at a press conference Thursdayafternoon, Sen. Tucker said the deal negotiated by Gov. Pat McCrory wasn’t a good deal for the state. “I just believe that the propertyis worth more than we’re being offered.” He said the state will likely spend $100 million to build a new headquarters for the NCDepartment of Health and Human Services, which currently occupies part of the Dix site, and that as a result, more money is needed fromthe deal.
Read SB 705here
‘Autocycle’ Bill Whizzes Through the House
A bill to define and license three-wheeled cars, or “Autocycles,” zipped through the House on Thursday, passing the Finance Committeeand two subsequent floor votes with little debate. Autocycles are enclosed and feature a steering wheel, safety belts and air bags,just like a car. They also have three-cylinder engines that can carry a driver and an additional passenger in a rear seat. Despitethese features, the vehicles are considered motorcycles under current state law because they have three wheels instead of four.
This means that drivers would have to wear helmets and have motorcycle endorsements on their licenses, something that bill sponsor Rep.John Torbett (R-Gaston) feels is unnecessary given the safety features of the vehicle. “Autocycles have the potential to be one of themainstays of our future commuter needs, this is an entry market and an exciting one,” Torbett said. House Bill 6, Autocycle Definitionand Regulation would reclassify autocycles as a separate type of vehicle, which would free owners from the cumbersome requirements ofwearing helmets and having motorcycle endorsements on their licenses.
Read HB 6here
House Panel Rejects Proposal for Medical Marijuana
House Judiciary I Committee unanimously rejected a bill to legalize medical marijuana on Wednesday, after an emotional and often heatedhearing that pitted religious groups against veterans and others who claimed to use the drug for medical purposes. House Bill 78, EnactMedical Cannabis Act, would have made the drug legal only for patients with “chronic, debilitating conditions.” But opponents said itcould have paved the way for widespread legalization, turning North Carolina into Colorado, where the drug is sold in stores. More thana dozen people spoke on the proposal at Wednesday’s hearing, from elderly cancer patients to young veterans. Before, medical marijuanaproponents pleaded with House members to make it legal, but to no avail. Despite being sponsored by four Democrats, both Democrats onthe committee — Reps. Grier Martin (D-Wake) and Darren Jackson (D-Wake) voted against the proposal. Medical marijuana supporters atthe hearing said they would now focus their attention on House Bill 317 Medical Marijuana for Terminally Ill Patients, which wouldlegalize medical marijuana for terminally ill patients in hospice care.
Read HB 78 here