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Friday Fax – Legislative Update
The Senate maintained their rapid pace in trying to finalize their budget by Memorial Day weekend. With budget meetings tying up the bulk of the week, many non-budgetary issues took the back burner. The most involved-debate circled around the House chamber's discussion of ethics reform (which you can read about below). In spite of the $2 billion "surplus," the Senate still faces some tough decisions since only approximately half of that money comes from permanent sources that would be available in the next fiscal year. This is commonly referred to as "one-time" money. Recurring budget items (year to year expenses) like significant pay raises for teachers and state employees, as proposed by Governor Easley, would consume most of that money. Other money will most likely go toward about $225 million in tax cuts to phase out increases in sales and individual income taxes passed in 2001. We also expect to see the Senate's proposal include an 85 cent increase in the minimum wage to $6 an hour, a figure that was also included in Governor Easley's budget. House members are seeking a $1 increase to $6.15. NCRMA is continuing to talk to legislative leaders about the impact of such an increase, but we continue to hear that this issue is not going away this session. Senate Appropriations leaders are continuing to meet through the weekend to finalize their spending plan. The Senate Budget, once approved, will be sent to the House for consideration. The House has indicated that they would like to complete their form of the Budget by mid-June to give House and Senate Budget conferees two weeks to iron out their differences before the end of the fiscal year on June 30th.
In other news, the NC Legislature was bustling with bill-filing this week. Most House and Senate members were focused on getting their materials to bill drafting to meet Thursday's deadline. NCRMA has highlighted below some of the bills filed related to issues affecting retailers.
May 19, 2006
1. Price Gouging
2. Minimum Wage & Sales Tax
3. Advanced Disposal Fees
4. Methamphetamine Issue
5. Pharmacy Update
6. Ethics Reform
1) Price Gouging -- Senator Clark Jenkins (D-Edgecombe) filed two bills this week to address Attorney General Roy Cooper's concerns with regard to price gouging. NCRMA staff has already met with Senator Jenkins to let him know of NCRMA's concerns with certain provisions of these bills. NCRMA met with the Attorney General's office last week to discuss their proposal to expand the current price gouging statute. The Attorney General's office is pushing a proposal to trigger the price gouging law during instances where North Carolina does not actually have a disaster-type occurrence hit the State like with Hurricane Katrina. While the main focus of this proposal has been gas prices, the focus could broaden into other sectors, including the retail industry. NCRMA is working with the Convenience Store Association and Petroleum Marketers Association on this issue. You may recall that NCRMA drafted NC's current law on this subject in 2003 that strikes a balance between supply and demand in extreme circumstances. NCRMA has a close watch on this issue and remains in conversations with the AG's office as well as legislators. Representative Pryor Gibson (D-Anson) is also slated to introduce legislation next week on this same subject but his bill should be more to the liking of retail.
Links to Senator Jenkins' bills:
SB 1576: http://www.ncleg.net/Sessions/2005/Bills/Senate/HTML/S1576v0.html
SB1581: http://www.ncleg.net/Sessions/2005/Bills/Senate/HTML/S1581v0.html
2) Minimum Wage Hike and Sales Tax -- The week opened with State Treasurer Richard Moore, Rep. Alma Adams and former U.S. Sen. John Edwards rallying to increase the minimum wage. The Monday afternoon press conference was targeted to promote a $1.00 increase in the minimum wage from $5.15 to $6.15 per hour. This increase at its minimum would increase wages by $2,000 for an estimated 100,000 North Carolinians, which means a minimum of $200 million in increased costs to business in the state. And, this number does not reflect the additional workers compensation, FICA costs or the ratcheting effect on other employees pay. Last week, we noted that a bill addressing minimum wage was likely to be considered and passed by the Senate but that it would probably be incorporated into a larger package. This week, Senator David Hoyle (D-Gaston) filed SB 1459 which increases the minimum wage by .85 to $6.00 per hour, phases out the temporary increase in the top individual income bracket by ¼% beginning on January 1, 2007 and another ¼% beginning January 1, 2008. Hoyle's proposal also follows a recommendation set forth in the Governor's budget to cut the state sales tax rate by ¼% January 1, 2007 and removes another ¼% on July 1, 2007. NCRMA was successful in defeating (on three different occasions) legislation during the 2005 Long Session to increase the minimum wage until the House eventually coupled it with a bill providing health insurance tax credits for small business and gained the support of several conservative Democrats. House leaders have again made it clear that this will be a priority for this short session. Rep. Alma Adams (D-Guilford) filed HJR 1808 and Rep. Jim Harrell (D-Surry) filed HB 2174, each raising the minimum wage by $1, to $6.15 . This will be an important issue for the Legislative Black Caucus. An increase in the minimum wage is expected to be widely supported by Democrats in the House and Senate as polls show public support reaching 80-90%. Legislative leadership continues to tell us this issue is going to pass. Many in the business community are not taking a stand on this issue as in the past as they see the train coming down the tracks.
