Negotiations continued all day Thursday, with meetings in the corner room and rumors in the legislative halls about new revenue estimates and threats by the Senate to leave town for a while if an agreement can't be reached soon.
Most of the talk about the budget negotiations has focused on the differences in spending in children's health care, public schools, mental health, the university system, and state construction projects.
Many of those differences remain but it is not just the spending decisions that are the problem. There are significant differences in tax reductions and tax credits.
House and Senate leaders agreed weeks ago to allocate $50 million for the tax changes and that's where the agreement on taxes ended. The House budget includes an increase in the State Earned Income Tax Credit to help the working poor, a property tax break for military veterans, and the renewal of several other tax credits, most notably the break for small businesses that provide health care coverage for their employees.
The Senate did not include any tax changes in its budget, preferring instead to pass tax cuts and credits in separate legislation. The Senate first voted to repeal the state's gift tax, a move that will benefit the wealthiest taxpayers and reduce state revenues by almost $20 million.
The Senate has also approved a reduction in the sales tax on home heating fuels, a further erosion of the sales tax base and out of line with the sales tax on other utilities, like electricity. That reduction would eventually cost $30 million.
There's the fifty million that the House and Senate agreed to.
But the Senate has also passed changes in sales taxes for small businesses that could cost $10 million or more and there are other tax credit bills making their way through the Senate. The Senate tax reductions could total as much as $70 million-$80 million and not include the House increase in the EITC.
The Senate has also passed legislation taking away from counties the option to put a small increase in the local land transfer tax before voters to raise money for schools and other infrastructure needs.
Last session lawmakers gave counties authorization to raise the transfer tax or the local sales tax if voters approved it in a referendum. Nineteen counties have put the transfer tax on the ballot and all were defeated by the big money of the Realtors and homebuilders, who mounted aggressive and misleading propaganda campaigns against the 0.4 percent transfer tax, an assessment 15 times less than the 6 percent commission Realtors take from families who sell their home.
Now the Realtors want lawmakers to take away the right of people to have a say about how to pay for schools, and using the results of the elections they bought as evidence that there is no support for an increase in the transfer tax.
The Realtors know that the more people understand the transfer tax, the more they will prefer it to an increase in the property tax. Facing the prospect of more local votes next year, the Realtors are trying to save themselves some money by taking away the right of counties to even hold the vote.
Sen. David Hoyle is all too happy to oblige and introduced the repeal of the local option transfer tax that the Senate recently passed. Hoyle said in a recent column in the Charlotte Observer that the transfer tax option should have never passed last year and did so only because it was rolled into the budget and "never received a fair vote."
Hoyle has apparently developed a dislike of inserting provisions in the state budget, a routine practice in the Senate and one on display in the budget Hoyle voted for last week. Maybe he is only against the idea when he doesn't like the result or when it makes the Realtors unhappy.
They are happy now, almost, and are reportedly trying to convince Hoyle's Senate colleagues to make the repeal of the local option transfer tax a key part of the budget negotiations with the House.
Taxes are what the budget negotiations could come down too. The House wants to help working poor families, military veterans, and small businesses. The Senate is fighting to cut taxes on the wealthy, create more holes in a tax system they claim to want to reform, and take away the right of people to vote on how to pay for schools.