New Debt, Crony Tax Carve-Outs and Fee Hikes Galore in House Budget Plan

A House budget document sent to House Finance Committee members Sunday night includes sections focused on proposed new debt along with tax and fee changes being considered for the 2015 state budget. The committee will debate these proposals this evening.

The fingerprints of special interest lobbyists are all over the tax sections, with targeted tax credits for several politically-connected industries included. The House plan also authorized more than a quarter billion dollars worth of new debt, but at least it would be subject to voter approval. The gas tax would be set at a fixed rate for the next year- higher than it is projected to be under the current formula – and scheduled to increase automatically every year according to a formula tied to population growth and price inflation.

Here are the major highlights:

Targeted Tax Credits

• Extends the Research & Development tax credit another four years
• Extends the renewable energy tax credit for two years for solar and four years for other projects
• Restores and expands the tax credit for rehabilitating historic structures
• Extends the sales tax preference for purchases made by a motorsports team
• Expands the sales tax credits for data center ‘support equipment’
• Exempts service contracts on certain aircrafts from the sales tax

Other Tax Credits

• Restores the income tax deduction for medical expenses for seniors that had been eliminated in the 2013 tax reform

Gas Tax/DMV Fee Changes

• Sets the state gas tax at a rate of 33 cents per gallon for 2016 (36 cents for diesel) for 2016. Under projections for the current formula, the tax will fall lower than that next year. The tax rate would automatically increase every year thereafter by a formula based on population growth and price inflation
• Increases dozens of fees at the DMV, including fees for driver’s licenses, temporary tags, duplicate licenses and vehicle registration

New Debt

• Authorizes $270 million in new debt to finance five new building projects on UNC campuses. The debt would be subject to voter approval.

Other Fee Increases

• Drug manufacturing and wholesalers licensing fees
• Food manufacturer and retailer inspection fees
• Medical examiner autopsy fee
• Medical examiner report fees
• A new fee of $100 for each Medicaid provider