McCrory pledges to help towns find new revenue to replace privilege tax

ccampbell@newsobserver.comJune 5, 2014 

— Gov. Pat McCrory sought to reassure city and town officials Wednesday that his administration doesn’t want to take away municipal revenue and regulatory powers.

McCrory’s annual meeting with the N.C. League of Municipalities came at an awkward time this year – just days after he signed a bill to repeal local business taxes, a move that’s expected to cost cities and towns a total of $62 million.

The governor promised local leaders that he’ll help them find a way to make up for the lost funding without raising property taxes.

“There ought to be a way to have you be able to make up that revenue and make up that gap,” McCrory said. He didn’t offer specifics but said that leaders in the state legislature have also promised to find a solution before the repeal goes into effect next year.

The governor said that killing the program, known as the privilege license tax, was the right move.

“The business license tax was not a well-implemented program,” McCrory said. “Something needed to be done because the inconsistency was enormous.”

The annual tax each business pays varies dramatically between industries and between towns. In Raleigh, where the city collects $7.9 million a year, the privilege license fee ranges from $2.50 for an ice cream business to $20,000 a year for big-box stores such as Target and Walmart that have millions in sales. Many businesses pay nothing: attorneys, doctors, breweries, private detectives, Internet ticket resellers and “healers.”

The League of Municipalities’ president, Goldsboro Mayor Al King, thanked McCrory for his willingness to help with the loss of the tax. King’s comment prompted applause from just a few of the town officials in attendance.

“It seemed like there was a little less optimism from the audience,” Garner Town Councilwoman Kathy Behringer said after the meeting. “We still don’t have an answer to where the revenues are coming from to replace (the tax).”

Others left feeling more hopeful. “I was pleased that he’s looking for replacement revenue,” said Steve Rao, a town councilman in Morrisville, which takes in $855,000 annually from privilege licenses. “I still wish he didn’t sign the bill.”

Rao said he was happy to hear the governor’s strong opposition to another controversial bill making its way through the state legislature.

The Republican-sponsored bill effectively bans municipalities from regulating trees on private property. Raleigh and other local towns have a variety of tree ordinances that require developers to preserve or plant trees and mandate wooded buffer zones around new developments.

McCrory said he “would be surprised” if the bill passes the legislature.

“I strongly support the ability of the cities to write their own ordinances on trees,” he said. “I firmly believe that cities have that right and responsibility. I will take whatever action is necessary not to have that implemented.”

And while the business tax repeal and tree bill have prompted plenty of gripes in the past month, they weren’t mentioned in a 30-minute question-and-answer session that followed the governor’s remarks.

Many of the local officials at the meeting represent tiny towns far from Raleigh, and they took the chance to complain about issues specific to their communities. The finance director from Bolton, a Columbus County town of about 700 people, asked the McCrory administation to add the town’s name to a nearby highway sign.

Transportation Secretary Tony Tata, who accompanied the governor, seemed visibly pleased by the simple request. “You’ll have a sign within the week,” he said.

Staff writer Kyle Jahner contributed to this report

Campbell: 919-829-4802; Twitter: @RaleighReporter

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