WPTF Features

NC Tax Negotiations Delaying Budget Talks

RALEIGH, N.C. (AP) -- Negotiations on a tax overhaul plan probably will require the General Assembly to pass a stop-gap spending measure to keep funding North Carolina state government into the new fiscal year, House leaders said Thursday.

House Speaker Thom Tillis, R-Mecklenburg, told colleagues that he and Senate Republican leaders have agreed that legislation called a "continuing resolution" likely will be debated next week.

The current fiscal year ends June 30. Continuing resolutions in previous years only lasted a couple of weeks, giving legislators more time to work out differences with competing budget bills and passing a final one for the governor's signature.

Intense talks on a two-year budget plan should be happening by now, since the House approved its version last week, following the Senate from three weeks earlier. But they've been delayed while Senate and House GOP leaders tried to work out how to lower income tax rates and tinker with the types of transactions subject to the sales tax.

House Republicans offered a compromise to their Senate counterparts Thursday on the tax overhaul, according to Senate leader Phil Berger, R-Rockingham. He said Senate leaders were reviewing it.

The tax overhaul will adjust the level of funds budget-writers can spend through the middle of 2015. "We're hoping to see a resolution soon on that issue," said Rep. Nelson Dollar, R-Wake, senior co-chairman of the House Appropriations Committee.

Budget negotiations should begin in earnest next week, Dollar said, but with the end of the fiscal year so close it "is probably more likely than not" that a continuing resolution will have to be approved.

Tillis said on the House floor he's still hopeful that this year's legislative session can end by July 4. He and a cadre of House Republican allies haven't shaved for two weeks and don't plan to do so until the session is completed.

The House's latest tax offer to the Senate would reduce the corporate income tax rate more quickly compared to the package the chamber approved two weeks ago and agrees to the Senate's position on the future of several sales tax exemptions, according to documents obtained by The Associated Press. The House offer would still retain the 2 percent local tax on groceries. The Senate wants to eliminate it.

Both proposals would result in several hundred million fewer dollars for state tax coffers over the next two years, with the Senate proposal now sitting in a committee holding the higher price tag.


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