Agenda - 03-06-1991 - Laserfiche WebLink

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THE FACTS ON How HB2377 affects local revenues W1tat is 102377 all abort? Last year the General Assembly passed a bill, HB2377, that made cer- tain long - standing local revenues sub - ject to annual appropriation. This was done to balance the state's budget on an acarval accounting basis. Before this, these revenues had been distributed automatically, by state statute. These funds did not have to go through the state budget process. Now, they do. Now, each year, legislators must vote to send us these tax revenues -- from taxes that have long been local reve- nues sources. What revenues are affected? O The remaining tax on intangible preppy O The excise tax on the sale of beer and wine O The franchise tax on electricity, natural gas and telephone sales Isom ntwA survey is involved? For municipalities, these revenue are expected to bring in $167.2 million for FY 1990 -91. For 1991 -92, the munic- ipal snare is estimated at $175 million. In total, municipalities and counties will receive an eatimated $240.4 million in HB2377 funds for. FY1990 -91. The estimate for local governments for M991 -92 is about $250 million. Are these local taxes or state-shared revenues? The intangibles tax orginally was a local tax. Intangible property was part of the local property tax base, subject to the ad valorem property tax. The General Assembly passed leg- islation in 1937 for the state to adminis- ter the intangibles tax. This was done to establish a uniform tax rate and to im- prove collection of the tax. The tax was to be collected by the state on behalf of local governments. Before 1949, there were local fran- chise taxes on sale of electricity, natural gas and telephone service within a mu- nicipality. The state's franchise tax re- placed the local taxes, again applying a uniform rate across the state. The state keeps the franchise taxes from sales within unincorporated areas and re- turns to cities and towns part of the tax proceeds from sales within municipal- ities: The state began levying an excise tax on beer and wire back in 1933. In 1947, the General. Assembly raised the tax and shared the increase with cities and counties that allowed sales within their boundaries. Are these revenues at risk? Yes. The General Assembly could decide to cut the appropriation of HB2377 funds. There already has been talk of keeping the 1991 -92 appropria- tion the same as the 90-91 appropria- tion, thus cutting out the natural growth of these local revenues. What's the alternative? Municipal legislative policy calls for the repeal of HB2377, returning these funds to the previous statutory method of distribution. Municipal offi- cials also would be happy with statu- tory language that stops short of restor- ing the previous status as local government money, but gets these funds out of the annual appropriations Process. What can local officials do? Contact your legislators and ask them to support repeal of HB2377 or alternative language that gets this local government money off the table. Prepared by the North Carolina League of Municipali. P.O. Box 3069, Raleigh, NC 27602 (919) 834 - 1311.2/91