North Carolina State Senate Moves Ahead on Local Sales Taxes

Following an April vote in the House, the Senate appears to be close to allowing the Triangle and Triad to fund new transit systems.

After years of controversy revolving around the regressive nature of sales tax increases, the North Carolina State Senate yesterday tentatively approved a measure that would allow citizens in the Triangle and Triad metropolitan areas the right to vote to increase their local sales taxes by a 1/2¢ on every dollar to pay for transit improvements. Mecklenburg County, which includes the state’s largest city Charlotte, has been taxing itself a similar amount since 1998 after the legislature allowed it and it alone to expand its tax base. The bill, if approved later this week as expected, will also allow other less urban areas in the state to push up sales taxes by 1/4¢ to fund transportation.

The measure passed the state house in April and will let the cities of Raleigh, Durham, and Chapel Hill in the Triangle and Greensboro and Winston-Salem in the Triad construct ambitious new transit networks, but only if the citizenry of their surrounding counties can be cajoled into voting for tax increases. The state will require all counties wishing to fund transit to conduct local referenda before the sales taxes can be implemented. Votes are expected in 2010 if the economy improves sufficiently.

A DMU regional rail system connecting Raleigh and Durham came close to receiving federal funds in the early 2000s, but it was shot down because of Washington’s strenuous cost-efficiency regulations. A new regional advisory commission released a report in 2008 proposing an even more ambitious project, with lines reaching 50 miles through the Triangle region. New streetcars could serve the downtowns of the two inner cities, and many more buses would extend through what is one of America’s fastest growing regions. A 1/2¢ sales tax would be an efficient way of funding the new network.

Meanwhile, Greensboro and Winston-Salem have been planning a new light rail connector between each downtown, though their project is not as far advanced. The new tax, if approved, would allow planning and construction to go ahead.

Each region, however, is sprawling and will have a hard time meeting the cost-effectiveness guidelines required by the Feds because of likely low ridership compared to proposed lines in other cities. This barrier could be insurmountable unless they significantly reform their land use policy to encourage dense, station-oriented growth. Without money from Washington, both the Triangle and the Triad will be doomed to smaller and less effective transit lines.