All that appears to be preventing an agreement among House and Senate Democrats on taxes for the state budget and a plan to help counties with their Medicaid bills is a .4 percent land transfer tax.
House Democrats want it as part of a deal to help counties with their Medicaid bills. But Senate Democrats balked after meeting behind closed doors for two hours this afternoon with lobbyists for the homebuilding and real estate businesses camped outside, reports Dan Kane.
Senate leaders would only say they had no deal late Thursday afternoon.
"No decision is sometimes a victory," said Paul Wilms, a lobbyist for the N.C. Home Builders Association.
Read more after the jump.
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House leaders say here's what has been agreed to:
-- a quarter-penny temporary sales tax will stay on the books permanently. It is scheduled to expire on Sunday, though a stopgap spending bill that has cleared the House and tentatively passed the Senate would extend it another month.
-- a quarter-percentage point temporary income tax on high earners will come off as scheduled on Jan. 1.
-- the working poor would receive an earned income tax credit that splits the difference between House and Senate proposals and would cost roughly $45 million. It would allow some recipients to get back in credits more than what they paid in income taxes, but would not let them receive more than their total tax liability.
Here are some of the details of the Medicaid plan:
-- it would be phased in over the next three years.
-- the state would swallow the Medicaid bill by 25 percent next year, 50 percent the following year, and entirely by 2009. The projected cost by then is roughly $600 million.
-- the state would take a quarter-penny of the counties' share of the sales tax next year and then another quarter penny in 2009. The state would also take the $44 million corporate income tax money that counties would get for school construction next year.
-- the state would agree to hold the counties harmless for any revenue losses from 2009 to 2011.
-- the counties would agree to hold cities harmless for any loss in revenues.
The sticking point has to do with the options the counties would be given to raise taxes to cover the sales tax loss. The House Democrats say they want counties to have the option of adopting a quarter-penny increase on the sales tax or a .4 percent land transfer tax. Counties would be required to let voters decide to increase either tax through a referendum.
House leaders say Senate Democrats have agreed to the sales tax option, but not the land transfer tax. Negotiations will continue. The question now is whether the rest of the deal will start to unravel.
Correction: An earlier version of this post misstated how long the sales tax would stay and some details of the Medicaid plan.
Comments
Re: No deal on budget
July 3, 2007 - 11:22am — DallasWoodhoHelp Hold the Line on Home Taxes
Currently, state lawmakers are busy developing a state budget. One proposal being discussed is increasing the taxes that property owners pay when they sell their own property.
Some lawmakers want the budget to include an increase in the existing statewide transfer tax and/or permission for local governments to adopt local transfer taxes.
This ploy – to hide this unfair home tax among the complex and lengthy language of the state budget – is not right.
The home transfer tax singles out one group of people to pay for infrastructure and services that benefit everyone. Why should property sellers pay more for the services and infrastructure that the entire community enjoys? This is not a tax on growth and newcomers.
It’s a tax on current residents who already pay property and sales taxes in their communities. This tax increase will not lower local property or sales taxes, it will just increase government spending.
Follow the link to contact your lawmakers
Sincerely,
Francis X. De Luca
State Director
http://capwiz.com/americansforprosperity/issues/alert/?alertid=9967676&type=ST&show_alert=1
Bad deal for the working class
June 29, 2007 - 1:34pm — SenateMinnie,
It is outrageous that a state running a $1.5 billion surplus is trying to find more ways to tax it's citizens. We are due some tax relief.
A transfer tax is particularly unfair, it is paid by every working and middle class family when we sell our biggest asset, our home. It will hit young folks trying to achieve the American Dream and the elderly on fixed incomes the hardest.
I'm not in the least bit inclined to have to write Wake County a check for $1,000 dollars when I sell my house. Every property owner in North Carolina already pays an equivalent to a transfer tax in the form of a deeds stamp tax of .2% that is more than enough.
That might not be real money to you but it is enough to make a difference in my family's life.
And your argument about not moving is ridiculous. As people get older and the number of people living in home goes up and then down, they move. In fact according to the study below the average person, as you point out, moves 7 times in their life and and about 1 in 5 americans move each year.
So that is a lot of folks that will get hit with a huge new tax for the "value" that local governments contribute to their homes. And home prices won't appreciate forever. This tax could mean you lose money on your home. It really is a monumentally bad idea.
http://ecp3113-01.fa01.fsu.edu/lively_introduction/Migration.htm#box3
Re: Facts right?
June 29, 2007 - 9:19am — ryanteaguebeckwithThe post has been corrected. My apologies. The correct version ran in the print edition, but I mistakenly left an earlier draft on here.
— RTB
Facts right?
June 29, 2007 - 8:17am — AnglicoWho's the source of the information about the House compromise on taxes? My representative just wrote this back to me:
Well said Stan
June 29, 2007 - 1:51pm — AnglicoIt would appear our so-called elected representatives in Raleigh have sold out to special interests (Realtors) and self-interest (big donors) and thrown We the People and our unimportant needs under the bus.
The Senate is an embarrassment, but the House isn't all that much better. Their reported current position on the sales tax and upper-crust income tax are an abrogation of trust, in my opinion.
Re: No deal on budget
June 28, 2007 - 11:19pm — stannIf your report is correct, the decision between a quarter-penny increase in the sales tax and a 0.4% transfer tax is correct is a no-brainer.
The quarter penny sales tax would raise $15 million per year in revenues and the 0.4 transfer tax over $50 million per year. That might sound good to some but the need for school construction is so great that the $35 million difference between the two would have to be made up with another five cent increase in the property tax. And that tune would have to be played over and over in succeeding years. That one decision would cost the taxpayers of Wake County a continuing succession of five cent property tax increases year after year.
The counties Blue Ribbon Commission told us that we have a $1.5 billion gap to fill over the next five years ..that was before Judge Manning's decision discouraging year-round schools increased the bill by as much as roughly $200 million over five years.
Think of the damage a constant succession of property tax increases will do to lower income folks on a fixed income or to small businesses. But does Paul Wilms and the development lobbies leadership care about that? - (although some individual developers have broken away from the lobby's position.) Worrying about taxpayers is not Paul Wilms' job. Sadly, even the NC Senate leadership that we have elected to represent us, doesn't seem to care either. And why won't either the Senate leadership or the developers lobby let us make our own decisions in a referendum?
The fact is that neither tax is big enough by itself. The 0.4% transfer tax should be raised to match the 1% allowed six NC counties represented by Senator Basnight - the Senate's leader.
I am dumbstruck and totally amazed by the Senate leadership's unwillingness to recognize the crisis all of us in Wake County are in.
Stan Norwalk
WakeUP Wake County
Re: No deal on budget
June 28, 2007 - 9:47pm — minnieA transfer tax is a sales tax on all real estate transactions involving land, new residential construction as well as timber, construction of offices, factories, retail shops, as well as existing residences. It is paid every time a deed changes hands.
For new development, it is paid when a developer buys unimproved land, when improvements such as streets and utilities are made and lots sold to builders, and when builders sell new homes, office buildings or shopping malls.
When the NC Association of Realtors calls it a "home tax", that is not accurate. The only tax on homes is the property tax, paid by ALL homeowners every year. For those persons who intend to live in their home indefinitely, the only time that a transfer tax would be paid is when their estate sells their home. The typical homeowner, who sells their home and moves every seven years, would pay it at those times.