THIS WEEK AT THE CAPITAL
FINAL EDITION UNTIL 2011…
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
Legislation Aimed at Job Creation among Flurry of Bills Passed on Last Day of Session
The NC General Assembly adjourned the 2010 “short” legislative session on Saturday, July 10th, at 5:30 a.m. after a long, intense last day that saw dozens of bills pass – some controversial, some aimed at attracting and creating jobs, and some both. In the final hours, lawmakers debated legislation to provide incentives for growing businesses; new campaign finance regulations, elections and ethics rules; and determined whether it is appropriate to take DNA samples from certain individuals who have been arrested.
Tax Incentives for Jobs and Investments:
Following through on their pledges to take legislative action focused on job creation, legislators gave final approval during the last week of the short session to three economic incentives bills that offer tax breaks to a wide range of industries. As a result, internet data centers, film production companies, pulp mills and energy turbine manufacturers will receive tax breaks for investments and job creation in the state. The legislation was hotly debated, with proponents arguing that the tax breaks are needed to create jobs and opponents saying the legislature shouldn’t influence “winners and losers” in the marketplace.
The bills that passed resulted in the following:
• A 15-year tax break for an unnamed company that is purportedly pledging to invest $500 million in one of the poorest counties in the state. (This provision would reportedly cost the state $46 million over 10 years and is similar to the tax break offered Apple last year.)
• A provision extending or expanding tax breaks for companies investing in “green” industrial parks, oyster shell recyclers, and film and television producers – at an estimated cost of $240 million over the next five years.
• A bill providing tax incentives to additional unnamed companies that have been targeted by economic development recruiters, including an energy turbine manufacturer, a plant converting wood pulp to paper and at least two computer data centers. Supporters called the $39 million cost over five years modest compared to the 1,200 jobs and $2 billion in investments the companies would generate.
Update: House Bill 1973 – Keep NC Competitive Act – Passes!
An NC-Chamber backed bill that included a number of critical economic development provisions passed the General Assembly before the end of the 2010 legislative session. Two key issues in the legislation (HB 1973) that the state Chamber supported were the extension of the Article 3 J tax credits and the need to clarify current law so that minor environmental violations do not inadvertently disqualify a taxpayer that would otherwise be eligible for tax incentives for job creation.
Update: Chamber-backed Legislation to Protect Economy & Environment Passes!
After several twists and turns, including direction from House Speaker Joe Hackney (D-Orange) to move it from one bill to another and an attempt by Rep. Grier Martin (D-Wake) to defeat it in a House committee, legislators passed an NC-Chamber backed provision to protect and lure jobs to the state in the final hours of the 2010 session. The bill that ultimately passed, SB 778, makes it clear that private economic development projects do NOT require broader and more burdensome environmental review (called SEPA) simply because they received state and local government incentive funds.
This important legislation was necessary following a recent court decision related to a planned cement plant in eastern North Carolina that threatened future economic development projects and jobs. The decision would delay private economic development projects that create jobs by at least six months – and as long as two years – while a SEPA review (such as EIS) is completed.
The bill that passed solidifies 30 years of economic development practice. Supporters, including the NC Chamber, MCIC, the NC Economic Developers Association, the League of Municipalities, the Association of County Commissioners and the governor’s office, emphasized that lawmakers never intended for incentives to trigger the SEPA requirement and doing so would cost North Carolina jobs and investment as businesses consider building or relocating in the state. The bill passed overwhelmingly in both the House and Senate – 74-33 and 43-2, respectively.
Update: Lawmakers Pass Ethics Reform amid Last-Day Frenzy
In the waning hours of the 2010 legislative session, the state House and Senate passed an ethics reform bill that both chambers had cited as a priority this year. The final vote on the bipartisan legislation occurred after 3 a.m. when the NC House approved it unanimously. The ethics bill increases penalties for illegal campaign donations above $10,000, requires board and commission members to account for campaign fundraising activities for elected officials who appointed them, and expands personnel information that must be released to the public about state employees. The measure did not contain a requirement sought by the House that state vendors be limited in donating to the political campaigns of individuals seeking a Council of State office with authority to award a contract. Instead, the legislature's ethics commission will study the issue.
Update: Lawmakers Create New Disclosure Requirements for Political Contributions
Responding to a recent U.S. Supreme Court ruling in which the court struck down prohibitions on corporations and unions spending money on behalf of or against candidates, lawmakers passed legislation on the last day of the 2010 session that eliminated North Carolina’s prohibitions on this type of political spending and included new disclosure requirements. Proponents of the bill argued that the disclosure requirements are necessary to prevent political speech from being anonymous, while opponents argued that the disclosure requirements place undue burdens on those wanting to get involved in political speech and campaigns.
