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Friday Fax – Legislative Update
The House appears set to follow the Senate's lead in setting a two-week timeline to pull together their spending plan. House leaders have announced their plans to adopt their version of the Budget by June 15 th in order to leave two weeks until the end of the fiscal year for the Senate and House to iron out their differences between their two spending plans.
House Appropriations Chairs have indicated that their budget proposal, like the Senate plan passed last week, will be void of many special projects or "pork." Chairs have noted that any Senate special provisions that had no financial implications would be stripped from the bill. Many are looking to the House to pull out two or three items included in the Senate Budget which could be seen as not related to the Budget and to include some Medicaid relief for counties. The Senate left $78 million in a separate pot to allow for some additional tax cuts but there are rumors that the Senate may try to pass a separate finance package or "supplemental budget" to provide for some of the special projects that were left out of the budget.
As House budget writers are trying to iron-out their spending plan, the focus on the House chamber floor fell on minimum wage and video poker. The House took the final vote to send their version of the minimum wage hike to the Senate and also adopted a phase out of video poker machines in North Carolina. The measure would slowly reduce the number of machines any retailer could operate or distributor set up at one location from three to none by July 1, 2007. The Senate will vote on the phase-out on Monday and is expected to pass it as they have passed a bill banning video poker in several past sessions.
NCRMA issue updates along with highlights from the week are below.
June 2, 2006
1. Minimum Wage Hike Passes House
2. Work Opportunity Tax Credit
3. Pharmacy Issues
4. Electronics Recycling Tax
5. Methamphetamine Issue
6. Price Gouging
7. Veteran Security Breech
8. Food Drive Press Release and Photos
1) Minimum Wage Hike Passes House -- On Tuesday, the House gave its final approval to HB 2174, which increases the minimum wage by $1 (from $5.15 to $6.15) effective January 1, 2007. By a vote of 72-43, the measure received bipartisan support and was sent to the Senate for consideration. Last week, the Senate included the $1 hike as part of its budget but would become effective September 1 of this year. NCRMA has made legislators aware that retailers have already planned their annual budget for 2006 and any new mandated payroll increases would not be factored into those budgets. NCRMA was successful in defeating legislation last year (on three different occasions). However, poll numbers were released before the short session showing that 92% of likely Democratic voters said they support an increase and House and Senate leaders made it clear that passing an increase is a top priority for the short session. NCRMA continues to work with a coalition on the minimum wage increase called the Coalition to Preserve North Carolina Jobs. This coalition is made up of a number of business associations that are concerned with the detrimental effect a minimum wage increase would have on North Carolina businesses. While most NCRMA members pay above minimum wage, many are concerned about the ratcheting effect of those employees that make in the $6 to $8 range. Twenty states and the District of Columbia have now raised the minimum wage above the federal level which was increased to $5.15 per hour in 1997. Governor Easley originally proposed an 85¢ raise in his budget but has indicated his support for the $1 increase. The House and the Senate still must decide whether to approve the increase through a stand-alone bill or as part of the budget in order for the increase to meet final approval by both chambers.
2) Work Opportunity Tax Credit -- NCRMA continues to express concerns about the minimum wage to House and Senate leadership and the need for the General Assembly to find some mechanism to help offset this increase in the cost of doing business that ranges from $95 million to $200 million (depending on the source). Such a measure has been introduced in both the House and Senate. SB 1889, sponsored by Senator David Hoyle (D-Gaston) and HB 2844, sponsored by Representatives Pryor Gibson (D-Anson) and Nelson Cole (D-Rockingham) make North Carolina employers eligible for a tax credit of up to $2,000 of wages paid to employees meeting certain criteria and who are employed at least nine months.
An employer could receive the credit for hiring workers who:
1) Receive Temporary Assistance to Needy Families
2) Are a veteran and a member of a family that has received benefits under the Food Stamp Program
3) Are between the ages of 18 and 24 years old when hired and a member of a family that has received benefits under the Food Stamp Program and
4) Received benefits from the Supplemental Security Income
We continue to oppose an increase in the minimum wage, but it is a possibility that this type of tax credit could find its way into a package along with the minimum wage which might somewhat offset the employer expense since many of the hires that create a tax credit for an employer would be hired at or near the minimum wage. The NC WOTC concept is well received in both the House and the Senate but the legislative staff is developing the fiscal note and legislators are curious to find out the dollar figure that will be attached. Stay tuned.
