The special interests still reign

The special interests still reign

- in Fitzsimon File

House and Senate negotiators continue to work toward a final budget and tax package, but there doesn't appear to be much progress towards an agreement on the best way to raise $900 million.

Both sides claim their tax plan is broad and progressive and that it treats everybody fairly by asking virtually everyone to pay a little more to help protect public schools and human services from the most devastating cuts.

That's not entirely true of course, but the newly found commitment to treating people the same regardless of their ability to hire lobbyists and make campaign contributions is worth noting nonetheless.

But outside the budget negotiations, lawmakers aren't even paying lip service to treating the special interests like everybody else. They're giving them breaks all over the place, at the expense of already cash-strapped local governments, taxpayers, and homeowners across the state.

The House passed one of the most egregious examples Thursday afternoon, approving legislation to allow home builders to delay paying property taxes on houses they have built but not yet sold.

The home builders tried last session to get legislation passed to allow them not to ever pay taxes on unsold homes, which was too much for lawmakers to take even from an industry that is among the leaders in political contributions and employs a battalion of lobbyists in the General Assembly.

This year's version would allow a home builder to avoid paying taxes on an unsold house for up to five years.  The builder would be required to pay all the taxes owed plus interest when the house was sold.

It amounts to a loan from local governments to home builders. And it's not like local governments have the money to get into the finance business. They are struggling to balance their budgets too and can't afford to forego the tax revenue.

Besides, the cities are still providing services for the unsold homes like police and fire protection and maintenance of the roads in front of the houses. That's what taxes pay for and most people can't simply ask to pay their taxes later, when the economy improves.

But the home builders are one of the most powerful lobbies in the General Assembly, and have helped lead the opposition to public financing of campaigns, a system which would remove the source of much of their power.

Now it's up to the Senate to stand up for local governments, but don't hold your breath. The Senate has traditionally been even more receptive than the House to the home builders' wishes.

The giveaway to the home builders is hardly the only current example of a legislative process tilted toward a special interest.

A tax break for movie companies is making its way through the General Assembly. Lawmakers justify the special treatment by pointing to other states that now provide more breaks for Hollywood studios than North Carolina.

That faulty reasoning is likely to continue the tax break bidding war among states and it's hard to see an end in sight. Even more troubling is that the film tax credit will be a net loser for the state for at least the next two years, and it is maybe the worst two years in the state's history to giveaway public money.

If you own a house in North Carolina, it's likely your homeowners insurance will increase soon as a result of a deal made to protect the owners of million dollar mansions on the coast that are at risk of being damaged by hurricanes.

The plan at least lowers the cap on a residential policy at the coast from $1.5 million to $750,000, but nothing has passed yet and it wouldn't be a surprise to see proposals to move the cap back up.

It has been quite a week at the General Assembly. Homebuilders and movie studios get tax breaks and you get higher homeowner premiums and higher taxes to help balance the budget.

No matter how you look at it, that's a pretty powerful reminder of how the General Assembly often works, and who it works for.

About the author

Chris Fitzsimon, Founder and Executive Director of N.C. Policy Watch, writes the Fitzsimon File, delivers a radio commentary broadcast on WRAL-FM and hosts “News and Views,” a weekly radio news magazine that airs on multiple stations across North Carolina.

chris@ncpolicywatch.com

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