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February 2, 2007
Raleigh, NC
The work week at the NC General Assembly was cut short due to messy weather forecasts for Thursday. Most lawmakers hit the road on Wednesday to avoid the possibility of icy road conditions. Regardless of the weather, this early in the session lawmakers did not miss much since they are still awaiting committee assignments. House Speaker Joe Hackney is also in the process of pulling together his staff for the Speakers office. We expect to see committees take shape in the next two weeks.
While committee work is on hold, legislative staff briefed Legislators this week to provide a budget overview. The good news was that revenues are running ahead of projections for the first half of the fiscal year. Approximately $290 million additional revenue came in over what was anticipated. However, it will be April when corporate and personal income tax returns are calculated before firm numbers are in hand. Slowing real estate sales could also impact state tax revenues.
The overlying problem is a projected deficit in next year's budget that could reach as high as $1 billion - mostly due to the use of one-time funds to pay for recurring expenses. If the mid-year surplus holds, lawmakers would still be looking at a $710 million shortfall. While the gap could narrow significantly by Spring, there are still more needs for state funding than there are resources.
ADJUSTING TO NEW ETHICS LAWS - While the lobbying community has been undergoing training since back in September, State lawmakers this week finally started trying to wrap their minds around deciphering the legislation they enacted last session and subsequently trumpeted in their campaigns in November. For the lobbying community that has attended hours on end of training, we can sympathize with the overload of questions posed by House and Senate members to legislative staff about what is or isn't allowed. As Representative Bill Owens (D-Pasquotank) commented "It is clear as mud." House members asked questions, shook their heads and even dropped their jaws while listening to legislative staff attorneys winding through the exceptions to the laws. The new rules as written can be tough to comprehend as much is left to interpretation.
The new laws took effect January 1 and essentially ban lawmakers from accepting most gifts from lobbyists with a handful of exceptions, largely for public receptions, educational conferences and award plaques. Lawmakers, executive branch leaders, judges and appointees to state boards and commissions will also have to fill out expanded financial disclosure statements to highlight potential conflicts of interest. People who intentionally file false information can now be convicted of a felony.
BOND BILLS - As mentioned last Friday, Legislators are expected to consider a number of borrowing proposals this year, including as much as $2 billion for school construction, hundreds of millions for land preservation, roads and water/sewer infrastructure in North Carolina. State Treasurer Richard Moore announced yesterday that North Carolina could afford $384 million in additional debt in each of the next 10 years and remain within a recommended borrowing cap. The debt recommendation is up substantially from the 2006 projection of $214 million. The state had $5.7 billion in outstanding, General Fund-supported debt in 2006, and lawmakers had budgeted $571 million for this year's debt service payment. The state's debt and debt service have roughly doubled since 2001.
OTHER BILLS ON THE WAY: Last week, we told you of some legislation that was on the way but not yet filed. Many legislators are awaiting appointments of committees and committee chairmen before they file and introduce bills. Among the items we mentioned to you last week were: a "Bottle bill," a prohibition for retailers to sell violent video games to minors, an advanced disposal tax on televisions and computers, requirements for corporations to file consolidated corporate income tax returns and a proposed increase in restaurant inspection fees (grocery store delis and meat counters to be affected). This week, word began to trickle that the North Carolina Academy of Trial Lawyers and Organized Labor are so-excited they cannot hardly stand it and plan to begin shooting shots across the bow at the business community as soon as next week including: replacing contributory negligence with comparative fault, repealing North Carolina's Right to Work Law and allowing public employees (teachers, firemen, police and state employees) to collective bargain and strike if their demands are not met and a Universal Health Care proposal requiring employers to either provide health insurance or pay an assessments to the State.
RETAIL BILLS OF INTEREST INTRODUCED THIS WEEK: For your information, bill filing deadlines are attached again this week for both the Senate and the House. Every bill must be voted out of its House of Origin unless the bill raises or appropriates state money (a revenue or appropriations bill) by May 17, 2007 which is the so-called "crossover deadline."
It is our pleasure to work on your behalf. Thank you for allowing us to continue to represent the retail perspective before the North Carolina General Assembly since 1902.
Until next week -
Fran Preston (franp@ncrma.org)
Andy Ellen (andye@ncrma.org)
Elizabeth Dalton (elizabethd@ncrma.org)
Lindsey Kueffner (lindseyk@ncrma.org)
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