3) Advanced Disposal Fee on Electronics -- Senate Bill 1030 (Senator Janet Cowell, D-Wake) and House Bill 1765 (Representative Joe Hackney, D-Chapel Hill) were introduced last year to impose a $10 advance disposal fee on the purchase of certain electronics including televisions and computers. NCRMA has long opposed ADFs, especially fees that continually place North Carolina 's brick and mortar retailers at a competitive disadvantage with remote retailers who would not be required to collect this fee. Senator Cowell's bill was being held in Senate Finance but was moved last Tuesday to the Senate committee on Agriculture/Environment/Natural Resources, Chaired by Senator Charlie Albertson. NCRMA met with stakeholders yesterday. Senator Cowell is also labeling this tax as a privilege license tax on the retailer for selling these items. We also anticipate House Majority Leader and long-time proponent of Advance Disposal Fees Joe Hackney (D-Chatham) to try and carry the torch in the House. Senator Cowell plans to amend her bill in the Agriculture/Environment/Natural Resources Committee to reduce the tax (although she calls it a fee) to four dollars per item sold. In addition to environmental groups pushing this tax such as the Sierra Club, the Electronics Manufacturers Coalition for Responsible Recycling comprised of Sharp, Hitachi, Panasonic, Sony Electronics, IBM, Philips, JVC, Pioneer, Toshiba and Samsung hired a lobbyist this week to support the tax on retailers.
4) Methamphetamine Issue -- NCRMA continued conversations with legislative leaders this week to develop a solution to resolve differences between state and federal Meth legislation. The methamphetamine issue has been an exhaustive battle for NCRMA and it remained at the center of controversy until the bitter end of the long session. NCRMA worked tirelessly on getting a compromise in House Bill 248 which passed in the last days of session and went into effect January 15, 2006. However, now that Federal Meth legislation has passed, there are discrepancies among the requirements between the two laws and one is not directed to preempt the other. This leaves retailers to discern which restrictions apply - Federal or State. While we at NCRMA have provided our best guidance in helping you comply with these new laws, our preference is that NC adopt legislation to comply with the Federal. NCRMA sat down with the Attorney General's office last week to discuss our concerns. The Attorney General's Office has made overtures that they will be amenable to some changes to this legislation and we expect to continue these discussions next week with the legislators that were heavily involved in this issue last session.
5) Pharmacy Update -- We have a new rule this year that every provision that ends up in the Budget must be first introduced as a bill and then sent to Appropriations. Sunshine, Sunshine and more Sunshine. Two Appropriation bills to help retail community pharmacy were sent to bill drafting and will be filed in both the Senate and the House next week. The first bill requires the Department of Health and Human Services to look at the new federally-created Average Manufacturers' Price figures prior to January 1, 2007 and adjust the dispensing fee accordingly to keep reimbursement for generic drugs dispensed under Medicaid revenue neutral. The second provision of this bill will require a study to be conducted on the cost to dispense a prescription. Representative Bobby England (D-Rutherford) will introduce this bill in the House and Senator Bill Purcell (D-Scotland) in the Senate - both are retired physicians and serve on their respective Health and Human Service Appropriations Subcommittees. There will be $100,000 appropriated to pay for the study. The second bill is being drafted two ways. Senator Purcell will introduce a bill that will reimburse pharmacies the Medicaid dispensing fee for each prescription dispensed to a Medicare D enrollee that is a Medicaid recipient - $4.00 for brands and $5.60 for generics. Representative Edd Nye (D-Bladen) will introduce a bill that instructs the Department to establish and implement a program that pays pharmacies for servicing Medicaid recipients enrolled in Medicare Part D.
6) Ethics Reform -- The House approved a bill this week that largely bans gifts from lobbyists and their employers to legislators and makes it a felony to lie on economic disclosure statements. The legislation follows a similar House bill governing ethics among executive branch officials. The House bill keeps oversight of legislators' conduct within a legislative ethics committee, rather than under the state Board of Ethics as proposed by Governor Easley. The original bill also required lawmakers to report gifts from non-family members valued at $200 or more until a vote to amend the bill to bump the reporting threshold up to $1,000. "Even Baby Jesus accepted gifts, and I don't believe it corrupted him."
Rep. Drew Saunders, D-Mecklenburg, arguing that a $200 gift-reporting requirement for legislators from non-family members was too low.
The Senate is expected to pass their own version of ethics reform to incorporate some of the recommendations set out by Governor Easley. This would include putting ethics oversight for all state government branches under the state Board of Ethics. The Governor also proposed increasing the number of board members from three to seven. As always, we value the working relationship we have with our member companies and 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.
'Til Next Week
Fran Preston
Andy Ellen
Elizabeth Dalton
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