Senate considers retooled plan on tax distribution

RALEIGH — State Sen. Jane Smith says she is ready to vote in favor of a bill that will change the redistribution formula of state sales tax so that rural counties will receive more revenue.

The bill, which is expected to come before the full Senate on Monday, also calls for expanding the state’s Job Development Investment Grants program, the state’s most popular tool to attract new jobs.

The incentives proposal that cleared the Senate Finance Committee on Thursday addressed Gov. Pat McCrory’s requests about expanding the Job Development Investment Grants. It also included a retooled plan shepherded by Sen. Harry Brown, a Republican from Onslow County, to redistribute the portion of the sales tax all consumers pay that goes to local governments.

Brown unveiled a new plan Thursday where 50 percent of local sales taxes would be distributed by population and 50 percent by where the transaction occurred. Rural counties still would benefit most, while urban counties and vacation centers would still lose.

Brown’s original proposal called for 75 percent of local sales tax to be distributed by population and 25 percent by point-of-sale, meaning more sales tax revenue would go to rural counties while urban counties would receive less. Under that proposal, Robeson County after a four-year phase-in period would have seen an additional $3 millon to $6 million more annually in sales tax revenue. According to County Manager Ricky Harris, Robeson County now gets about $17 million annually.

Figures for how much Robeson County would receive under the latest proposal were not available Friday morning.

Smith said that she believes the revised sales tax proposal now has a chance to pass both the Senate and the House.

“This is a compromise I think can pass. I’m not sure it would under the original proposal, which would be opposed by representatives of urban areas,” Smith said, noting she would have preferred a formula that gives more to rural counties. “… At least we will be getting 50 percent of the sales tax revenue rather than just 25 percent.”

Harris is on vacation and could not be reached for this story, but Kellie Blue, Robeson County’s finance director, agreed with Smith, who is a Democrat from Lumberton.

“Any additional revenue we can get for the county is great,” Blue said.

McCrory has said he would veto Brown’s original plan.

According to The Associated Press, House Speaker Tim Moore, of Moore County, said he didn’t know whether House members would find the updated sales tax proposal acceptable.

Smith said that she is especially happy to see the Senate finally act on an incentives bill needed to recruit industry to the state.

“We have had no incentives to offer companies that may have been interested in locating in North Carolina,” Smith said. “I’ve worked with industrial recruitment for years, and I can assure you some of the companies that may have come to North Carolina have gone other places.”

In another committee senators rolled out a reworked plan to change how North Carolina pays for medical and other services for Medicaid and NC Health Choice patients.

The new proposal would still take Medicaid oversight away from the state Department of Health and Human Services. But instead of placing it in a new independent health benefits authority as the Senate budget directed, the proposal creates a new Department of Medicaid that would remain under a governor’s control. The House has wanted to keep Medicaid under DHHS.

The House and Senate both want to end Medicaid’s current fee-for-service model of paying hospitals and doctors and instead give networks or managed-care groups a fixed amount for each patient they treat. The Senate left mostly unchanged its proposal that allows some private managed-care companies and insurers to enter into contracts to manage patients. The House plan, which McCrory supports, leaves it to networks led by regional hospitals and local doctors.

Jane Smith Smith

by Bob Shiles

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Associated Press writer Gary D. Robertson contributed to this report.


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