NC Budget Update from the North Carolina Association of REALTORS®

 

PROGRESS REPORT: BUDGET

August 21, 2015

In this week’s progress report, we are focusing on the ongoing budget debate in the legislature.

On Tuesday, legislative leaders and Governor McCrory announced an agreement on the budget spending target. The $21.735 billion spending target represents a compromise between the chambers given their earlier differences.  The chart below shows the different budget amounts from the House, Senate and Governor’s budgets as well as their final compromise.

Governor House Senate Compromise
$21.52 $22.2 $21.47 $21.735

Note: Numbers presented are in billions ($)

This compromise is $415 million less than the House originally proposed and $265 million more than the Senate’s proposal. If agreed upon, this budget will represent a 3.1 percent increase in spending from last fiscal year.

There is still much work ahead. Budget conferees have less than ten days to reach an agreement on how this sum should be spent. The current continuing resolution expires on August 31.

NCAR Government Affairs staff continue to promote our priorities. The chart below illustrates these priorities and their status.

Issue Status
Mortgage Interest and Property Tax Deductions

Current law caps the combined deductions at $20,000. Current law also allows an unlimited deduction for charitable giving.

Senate leaders want to lower the personal income tax rate, increase the standard deduction to $18,500, and add other Schedule A deductions under the $20,000 cap. Capping deductions erodes the benefits of the MID and PTD for homeowners. The House budget does not make changes to tax deductions. This proposal may still be on the table in budget talks but could also find its way into another bill. NCAR strongly advocates for increasing the cap as well as indexing it for future cost-of-living adjustments and increases in mortgage interest rates. 
Historic Preservation Tax Credit

This tax credit expired in 2014.

The House budget supports reinstating the tax credit, but the Senate budget does not. NCAR supports reinstatement of the program, which will likely remain part of budget discussions.
Sales Tax Reapportionment

Current law distributes 80% of sales tax revenue to the counties where the sale occurred and 20% on a per capita basis.

The Senate originally proposed flipping the formula to 80% per capita and 20% point of sale. Senators amended HB 117 to change the formula to a 50/50 split (see this chart for more information). On Thursday, the House voted 111-2 to reject the Senate’s proposal.
Leaking Petroleum Underground Storage Tank (UST) Cleanup Funds

Last year’s budget appropriated recurring and non-recurring funds for these programs.

The Senate budget pays for clearing the backlog of current claims, but pays for only the program for commercial properties going forward. The House version continues the program and clears the backlog. As an appropriation item, this issue remains part of the budget negotiations.
Workforce Housing Loan Program

Last year’s budget funded this program at $10 million.

The House wants to increase funding to $20 million. The Senate would maintain current funding of $10 million. As an appropriation item, the WHLP remains part of the budget negotiations.
Sales Tax on Services Current law places a sales tax on a narrow group of services. The Senate proposed adding advertising, veterinary and non-medical pet care, and personal property repair and installation services to the sales tax base. Much like the MID and PTD proposal, this issue could remain part of the budget talks for show up in another bill.
Film Incentive Grant Program

Last year’s budget contained $10 million for this grant program.

The House voted to increase funding to $40 million, and the Senate supported maintaining the program at $10 million. As an appropriation item, this issue remains part of the budget negotiations.

 

 

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