The transfer-tax option is signed into law the same week former House Speaker Jim Black goes to prison. Coincidence? No. Black was a guy who made sure that money talked in the General Assembly, not good public policy. Whereas his successor, Speaker Joe Hackney, is the main reason why progressive analysts like Rob Schofield of N.C. Policy Watch could say, of the 2007 session, that it was “a pretty darned good job.”
Not a great job, I’d add, due to the way the two big utilitiesProgress Energy and Duke Energywere allowed to hijack the alternative-power bill. This legislation was supposed to promote “renewable” sources (solar, wind, conservation) so we could avoid paying for a lot of new power plants. The utilities turned it into such a nuclear-power sop, however, that it could end up having the opposite effect.
So no, big money’s influence on state politics won’t be disappearing soon. And yet, prior to this session, who would’ve predictedwith the way the Realtors and homebuilders’ lobbies throw their money around, along with their threats to attack unheeding legislators at election timethat the transfer tax had a chance? Its enactment is, as Schofield says, “almost as important for the message it sent to moneyed special interest groups as it was for the substance.”
Indeed, not almost as important. More important. On the substance, after all, it’s not the 1 percent transfer-tax option that advocates sought, it’s merely a 0.4 percent option. Which means, for example, that in Wake County it will bring in about $40 million a year for starters, not $100 million a year. Nor is this a go-ahead to hit the new developments with much-needed impact fees. In substance, then, it’s perhaps less significant than such other progressive victories as the mental-health parity legislation.
I’ll say, too, that its opponents made a mistake mounting a TV campaign against it, for two reasons. One, money talks in the legislature when you contribute it to legislators; but they get all miffed when you spend it trying to go over their heads to the public. And two, while there are issues that lend themselves nonetheless to an advertising campaign, this wasn’t one of them. Quite the opposite. Once the public understood the stakes, they liked the transfer tax, and they got it that the N.C. Association of Realtors was hoodooing them.
Why? Because the ads kept calling it a “home tax,” but as any homeowner knows, the real home tax is the property tax, which all of us pay. Whereas the transfer tax is paid only by people selling land, buildings or houses, which is usually not most of us.
The whole point of having a transfer tax on the few is to keep property taxes down for the many. So why go on TV and alert the many that you’re working against them in Raleigh?
Maybe if the Realtors had been smarter, they’d have won despite Hackney’s leadership. Still, no one should miss the contrast between the old Black gang, which gave us video poker, the state lottery and various other shady deals with the “moneyed special interest groups,” and Hackney’s team, where the finance sheriffs included such incorruptibles as Jennifer Weiss (D-Cary) and Paul Luebke (D-Durham). The day one of them sells their vote in a bathroom, just put me out of my misery.
The transfer-tax option is also a victory for the metro areas overor if not over, withthe rural counties that have ruled the legislature literally since Colonial days. Reapportionment (starting with the U.S. Supreme Court case of Baker v. Carr in 1962) required that the urban counties be fairly represented. Now, with their populations exploding (Raleigh, Durham, Charlotte), they’ve just about caught up in terms of sheer numbers. (After the 2010 census, they’ll sail right by.)
In this tug-of-war over the transfer tax, the rural Democrats who still control the Senate wanted the state to relieve their less-affluent county governments of Medicaid payments. Fine, said the urban House Democrats, but in return you must at least let our more-affluent counties tax themselveswith a transfer tax or the other option, a 1/4-cent sales tax increaseto build new schools.
When the development lobbies started in with their threats, the Senate was willing to cave and leave out the transfer tax. But Hackney’s House, unlike the old Black place, wasn’t buying, and the tax stayed in.
Now what in Wake?
Back in the Capital City, the Wake County Commissioners get to decide when and if to ask voters for the authority to use the transfer tax or the 1/4-cent sales tax option. Counties can only use one, not both. And they can’t use either unless the voters OK it in a referendum. (And in a concession to the developers’ lobbies, the referendum isn’t binding. Voters could approve both options, and the commissioners still use neither.)
I asked Stan Norwalk, vice chair of WakeUP Wake County and the leading local proponent of the transfer tax, what he wants the commissioners to do. Put the question on the ballot with the next school bond, Norwalk said. Tell the voters their property taxes will go up the most if neither option is used, and the least if the transfer tax is chosen. (It raises more money than the sales tax.)
Then the voters decide.
