BLOGS: Keeping Up With Jones Street

Friday, October 26, 2012, 3:45 PM

Gore My Ox? The possibility of tax reform in 2013

We’re hearing that the NC Legislature wants to take on tax reform in 2013 to provide stable, sufficient revenue to fund state government and reduce taxes on the overburdened to encourage growth.  The popular jingle is “expand the base, lower the rate” with regard to sales and use taxes; there is also an effort to eliminate the corporate income tax and close loopholes.

In the past quarter-century there have been two main drivers of NC’s ad hoc tax changes: the national Streamlined Sales Tax (SST) project, and economic recessions.

The goal of the SST is to provide a simple and uniform sales and use tax system across the states with a priority focused on collecting and remitting sales tax from remote purchases to states where they’re owed.  NC is a part of this.

During the most recent economic recessions the legislature stabilized revenues by enacting a number of temporary income tax increases through surcharges or by adding an additional bracket for our highest-earning taxpayers or by temporary sales tax increases.

Politics aside, the temporary nature of these tax changes was intended to maintain the state’s lagging revenue only during the downturn and then sunset as the economy improved.  Politics not aside, these taxes tended to linger.

Closing tax loopholes has a nice ring to it, but the political practicalities aren’t pretty.  Whoever is enjoying those exemptions and refunds will surely show up well-funded to complain, and they include: school districts, local governments, the agricultural and industrial sectors, prescription drugs, food, economic development, and non profits, just to name a few.  Are you affected by any of these?  By the way, those loopholes only add up to about $2 billion; remember that this year’s state budget is $20 billion.

In order for tax reform to occur in this political environment there must be a coalescence of disparate taxpayers and lawmakers who agree to put public policy ahead of political rhetoric – the need must be that compelling. Then is the selection of winners and losers. Not a simple proposition. I am reminded of the sage words of longtime Finance Committee staffer Cindy Avrette, “The devil you know must be more objectionable than the devil you don’t know.”

Wednesday, October 24, 2012, 3:51 PM

Life’s A Beach

We were recently at NC’s Wrightsville Beach for work and it got us thinking about the Coastal Area Management Act, or CAMA.

CAMA is a section of our state law enacted in 1974 to protect our estuarine, beach dune and coastal ecology in the 20 easternmost NC counties by requiring comprehensive planning for the protection, orderly development, and management of the coastal area. We have more than 3,000 miles of coastline – a few of which are seen below.

One of the key provisions of CAMA is to protect the public’s ownership of, and access to, the beaches. From the high tide mark to the dunes is public trust land; from the high tide mark to the water’s edge is state-owned land. Private property is from the dunes inland, and over the years this has been the source of tension and litigation – mostly because dunes shift without regard to private property. If you see a beach cottage forward of the dunes then it has survived a storm, but there may be other dangers often including failing septic which makes the dwelling unlivable. If a cottage is sufficiently damaged during a storm event and the lot would not be buildable if starting from scratch….we’ll save that bad news for another day.

Say you want to visit the beaches on a NC island that is a private community. The community can keep you and your car out, but it can’t stop you from landing your boat and setting up for a day in the sand and waves. We find that most communities work to accommodate the beach-going public with available nearby parking and beach access paths paid for by grant funds.

Local governments do have the authority to regulate many uses on the public trust lands – some examples are driving on the beach, having dogs on the beach or, ahem, nudity.

Yes, life may be a beach but whose beach is it really?

Monday, October 15, 2012, 3:21 PM

Raleigh Ripe For Job Seekers – political experience a plus.

The real perk of the incoming governor is finding meaningful work for qualified supporters and allies; they get hired into what used to be called patronage jobs but are now more aptly termed exempt positions.  In January, when our new governor takes office, he (it’s gonna be a “he” this time) will have a cool one thousand of these exempt positions to fill – up 900 from what our current governor had.

Buried in the 2012 state budget is a statutory rewrite to The State Personnel Act that increases the number of folks who work at the pleasure of from 100 to 1,000. That is staggering for many reasons, one of which is that these are not newly created jobs but jobs that are moving from a civil service-type designation to political.

The 1,000 number is misleading; if the governor wants additional exempt positions he will just list them and forward the list to the Speaker of the House and the President Pro Tempore of the Senate. If the legislature is in session and no legislative action is taken on the request within 30 days, the request is deemed approved.

Remember that this budget was passed by the legislature, vetoed by the governor, and overridden by the legislature -- so this ceding of legislative power was intentional.  But is it constitutional?

And is it unfair? The Republicans smell a victory in November, and the last time a Republican governor was doing the hiring was 1992. If the Republicans win the right to govern our state, should that not include the right to choose the policy-makers that shape its future?
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