RALEIGH — If the General Assembly doesn’t extend hold harmless funding, taxes in Zebulon will go up.
Without the funding, which is set to expire in June, Zebulon will face a $420,000 budget shortfall in next year’s town budget. To compensate, property taxes values could go up as much as six cents per $100 in property value.
So Tuesday, Zebulon Mayor Bob Matheny and Rick Hardin, Zebulon’s town manager, took their case to Raleigh and state lawmakers’ doorstep. As they walked toward the N.C. Legislative Building around 9:30 a.m., Matheny bemoaned the General Assembly’s decision in 1988 to repeal the inventory tax – the move that left Zebulon “holding the bag.”
“I knew we’d never see that money again. I told them so in 1988,” Matheny grumbled as cars whizzed by on Jones Street.
Twenty-five years ago, Democratic lawmakers told North Carolina towns that a one-half-cent sales tax increase would compensate for the loss of inventory tax revenues – but, for many, it never did. And the 10-year hold harmless program initiated in 2002 wasn’t fully effective. Now, Republicans are sketching out their own tax reform and budget plans. So far, they don’t directly restore lost inventory tax revenues for towns, and the future of hold harmless funding looks bleak.
Bills aimed at extending hold harmless funding died before reaching the floor of the House and Senate. Gov. Pat McCrory and Republican Senate leaders each proposed a state budget – but neither extends hold harmless funding. And within days, the Senate is expected to send a version of its plan to the House for approval.
If hold harmless funding isn’t written into the state budget, about 100 N.C. municipalities will lose a total of about $10 million. Despite the widespread effect of expired hold harmless funds, Matheny doubts he’ll garner much sympathy with legislators.
“These guys weren’t here when hold harmless started. They’re not familiar with it, and don’t want to spend,” Matheny said, referring to Republican legislators. “But, if you quit now, you’ll never win.”
In that vein, Hardin and Matheny climbed the stairs of the Legislative Office Building to meet with their first appointment of the day: Republican Sen. Tamera Barringer, of Cary. Barringer, a freshman legislator, said she was unfamiliar with the origins of hold harmless funding, but was concerned that affected towns might not be “made whole.” Matheny and Hardin were two of about a dozen N.C. League of Municipalities members that followed a meeting schedule and perused the legislative grounds. Their meeting with Barringer lasted about 15 minutes and was dominated by talk of a proposal to loosen clean water restrictions at Jordan Lake.
The group then stood outside Sen. Jerry Tillman’s office, where they talked briefly with the Archdale Republican. Matheny broached the topic of hold harmless funding, and Tillman, the Senate Majority Whip, said towns in his district had similar problems. He didn’t elaborate on his efforts to extend hold harmless or why an extension wasn’t addressed in the Senate budget.
The group was ushered out of Tillman’s office after about five minutes, and then visited Sen. Chad Barefoot, a freshman Republican who represents Zebulon and much of Wake County. The group made a crescent around Barefoot’s office, and Matheny asked him: “So how do you see your cohorts on this issue?”
“It’s not looking good,” Barefoot said, standing behind his desk.
Barefoot said he didn’t know why GOP leaders didn’t entertain the hold harmless extension bill he introduced.
“I just don’t know,” Barefoot said.
After a 20-minute meeting with Barefoot, the group tried to meet with state Reps. Nelson Dollar and Paul Stam, key Republican budget writers from Wake County. However, their secretaries said they weren’t available. Such was the case, too, with Rep. Chris Malone, a freshman Republican from Wake Forest.
By 11:30 a.m., Matheny left for an appointment. Hardin and the League of Municipalities members sauntered from the legislative office building to the main legislative building, where they waited for Republican state Rep. Tom Murry, of Morrisville, for the last meeting of the day.
At noon, when Murry greeted the group at a table in the hallway, Hardin asked Murry if budget writers in the House might extend hold harmless funds.
“Probably not,” Murry said.
Hardin exhaled and nodded his head slowly.
“But I think the House version (of the budget) might be a little slower to put together, so there might be enough time for more negotiation,” Murry added.
Matheny said later he left the legislature “without a cheerful heart” but maintained a sense of cautious optimism.
“When you come (to the legislature) you don’t expect to come away with anything definitive,” he said. “But you gotta keep fighting the fight, and hope your presence helps.”