At least 300 North Carolina cities are forced to look for extra money after state lawmakers eliminated a business tax.
GREENSBORO, N.C. -- Mayor Nancy Vaughan is disappointed with a recent move by the General Assembly to do away with privilege license taxes. So are officials from at least 300 other North Carolina cities.
Vaughan said the move will negatively impact local governments and taxpayers. A privilege license tax is collected from any business performing a service or selling goods or services within the city. The annual tax can range from five dollars to $5 to $5,000 depending on the size and success of a business.
Vaughan said Greensboro will lose out on $3.2 million next year. High Point city officials said they'll be $800,000 short. Leaders in Winston-Salem said they'll be $3 million in the hole.
Officials from Greensboro and High Point thought lawmakers would put a cap on the amount of tax money collected, rather than doing away with it altogether.
"I think anytime the legislature takes away local control, it's a disappointment, but we have to remember that the state controls what we do and we just have to manage and deal with it," said Eric Olmedo, Budget Manager for the city of High Point.
"The General Assembly said that as they took things away, they'd try to find things to put back, but they have not been able to identify how they'll be able to restore all our funding," added Greensboro Mayor Nancy Vaughan.
Members of the Greensboro City Council visited Raleigh last week in an attempt to provide insight into how this law could affect the city.
Vaughan said she expected the legislature to at least consider a $100 cap on the privilege license, rather than an abolishment. "I am extremely disappointed in the fact that this final version of the law ultimately takes away a traditional local government revenue source and decision," said Vaughan.
"Unfortunately, in Greensboro, this will leave us with over $3 million to replace in the 2015-16 budget. The only way to do that is to raise property taxes or cut services, so this law could have a significant impact on Greensboro's residents," the Mayor added.
State lawmakers say the tax cut will mean businesses around the state get to keep an estimated $62 million. Mayor Vaughan is waiting for the state to make good on its claim to find those missing city dollars somewhere else.
So far, Vaughan says lawmakers have only found $14 million of that $62 million loss. "They're looking at putting taxes on some services that we don't now pay taxes on so we really need to see what the full breath of what this tax reform look like."
It's now up to each city to find a way to make up the loss. Greensboro and High Point city leaders say a property tax increase or budget cuts are the two real options.
The privilege tax won't disappear until the 2015-2016 fiscal year.