Exempt Builders’ Inventory Bill Could Lead to Revenue Loss to Counties, Creating De Facto Unfunded Mandate

By Frank Williams | June 17, 2015 | Comments Off on Exempt Builders’ Inventory Bill Could Lead to Revenue Loss to Counties, Creating De Facto Unfunded Mandate

NCACCThe item below was just distributed by the N.C. Association of County Commissioners.  I sent a note to several members of the House about this issue; my note is included at the bottom of this post.

From the NCACC:

The House Finance Committee yesterday passed H168 Exempt Builders’ Inventory, and it is scheduled to be heard by the full House this afternoon. While improved from the original version, the legislation still causes significant revenue loss to counties. domain owner into . As currently written, the bill applies only to residential properties, including multi-family complexes, and exempts such property from taxation on the increased value for three years instead of five. domain name expiration However, it still prohibits local governments from taxing the increased value of property resulting from subdividing, utility installation, curb and gutter, and buildings under construction or complete as long as the property is for sale. It also does not limit the exemption to licensed general contractors but allows anyone with improved property for sale to benefit.

Estimates by NCACC of the fiscal effects of the original legislation were a $50 million statewide revenue loss to counties. While we have not had a chance to fully analyze this current version, a good estimate is $40-45 million loss.

Arguments by the bill sponsor and the homebuilding industry were that local governments were not truly losing money since this was revenue that counties were not yet collecting. This directly contradicts their contention that the bill benefits communities by spurring economic development, as counties would be blocked from benefiting from any growth.

NCACC thanks former county commissioners Reps. Becky Carney (Mecklenburg) and Ted Davis (New Hanover) for expressing concern during committee about the effect of the legislation on counties.

 

My Note to House Members:

Please consider the adverse impacts this bill will have on county governments. Many counties, mine included, have already adopted our budget ordinance for the next fiscal year, which begins July 1. I have copied our county manager, Ann Hardy, and staff from the NCACC, who can provide you with additional information.
While I certainly understand the importance of making North Carolina an easier place to do business, doing so without regard for the unintended consequences is not a wise approach. In my view: a cut in county revenues without a corresponding cut is, in effect, an unfunded mandate.

 

Posted in County Budget & Finances, NC General Assembly, News, State Government and tagged