Senate Republican leaders rolled out a compromise Thursday addressing jobs incentives and a controversial plan to change how sales tax revenues are distributed among counties.
The new Senate economic development bill – now separated from legislative budget talks – softens the impact of the sales tax revenue plan, which had prompted outcry from some urban and tourism counties that would lose money.
The current system keeps the majority of sales tax revenue in the county where a sale occurred. Senate Majority Leader Harry Brown had called for distributing 80 percent of revenues based on population and only 20 percent based on sale location. That prompted cries of communism and wealth redistribution in the House, and Gov. Pat McCrory vowed to veto the entire state budget if the plan was included.
The Senate’s new proposal would split revenues in half, with half staying at the point of sale and half distributed based on population. The change would take effect in 2016 and wouldn’t be phased in gradually over several years, as in the previous bill.
A breakdown of the revenue impacts for each county, prepared by the legislature’s nonpartisan research staff, shows about 80 counties gaining money and 20 counties losing funds, compared to revenue projections made under current law.
“Overall, it’s a whole lot less for the 83 counties that win and a whole lot less of a loss for those counties that lose,” Brown said.
The economic development package also includes the Senate’s plan to raise the cap on the Job Development Investment Grant, or JDIG, the state’s main jobs incentive tool. The Senate is sticking to much of its original proposal that requires more of the money to go to poorer, typically rural counties. The House version would raise the cap without imposing any location restrictions.
The Senate bill has also added tax credits for jet fuel and technology data centers that the House has approved.
“We all agree that encouraging job growth and tax relief are top priorities,” Senate leader Phil Berger said. “I believe this is a plan that everyone should be able to embrace.”
Senate leaders have fast-tracked the bill, with a favorable vote in the Finance Committee an hour after it was introduced. It’s scheduled to go before the Senate Appropriations Committee Monday afternoon and get a floor vote several hours later.
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