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Plans to finance both public education and transit at the local level would be stopped in their tracks under HB 1224 that passed the state Senate Finance Committee yesterday. The bill not only places a hard cap on the local sales tax rate at 2.5 percent but also only allows counties to levy a sales tax increase for either education or transit—not both.  This bill joins a slate of other bills that would restrict local control. The full Senate is scheduled to vote on the bill Monday night.

In effect, the bill restricts local governments’ authority to meet local needs and balance their budgets. Importantly, the bill is aimed at shifting the responsibility of funding public education away from the state and towards local governments. The state clearly cannot afford last year’s tax plan and now legislators are proposing budgets that would make serious cuts to public education as a result. Those cuts would have to be absorbed by children in the classroom or addressed at the local level, putting local governments in a tough spot having to choose whether or not to make up the difference via a local tax.

Local governments are dealing with the fallout from last year’s tax plan in other ways too. They no longer have access to the school Capital Building Fund, which received a portion of revenue generated from the state corporate income tax. Schools used this fund to help them meet their education obligations, as my colleague explained last month. The result is a $382 million dent over the next five years. This loss is on top of the looming $63 million-annual dent resulting from elimination of the local privilege tax in 2015. Read More

Local employers across the US have a demonstrated track record of supporting existing and new transit investments, according to a new report from Good Jobs First. In fact, local businesses’ support for transit extends beyond merely offering their employees monthly transit fare cards and commuter van pools. The report finds that many local businesses, unlike their national counterparts, take on a leadership role in pro-transit campaigns.

North Carolinians shouldn’t find the business community’s involvement in pro-transit campaigns to be all that surprising. Read More

Durham and Orange county residents are one step closer to accessing more affordable-transportation options. Each of the counties’ Board of Commissioners recently selected April 1, 2013 as the date to begin collecting the half-cent sales tax to support public transit investments. Expanded bus services and new commuter and light rail have the potential of expanding the reach of opportunity by connecting North Carolinians who are poor to the education, employment, and social networks that can help them improve their financial standing.

However, public transit is only helpful to riders if it connects where they live to where the opportunities are available, according to a new report released yesterday by the NC Budget and Tax Center. The success of transit, in turn, rests on increasing access for who regularly use and depend on it: low-income North Carolinians. The report found that more than two-thirds of the state’s workers using transit earn less than $25,000 per year, and a growing share of low-income workers are relying on public transit. The report also found that housing is becoming increasingly unaffordable in the urban cores, where public transit is primarily located and jobs are more plentiful. Read More

Just out from the NC Budget and Tax Center:

MEDIA RELEASE: Low-income North Carolinians’ needs must be at forefront of public transit plans
Plans should evaluate where low-income individuals – transit’s most reliable customers – live and work

RALEIGH (December 12, 2012) – The success of new and expanded transit in North Carolina will be largely dependent on how well the transit system retains and reaches its most reliable customers – low-income North Carolinians – according to a new report. Read More

Earlier this week, the House approved a $3.1 billion transportation budget.  The transportation budget is not supported with revenue from the General Fund like other areas of the budget. Transportation investments are supported with revenue from the Highway Fund and Highway Trust Fund, which receive revenues from the state’s gas tax, highway use tax, and fees collected from the Division of Motor Vehicles. Due to a revised revenue forecast and budget writers’ anticipation of capping the state’s gas tax at 37.5 cents, the transportation budget was reduced by more than $150 million from the continuation budget.

One casualty of the budget cuts is a reduction to the Division of Public Transportation, which provides grants to local governments for transit systems. The House’s proposal would reduce public transportation funding by nearly $2.6 million over the continuation budget, which already imposed a 15 percent recurring cut to the Division when passed in 2011. This $2.6 million cut was once slated to be an $8.6 million cut but members of the Appropriations Subcommittee on Transportation reduced the cut, citing the value of public transit to North Carolinians. This value is especially true for low-income residents. Read More