Link to House Bill 2844:http://www.ncleg.net/Sessions/2005/Bills/House/HTML/H2844v1.html
Link to Senate Bill 1889: http://www.ncga.state.nc.us/Sessions/2005/Bills/Senate/HTML/S1889v1.html
3) Pharmacy Issues -- HB 2853, sponsored by Representative Bobby England (D-Rutherford) 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 bill also allows for a cost of dispensing study. NCRMA spoke with the co-chairs of the House Health and Human Services Appropriations Committee this week who were receptive to the proposal and we are hopeful that this bill will not have any problem being included in the House budget and will be equally well-received by the Senate.
Link to HB 2853: http://www.ncga.state.nc.us/Sessions/2005/Bills/House/HTML/H2853v1.html
4) Electronics Recycling Tax -- Senate Bill 1030, which would impose a $4 tax on computers and televisions at the register, sits in the Senate committee on Agriculture/Environment/Natural Resources. NCRMA has been walking the halls of the legislative building this week and explaining the negative impact this bill will have on brick and mortar retailers to committee members. While many understand that this bill gives remote retailers an advantage over our North Carolina retailers, there are also many committee members that feel this is a viable solution to removing electronic waste from basements and storage rooms around the state. NCRMA is working diligently to keep this piece of legislation at bay. As we mentioned last week, several manufacturers in the "Electronics Manufacturers Coalition" have hired contract lobbyists to advocate their support of this bill. This puts the manufacturing community at odds as HP and Dell understand that this is an issue that needs to be addressed at the Federal level rather than state-by-state. We urge you to contact your Senator and tell them to vote NO on Senate Bill 1030 as many Senators are telling us they have not heard from their retailers back home.
5) Methamphetamine Issue -- NCRMA sat down with Representatives from the NC Attorney General's office, as well as legislative leaders, this week to attempt to resolve the differences between the recently enacted state and federal Meth legislation. There are discrepancies among the requirements set forth by the two laws and one is not directed to preempt the other. NCRMA's preference is that NC adopt legislation to comply with Federal Law so that the compliance requirements are set forth in a clear manner to North Carolina retailers.
6) Price Gouging -- The House Finance Committee met this week to begin hearing bills related to the gas tax and price gouging laws, including HB 2384. Several House members have filed legislation aimed at capping North Carolina 's gas tax and further addressing price-gouging during the time of a disaster. In addition to capping the gas tax, HB 2384 would expand the times in which the Attorney General could examine whether a gas station was intentionally charging high prices. NCRMA has been working closely with the bill sponsors as well as the Attorney General's office to ensure that this legislation will not adversely impact retailers. House Bill 2384 more closely mirrors changes to the price-gouging legislation that NCRMA could probably live with going forward and would actually provide some improvement to this well-intended law.
Senate Bill 1576 and Senate Bill 1581 contain the Attorney General's proposals which NCRMA has some serious concerns with - especially the removal of the requirement that a retailer have knowledge and intent to charge an unreasonably excessive price to be guilty of price gouging.
Link to Senate Bill 1576: http://www.ncga.state.nc.us/Sessions/2005/Bills/Senate/HTML/S1576v1.html
Link to HB 2384: http://www.ncga.state.nc.us/Sessions/2005/Bills/House/HTML/H2384v1.html
7) Veterans and Identity Theft -- In response to the news of a recent theft of a federal government database that included the names, social security numbers and birthdates of 26.5 million veterans across the nation - there are approximately 800,000 veterans living in North Carolina - Rep. Bruce Goforth (D-Buncombe) has filed a bill to exempt veterans from the $10 fee charged to place a freeze on a credit report. On Thursday, the House approved House Joint Resolution 2852, which will allow the legislation to be considered. A similar measure is also being considered by the Senate and either bill could come up for debate soon. NCRMA worked with the General Assembly last year when they passed the Identity Theft Protection Act, which gave consumers the right to place a fraud monitor on their account free of charge as well as the ability to place a security "freeze" on their credit report for a fee of $10. Placing a security freeze on your report would prohibit credit reporting agencies from releasing any information about you to new creditors without your approval, making it difficult for an identity thief to open an account or obtain credit in your name. There are questions as to the logistical implementation of such an exemption and the costs that would be incurred by credit bureaus in setting up this additional service for veterans in North Carolina. A "freeze" may not be the answer for a breach when there is no threat or proof of actual ID theft. Free fraud monitoring is already available and would provide the service of catching unusual activity on an account.
8) Final Food Drive Totals and Photos Attached -- The General Assembly had the most successful food drive ever for opening day on May 9, 2006 thanks to many of your very generous donations. A press release and photos are attached. Thanks to you, the General Assembly collected more than 20,000 pounds of food and more than $6,000 to benefit the North Carolina Association of Second Harvest Members!! Thank you all!
As always, we value the working relationship we have with you, our member companies. 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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