GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2001
H	1
HOUSE BILL 1450

 
 
Short Title:	No Tax on Homes/Equal School Funding.	()	
Sponsors:	Representatives Ellis;  Allen, Allred, Barbee, Brubaker, Buchanan, Capps, M. Crawford, Culp, Davis, Hill, Hunter, Justus, Morris, Rogers, Russell, Sexton, Warner, and G. Wilson.	
Referred to:	Finance.	
May 10, 2001

A BILL TO BE ENTITLED
AN ACT TO TRANSFER RESPONSIBILITY FOR FUNDING PUBLIC SCHOOL CONSTRUCTION FROM THE COUNTIES TO THE STATE, TO EXEMPT OWNER-OCCUPIED RESIDENCES FROM PROPERTY TAXES, AND TO LEVY AN INDIVIDUAL INCOME SURTAX TO REPLACE THE RESIDENTIAL PROPERTY TAX.

The General Assembly of North Carolina enacts:
TABLE OF CONTENTS
PART 1.	STATE FUNDING OF PUBLIC SCHOOL CONSTRUCTION
PART 2.	EXEMPT HOMES FROM PROPERTY TAX
PART 3.	INDIVIDUAL INCOME SURTAX
PART 4.	EFFECTIVE DATES

PART 1.	STATE FUNDING OF PUBLIC SCHOOL CONSTRUCTION
SECTION 1.  It is the intent of the General Assembly that the State surtax on individuals' income enacted by this act will replace the local property tax on individually owned residences repealed by this act. Accordingly, local government responsibility for public school capital needs will be eliminated and the State will use the proceeds of the surtax to provide an equitable system of funding public school construction statewide. In addition, this act requires the State to reimburse cities and towns for their loss of revenue due exempting residences from property tax.
Part 2. 	exempt homes from property tax
SECTION 2.(a)  G.S. 105‑277.1 reads as rewritten:
"§ 105‑277.1.  Property tax homestead exclusion.
(a)	Exclusion. – A permanent residence owned and occupied by a North Carolina resident is designated a special class of property under Article V, Sec. 2(2) of the North Carolina Constitution and is excluded from taxation under this Subchapter. 			
An otherwise qualifying owner does not lose the benefit of this exclusion because of a temporary absence from his or her permanent residence for reasons of health, or because of an extended absence while confined to a rest home or nursing home, so long as the residence is unoccupied or occupied by the owner's spouse or other dependent.
(b)	Definitions. – The following definitions apply in this section:
		(1b)	Owner. – A person who holds legal or equitable title, whether individually, as a tenant by the entirety, a joint tenant, or a tenant in common, or as the holder of a life estate or an estate for the life of another. A manufactured home jointly owned by husband and wife is considered property held by the entirety.
(2)	Repealed by Session Laws 1993, c. 360, s. 1.
(2a)	Repealed by Session Laws 1985 (Reg. Sess., 1986), c. 982, s. 20.
(3)	Permanent residence. – A person's legal residence. It includes the dwelling, the dwelling site, not to exceed one acre, and related improvements. The dwelling may be a single family residence, a unit in a multi‑family residential complex, or a manufactured home.
	
(c)	Application. – An application for the exclusion provided by this section should be filed during the regular listing period, but may be filed and must be accepted at any time up to and through April 15 preceding the tax year for which the exclusion is claimed. When property is owned by two or more persons other than husband and  wife, each occupying owner  must apply separately for  the exclusion.
		(d)	Multiple Ownership. –  When a permanent residence is owned  by two or more persons other than husband and wife and one or more of the owners  occupies the residence, each  occupying owner is entitled to the  exclusion for his or her proportionate share of the valuation of the property. "
SECTION 2.(b)  G.S. 105‑277.1A reads as rewritten:
"§ 105‑277.1A.  Reimbursement of cities for property tax homestead exclusion.
(a)	On September 1,  2002, the tax collector of each  city shall furnish to the Secretary of Revenue a list containing the name and address of each person within the city who has qualified in that year for the property tax homestead exclusion provided in G.S. 105‑277.1. The list shall also contain for each name the total amount of property  excluded, the tax rate the property is subject to, and the product obtained by multiplying those two numbers by each other. The lists must be accompanied by an affidavit attesting to the accuracy of the list and  be on a form prescribed by the Secretary of Revenue.
	(b)	Repealed by 1996, Second Extra Session, c. 18, s. 15.1(c).
(c)	The Secretary of Revenue may, for cause, grant an extension for the submission of a list required by this section.
(d)	Before May 31,  2003, the Secretary of Revenue must distribute to  each city the total for the  list provided pursuant to subsection (a) of this section of the product obtained by multiplying the tax exclusion for each taxpayer times the applicable tax rate. Each year thereafter, on or before May 31, the Secretary of Revenue shall pay to each  city that was entitled to receive a distribution under this subsection in 2003 the amount it was entitled to receive in  the previous May 31 increased or decreased by the same percentage of this amount as the percentage by which the consumer price index for housing increased or decreased for the preceding calendar year, rounded to the nearest one hundred dollars ($100.00). As used in this section, the term 'consumer price index' means the United States Consumer Price Index for All Urban Consumers, as published by the Bureau of Labor Statistics, United States Department of Labor.
	
(e)	Any funds received by any  city pursuant to this section because the  city was collecting taxes for another unit of government or special district shall be credited to the funds of that other unit or district in accordance with regulations issued by the Local Government Commission.
(f)	In order to pay for the reimbursement under this section and the cost to the Department of Revenue of administering the reimbursement, the Secretary of Revenue shall draw from collections received under Part 1 of Article 4 of this Chapter an amount equal to the reimbursement and the cost of administration."
SECTION 2.(c)  G.S. 105‑309(f) and (g), 105‑275(21), 105‑487, and 105‑502 are repealed.
PART 3.	INDIVIDUAL INCOME SURTAX
SECTION 3.  Part 2 of Article 4 of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105‑134.2A. Surtax.
(a)	Tax. – In addition to the individual income tax imposed in G.S. 105‑134.2, every taxpayer required to file a return under this Part must pay an income tax surtax equal to twenty‑five percent (25%) of the tax payable by the taxpayer under G.S. 105‑134.2 for the taxable year. This surtax is due at the time prescribed for filing income tax returns under this Part.
(b)	Proceeds. – From the net proceeds of the tax levied in this section, the Secretary shall credit to the General Fund annually an amount equal to the amount distributed to cities under G.S. 105‑277.1A during the previous fiscal year. The Secretary shall credit the remaining net proceeds of the tax levied in this section annually to the Department of Public Instruction to fund public school capital needs as provided in Chapter 115C of the General Statutes."
PART 4.	EFFECTIVE DATES
SECTION 4.  Part 2 of this act is effective for taxes imposed for taxable years beginning on or after July 1, 2002. Part 3 of this act is effective for taxable years beginning on or after January 1, 2002.  The remainder of this act is effective when it becomes law.