June 25, 2010

THIS WEEK AT THE CAPITAL

This weekly newsletter is intended to keep North Carolina Chamber members informed about legislative activity and hot topics in the capital city during the legislative session. The Capital News Update is a weekly collection of news briefs covering ‘hot topics’ in the state legislature and public policy arena. The weekly news briefs do not necessarily reflect the North Carolina Chamber’s priorities or legislative agenda, but will feature news about the state Chamber’s advocacy efforts when the topic is timely or a major news event in the capital city.

Capital News Update

Update: Legislative Leaders Predict Final Budget Will Pass Next Week!

NC House and Senate budget conferees continued to meet this week in joint conference committee, working out the differences between the House and Senate versions of state budget proposals, preparing a final package to present to the Governor by July 1^st, the start of the state’s fiscal year.

House Majority Leader Hugh Holliman (D-Davidson) indicated this week that the final budget bill could be up for a Senate and House vote early next week. Senate leader Marc Basnight (D-Dare) followed this concurring, saying his goal was to adjourn this legislative session by July 2^nd.

One of the major provisions remaining for negotiation among budget conferees involves the anticipated $490 million from Congress for state Medicaid funding. As mentioned, the budget proposals passed by both the House and Senate assumed that North Carolina would receive the pending $490 million from Congress for Medicaid funding, and it had appeared that the final compromise budget would do the same. The U.S. Senate, however, is stalled in its efforts to pass the bill containing this state Medicaid funding. In the last several weeks, the U.S. Senate has not had sufficient votes for the full package. This week, U.S. Senate Majority Leader Harry Reid unveiled a substitute amendment after negotiations that would trim the Medicaid funding from $24.2 billion to $16.2 billion. Just last night (June 24^th), the negotiated version also failed on the Senate floor. Senator Reid indicated today that the measure is officially stalled.

Given what has been happening in Congress in regard to the Medicaid funding for states, Governor Bev Perdue called on legislative leaders last week to create a section of the budget that assumed North Carolina would not receive the federal Medicaid dollars, forcing budget negotiators to cut an additional $525 million from their proposed budget. While there has not been a clear indication as to where the cuts will occur, House Speaker Joe Hackney (D-Orange) stated this week that he expected state employee furloughs to be discussed among the options. Additionally, other cuts could possibly be set to take effect in January 2011, giving the state time to see if Congress eventually passes the Medicaid funding.

House Passes Chamber-backed Bill Providing Tax Credits & Regulatory Reform

House Bill 1973, Keeping North Carolina Competitive Act, backed by the North Carolina Chamber, was given final approval by the NC House this week when it passed a final floor vote on Monday night (June 21^st)  with a vote of 80-28.

This followed HB 1973 passing the House Finance Committee on July 16^th and House Commerce Committee on June 9th, overcoming attempts to strip back extensions of the vital Article 3J tax credits.

HB 1973 is a multi-faceted proposal, including tax credits and economic development incentives for a wide array of industries. Two provisions in particular that the North Carolina Chamber believes are crucial to economic recovery and growth are:

• Tax Credits for Growing Businesses
  
  Tax credits established in 2006 by the NC General Assembly, commonly known as Article 3J Credits, would be extended through January 1, 2014. Under current law, these credits are set to sunset on January 1, 2011. Article 3J offers credits to existing North Carolina businesses for 1) Creating Jobs; 2) Investing in Business Property; 3) Investments in Real Property.
  
  The North Carolina Chamber supports the extension of these tax credits essential for economic development in our state. Incentives for investment yield benefits that will help fuel economic recovery and growth and also serve to make North Carolina more competitive when it comes to attracting businesses and jobs.
  
  
• Clarifies Regulations to Help Grow Jobs & Economy while Protecting Environment
  
  Under current law, a taxpayer qualifies for certain economic incentives only if the taxpayer certifies that it has no significant violations of any DENR-implemented programs. While the Article 3J statute contains a definition for what constitutes a "significant" violation, some confusion has arisen as to whether violations should be considered "significant" or "non-significant".
  
