RALEIGH – Tonight the Speaker of the House, Charlotte Democrat Jim Black, and other members of the House leadership suffered a major defeat when the cornerstone of their 2002-03 budget plan, a half-cent hike in the sales tax rate, went down on a 57-60 floor vote.
Six liberal Democrats joined with most of the Republican caucus to defeat the bill, which would have allowed local governments the “option” of imposing the higher sales tax rate (see http://www.herald-sun.com/state/6-247687.html). City and county officials crowded the gallery above the House floor, looking on with anticipation at what they perceived to be a crucial measure to offset the expected loss of hundreds of millions of dollars in tax reimbursements from the state. They were disappointed. But thanks to the House Republicans and Democrats like Rep. Martin Nesbitt of Asheville, they know whom to blame. Here’s a hint: it isn’t the House Republicans or Nesbitt and his liberal posse.
No, the culprit was Black himself. He refused to allow an amendment on the floor to make the bill revenue-neutral. As pitched by Nesbitt, the idea would have been to give localities the tax-for-reimbursement swap a year earlier than the 2001 tax bill authorized but also to repeal the state’s temporary half-cent sales tax hike enacted last year. In other words, the state would have simply transferred its taxing authority to the localities. The total sales tax rate statewide would have remained at 6.5 percent, but its distribution would have been different.
I don’t happen to favor this idea, for a variety of reasons, but it would have provided just as much help to localities as the House leadership’s bill would. But Black wouldn’t have it. His budget-writers have told him that they can’t balance the state budget without big tax increases, and his political consultants no doubt told him that a “local-option” sales tax is more politically salable than direct increases in personal or corporate income taxes. So Black, coming off an embarrassing defeat last week in failing to assemble sufficient votes for a state lottery and a summer of bitter defeats on redistricting, ran with yet another controversial idea without possessing the arguments or the heft to make it happen.
Most North Carolinians don’t think their state government needs more taxes. They want to see fiscal restraint. Another sliver of North Carolinians, represented by Nesbitt and a half-dozen others in the House, want big tax increases on corporations and the wealthy. In between are the Democratic establishment, the education establishment, and a smattering of RINOS (Republicans In Name Only) who are comfortable with a tax hike that disproportionately hits lower-income people and that will further hamper North Carolina’s economic recovery.
Apparently, this faction totals no more than 57. Not enough in a 120-member House. What happens next is anyone’s guess, but one thing is for certain: the speaker’s power and credibility are ebbing.