RAISING RENTAL CAR TAX 11% TO 16%

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Charlotte.comWed, Jul. 12, 2006

Key vote for arts likely to be closeHouse considers raising Mecklenburg rental-car tax from 11% to 16%MARK JOHNSON AND GREG LACOUR

mjohnson@charlotteobserver.comglacour@charlotteobserver.com

RALEIGH - A critical source of funding for Charlotte's planned uptown arts complex hinges on a vote that the N.C. House could take as early as today.
"It's probably going to be close," said House Speaker Jim Black, a Mecklenburg Democrat who supports the arts projects. His lieutenants routinely count votes for him ahead of time.
The proposal has drawn fire because it increases a tax and, its critics argue, it's being sneaked into a larger bill.

The bill in question, which passed the House Finance Committee on Tuesday, makes technical changes in revenue laws but includes a provision allowing Mecklenburg County to raise its rental-car tax from 11 percent to 16 percent. The money would be funneled into transit projects.

The city then would be allowed to take some of the general-fund money it now spends on transit -- up to $7.5 million per year -- and shift that funding to the arts and museum projects.
City leaders plan to spend $158.5 million renovating Discovery Place and building a new Mint Museum, a new modern art museum, a performing arts theater and a new Afro-American Cultural Center. The idea is to group cultural institutions into an easily accessible area, boosting the city's stature and marketability as a tourist destination.

Charlotte officials want to use the tax increase to leverage the borrowing of $69.7 million over 25 years. That money represents the largest portion of the overall arts-package funding, which includes $60 million in property tax proceeds from a Wachovia business tower currently under construction.

The plan's supporters contend that the projects will generate $43 million a year in new state tax revenue from tourism and uptown patronage. They also say it's critical for the funding bill to pass before the end of the current short session to secure money from investors and proceed on construction and plans already underway.

"It has strong bipartisan support from the (finance) committee," said City Councilman John Lassiter, a Republican who has pushed for the arts plan.
City officials have insisted for years that transit money is locked into that purpose and can't be touched for other needs. But the bill essentially uses transit as a lever to free up money for the arts plan.

"It represents a broken promise," said Rep. John Rhodes, R-Mecklenburg, who opposes it.
The change didn't come to the House as legislation affecting Mecklenburg. Instead, the bill changes statewide tax law and, to some lawmakers, amounts to a policy change that should be debated in next year's so-called "long session."

"There are some members who have concerns about the way it's been brought over here," said Black, who said the bill abides by House rules.

Rental car companies object to the tax increase, saying it penalizes a single industry and group of consumers for a project that benefits the whole community. The industry estimates that about half of car renters live where they rent.

"It's bad public policy to have the customers of one industry subsidizing and paying for arts facilities, museums that are affiliated in one way, shape or form with another industry," said Bob Muhs, a vice president with Avis and Budget rental cars.

Among the bill's supporters in Charlotte, though, the news that the bill had passed the House committee raised hopes.

Said Bob Halbruner, spokesman for Charlotte's Arts and Science Council: "Right now, we're just keeping an eye on the next two days and remaining hopeful."
Staff writer Richard Rubin contributed.

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