  House Bill 1973 would ensure that minor violations do not inadvertently disqualify a taxpayer that would otherwise be eligible for tax incentives. The North Carolina Chamber believes that it is very important to provide certainty around incentives that companies are awarded for investments and job creation if we are going to attract and keep jobs in our state.

HB1973 now goes to the Senate for consideration, where it has been referred to the Senate Finance Committee.

NC Runoff Election Results: Chamber PAC-Endorsed Candidate Wins!

Quickly approaching the 2010 General Election, North Carolina voters have officially finalized the selection of candidates this week. Following several close results in the May primary elections, North Carolina held several runoff elections on Tuesday (June 22^nd). A little more than 200,000 votes were cast on Tuesday, compared to 425,000 votes in the primary elections in May.

There were five runoff elections, with only one being for a seat in the NC General Assembly and the remaining being for North Carolina congressional races. The North Carolina Chamber is pleased to report that NC Chamber PAC-endorsed candidate Eric Mansfield, defeated Lula Crenshaw in the Senate District 21 runoff for the chance to face off against Republican Wade Fowler for the seat being vacated by current state Senator Larry Shaw. (More information on this election below).

Runoff races and results from this week include:

• U.S. Senate (Democratic Primary): Secretary of State Elaine Marshall defeated former N.C. Senator Cal Cunningham with 60% of the vote, winning in every region of the state with the exception of the Triad area. Elaine Marshall will now run against North Carolina’s current U.S. Senator Richard Burr. 
  
  
•  8^th U.S. House District (Republican Primary): Retired sportscaster Harold Johnson defeated Raeford businessman Tim D’Annuzio by approximately 3,000 votes. Johnson will now run against first-term incumbent U.S. Rep. Larry Kissell.
  
  
• 12^th U.S. House District (Republican Primary): Security firm executive Greg Dority defeated computer storage specialist Scott Cumbie with 52% of the vote. Dority will now run against U.S. Rep. Mel Watt who has served since 1992.
  
  
•  13^th U.S. House District (Republican Primary): Navy veteran Bill Randall defeated published Bernie Reeves with 59% of the vote. Randall will now run against U.S. Rep. Brad Biller who has served since 2002.
  
  
•  N.C. Senate 21^st District (Democratic Primary): Physician Eric Mansflied (who was endorsed by the NC Chamber PAC) defeated retired state employee Lula Crenshaw with a vote of 62%. Mansfield will now run against Wade Fowler.
  
  

Update: Proposal Banning Video Poker Passes Senate

The Senate gave its final approval Monday night (June 21^st) with a vote of 41-1 to controversial legislation that would ban video sweepstakes machines. The bill would ban the machines by using detailed definitions of those types of machines that simulate video poker.

Opponents of the measure argue that the industry provides jobs and can produce substantial tax revenue for the state. Proponents, on the other hand, argue that video poker robs North Carolina families of the money they need for home obligations, citing examples where family members have lost their savings using the machines.

The bill now moves to the House for consideration. House Speaker Joe Hackney has expressed his support for the measure and has indicated that he expects the bill to be heard in House committee during this legislative session.

Ethics Reform Bill Headed to the Senate Floor

Two Senate committees this week passed a broad ethics reform bill that would, among other things, increase criminal penalties for some political contribution-related violations; add indirect gifts to those prohibited from the state’s gift ban for state officials; broaden the state’s Open Records Law to require public release of  changes and dates of state employee’s salary and positions; and require additional information on state officials’ economic disclosure forms.

The original measure contained a provision providing public financing for five more statewide offices. After controversy ensued and opponents waged a campaign against the public financing provision this week, however, the bill was sent back to Senate Judiciary I Committee where the provision was removed.

The bill now goes to the full Senate for a vote. Members from both parties have indicated that several amendments will be introduced on the Senate floor.

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