Sic transit sales tax? Stein remains "optimistic" about the 1/2-cent transit tax | Citizen | Indy Week
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Monday, June 15, 2009

Sic transit sales tax? Stein remains "optimistic" about the 1/2-cent transit tax

Posted by on Mon, Jun 15, 2009 at 5:32 PM

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House passage of an $18.6 billion budget over the weekend, with higher income tax levies on the well-off and a 1/4-cent sales tax hike on everybody, sets the stage for final budget negotiations among House Democrats, Senate Democrats and Gov. Bev Perdue's Democrats. But does the fact that the yawning budget hole is likely to filled in part with a sales-tax increase dull the chances of HB 148, the bill to give Triangle counties the option of raising their own sales taxes by 1/2-cent to pay for transit? When I asked Sen. Josh Stein, D-Wake, he conceded that "there definitely is a relationship" between the two things, but added that the transit bill "isn't doomed by any means." Indeed, he's still "optimistic" that it will be enacted.

HB 148 has already passed the House. But it did so with the help of a provision allowing 94 other, non-urban counties to increase their sales tax rates by 1/4-cent to pay for transportation needs; that provision helped attract support among rural Democrats (and a few Republicans) who otherwise might not have been inclined to back a measure letting Wake. Durham, Orange and the two Triad counties of Guilford and Forsythe go for the 1/2-cent tax hike.

Now, though, HB 148 is hanging fire in the Senate Finance Committee while budget writers try to bang out a final package of spending cuts and tax increases to fill the $4 billion revenue shortfall. And with a 1/4-cent sales tax hike a cornerstone of most budget schemes -- along with broadening the sales-tax base to cover additional services that aren't currently taxed -- there's widespread talk in the Senate of taking the 1/4-cent transit-tax option out of HB 148.

Stein, though, pointed out that every county already has the option of a 1/4-cent sales tax hike -- and can spend it for any purpose -- under legislation enacted two years ago that also gave counties the chance to increase their real-estate transfer taxes. The counties, thus far, have used neither option. But they could, so why do they need the sales-tax option all over again? Anyway, that's what senators are asking each other, according to Stein.

With or without the 1/4-cent for other counties, though, Stein thinks the 1/2-cent tax for transit in the Triangle and Triad will survive (Charlotte-Mecklenberg already has it). "There seems to be widespread consensus that the Triangle needs the option," he says.

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