I think I'll start this diary off with a little primer on the recession for the General Assembly, because it appears as if they don't quite grasp what happened: Lending institutions and homebuilders finally consummated their years of flirtatious infatuation with an orgy of poorly vetted, ticking time-bomb loans for overpriced houses and, when the inevitable foreclosures resulted, the money wizards who gambled our future on those loans sucked down tequila at Cabo san Lucas and tried to ignore the incessant chirping of their cell phones.
Not only were land developers, builders and realtors at the core of what led to the current recession, they've been driving sprawl, bulldozing woodlands, draining wetlands, facilitating stormwater pollution, beguiling planners, and running roughshod over municipal governments' efforts to do what needs to be done for their communities. These are not wild accusations, they're statements of fact. But instead of taking steps to reign these folks in or mitigate the impacts of their behavior, our General Assembly, in the middle of a recession these folks helped to bring about, has chosen to reward them with a huge tax break:
The bill allows builders to defer for up to three years the portion of property tax generated by building a new home. The builder would still have to continue to pay tax on the value of the land. The increased property taxes generated by improving the land with a home would be due when the home is sold.
Now, you may be asking yourself, "Why, in the middle of a huge budget deficit, when painful cuts along with scads of new taxes are being contemplated, would the legislature slash taxes like this?"
Well, it's not State taxes they're cutting, it's local taxes. And when it takes a Republican to point this out, we have really entered the Twilight Zone:
Rep. Leo Daughtry, a Johnston County Republican, said his county officials told him the bill would delay payment of $1 million in taxes.
"My county commissioners asked me to give y'all a message and that is it's good to be generous and help your fellow man," Daughtry said. "They want you to do it with your own money."
This bill would block municipalities from collecting close to $50 million between July 2010 and July 2013 when they will need it the most, while allowing builders to use that money to engage in even more speculative development. Which will cost municipalities even more money (they don't have) for infrastructure these developments will demand, etc. On a scale of 1 to Recklessly Stupid, this bill rates about a 9.5.
Message to General Assembly: This housing slump didn't happen overnight. Even while reports were coming in from across the country of entire new neighborhoods lying vacant like tumbleweed-strewn ghost towns, builders in North Carolina were still building on spec like crazy. Their inventory problems are self-induced, and this bill is merely rewarding them for bad behavior.
Here's another message: I've been putting it off for a long time now, but the 106-8 House vote on this bill has convinced me to go ahead and make a list of every single member of the General Assembly who has interests in land development, construction, real estate transactions, etc. It's time we stopped rewarding you for bad behavior also.
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