North Carolina policymakers are facing short-term and long-term challenges this spring. A temporary 8 percent top income tax rate - and a quarter cent sales tax hike - are scheduled to expire on July 1, and leading elected officials (including Governor Mike Easley) are arguing that extending each of these tax increases will be necessary to make ends meet for the upcoming fiscal year.
And with an eye on long-term reform, a " State and Local Fiscal Modernization Commission" is asking hard questions about how best to reform the state's tax system ... and how to divide funding responsibilities between state and local governments. ITEP staff testified before the commission earlier this week. Among the likely recommendations of the Commission: eliminating county governments' responsibility for paying some Medicaid expenses, and diversifying the revenue-raising options available to local governments. One possible source of new county tax revenue: a real-estate transfer tax on home sales. NC Policy Watch has some sensible commentary on the merits (and demerits) of this proposal.