Yadkin River Controversy Results in Regional Commission to Help Oversee Natural Resources:
Before the 2010 session came to a close, lawmakers approved legislation to create a regional commission to oversee a six county-area that would "pursue the equitable distribution of water,” and could own or lease property and file lawsuits. The legislation was in response to an ongoing controversy over the federal re-licensing of four dams on the Yadkin River own by aluminum-maker Alcoa.
The bill that passed was a compromise after a controversial earlier effort to create a state trust to take control of the dams in the event that the Federal Energy Regulatory Commission denies Alcoa another 50-year license failed. Alcoa opposed the trust legislation, calling it an attempt to seize private property.
Bill to Expand Collection of DNA Samples Passes:
On the final day of the legislative session, lawmakers approved a bill that will allow investigators to collect DNA samples from people arrested for certain misdemeanor and felony charges for a state database – those who refuse to give a sample can be held by law enforcement. If charges are dropped or suspects are acquitted, their DNA samples must be removed from the database. Both Governor Bev Perdue and Attorney General Roy Cooper supported the proposal, but some lawmakers argued that requiring the sample upon arrest amounts to unreasonable search and seizure. The DNA database expansion legislation will take effect Feb. 1.
Recap: NC General Assembly Passes State Budget before Deadline First Time in Seven Years
Governor Bev Perdue signed the $19 billion state budget for the 2010-11 fiscal year on June 30, marking the first time the state legislature has completed a budget before its July 1 deadline (the start of the state’s fiscal year) in seven years.
To overcome an estimated $800 million shortfall, the budget cuts state spending by three percent from what was initially budgeted last year for 2010-11. It also contained a “contingency plan” that would cut another $518 million if Congress fails to pass legislation that would provide additional Medicaid funding for states.
The contingency plan settled on by legislators would first take money from a special fund to pay for disaster relief in the mountains from 2004 hurricanes and floods ($30 million) and lottery funds ($35 million). Next, it would cut Medicaid provider rates by one percentage point, withhold up to $139 million in state pension contributions, and require an additional one percent cut across state government ($178 million).
Most Democrats supported the budget bill and most Republicans opposed it. Republicans said the plan doesn't prepare the state for a potential $3 billion shortfall next year when temporary tax increases (enacted last year) expire and stimulus money runs out.
Some key items in the state budget:
•Language that clarifies when certain tax penalties are appropriate, addressing the critical need for fairness and due process for major NC employers (more below).
•$58 million to establish the NC Chamber-backed “Mobility Fund,” intended to relieve traffic congestion, improve logistic capabilities and create jobs around the state. (The governor’s proposal to help launch the fund with $75 million in higher motor vehicle registration fees was not adopted by lawmakers; instead, they set aside money that otherwise would be shifted from the Highway Trust Fund to the state's General Fund.)
•$34 million in tax relief for businesses that qualify through the establishment of a 25 percent refundable tax credit against unemployment insurance contributions. (The provision purportedly applies to about 125,000 businesses that gross less than $1 million.)
Recap: NC Chamber-backed Provision to Ensure Fair Tax Penalties Included in Budget
With the involvement of its members and other pro-jobs allies – specifically, the NC Retail Merchants Association and the Council on State Taxation (COST) – the NC Chamber was able to ensure that language was included in the state budget to provide fairness and certainty in the administration of North Carolina’s tax code. (The language that was in Senate Bill 1172 was amended and included in the final budget compromise.)
The controversial language that passed addresses the assessment of penalties when the state Dept. of Revenue forces multi-state corporations to file combined tax returns. NCDOR had been unfairly and unlawfully levying hefty penalties against major NC employers in cases when corporations filed combined returns within the 60 days required. It was a complex issue that posed significant challenges, but ultimately current law was clarified to make clear that these penalties cannot be assessed.
Recap: Bill Backed by Plaintiffs’ Lawyers that Would Overhaul State’s Lawsuit Law Blocked
Going into this year’s state legislative session, a top priority of the NC Chamber was a favorable outcome for business on House Bill 813 – critical civil liability (lawsuits) legislation. The bill passed the House in 2009 and was pending in the Senate this year. The state Chamber’s goal was to make sure that this legislation did NOT pass unless it was changed to maintain a fair and balanced legal system that is good for jobs and the state’s economy.
Thanks to the hard work of a strong Chamber-led coalition of businesses, health care organizations, local chambers and local governments, HB 813 did not advance this legislative session. The NC Chamber-led Coalition to protect NC’s Legal Climate put forward a very fair compromise proposal that the plaintiffs’ bar was unwilling to accept so the legislation was not heard in the Senate.
Re-Cap: Proposal Banning Video Poker Passes
The House gave its final approval Wednesday (July 7tht), with a vote of 86-27, to controversial legislation that bans video sweepstakes machines. The bill bans 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.
