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Raleigh, North Carolina
June 6, 2008
Yesterday, the NC House passed a $21.3 million budget proposal (HB 2436) overwhelmingly with a bipartisan vote of 104-10. House Republicans said they appreciated a budget with modest growth and no new taxes. HB 2436 increases spending by 3.3 percent over the current budget, or roughly $690 million. This spending increase is the smallest in recent years. The budget provides modest pay raises for teachers and most state employees, does not raise taxes and borrows roughly $550 million for construction at prisons and public universities. The House gave $14 million to teach several thousand additional students entering the University of North Carolina system this fall, but Easley and UNC officials want $20 million more. Also, the House budget gives Easley's signature More at Four preschool program about half of the $45 million he wanted. Easley suggested raising taxes on alcohol and tobacco in his budget to pay for teacher raises and mental health reform, but House members rejected that proposal and Senate President Pro Tem Marc Basnight (D-Dare) is on record as rejecting Governor Easley's tax increases as well. Without additional taxes, House Democrats were left with roughly $500 million in new money to spend. They found more money in part by spending $167 million less than projected within the Department of Health and Human Services.
HB 2436 now moves on to the Senate, where leaders say they expect to make their changes by the end of next week. Democratic Senate leaders, along with Governor Mike Easley, criticized the House budget as not going far enough to improve education. Senators want to raise teacher salaries beyond 3 percent, but they acknowledged they may be hard pressed to reach the nearly 7 percent salary hikes Easley said are needed to keep a promise to exceed the national average during the next school year. The Senate seems in line with the House in that they do not want to raise taxes, as proposed by Governor Easley, to increase revenue.
The Session continues to move at light speed with some Senators insinuating an early July adjournment as a possibility and House Leadership having set a July 15th target for adjournment to give them one week of slippage before Speaker Joe Hackney is installed as the new President of the National Conference of State Legislatures in New Orleans. This week, one member of Senate Leadership told us to get any bills we wanted passed this session moving soon because they were not going to be in Raleigh long this year. The Senate already began Appropriations subcommittee meetings on Wednesday and Thursday and have scheduled more for next week. If all stays on schedule, we understand that the Senate hopes to have subcommittee recommendations to the full chairs by the end of next week and have the Budget bill on the Senate floor for a vote the week of June 16th. This would provide the House and Senate two weeks to negotiate a compromise to reach their target date of getting the final budget to Governor Easley's desk before July 1.
Link to House Budget: http://ncleg.net/Sessions/2007/Bills/House/PDF/H2436v4.pdf
THIS WEEKS' LEGISLATIVE LOOKOUT:
1)
53-foot truck restrictions
2) DOT express permitting
3)
Energy Star Sales Tax Holiday
4)
Electronics Recycling
5) Pervious Pavement
6)
Vertical Licenses
7)
WOTC
8)
Pharmacy Update
9)
Other Legislation of Interest
10)
NCRMA Files Amicus Curiae Brief
1. 53-foot Truck Restrictions -- SB 1695/HB 2408: Senator Clark Jenkins (D-Edgecombe), HB 2408, Representative Nelson Cole (D-Rockingham)
http://www.ncleg.net/Sessions/2007/Bills/Senate/HTML/S1695v1.html
SB 1695 would expand the number of routes on which 53' trailers could be operated by fixing a significant glitch in North Carolina law that caused the NC Highway Patrol to begin strict ticketing of 53' trailers in the fall. The bill passed the Senate Commerce Committee two weeks ago but not without some concern being raised by some mountain legislators about big trucks being on curvy mountain roads. DOT has expressed concern about the vast expansion of the use of 53' trailers in North Carolina and is currently in conversations with legislative staff and the bill sponsor about their options but have yet to come forth with proposed language. We knew this would likely occur and we are prepared to give DOT the ability to pull some roads in the mountains off the map with certain criteria. The new committee substitute with this language is scheduled to be heard in the Senate Finance Committee on Wednesday. If the bill passes out of Finance, it will then head to the Senate Floor for a full vote.
2. DOT Express Permitting -- SB 1698/HB 2313: Senator Clark Jenkins (D-Edgecombe), Representative Nelson Cole (D-Rockingham)
http://www.ncleg.net/Sessions/2007/Bills/House/HTML/H2313v1.html
SB 1698 would create an express permitting program in the Department of Transportation and thus provide another option for projects to avoid a permitting delay by paying a fee of up to $4,000 to get a permit expedited in 30 days. The House version of the bill has already passed the House Transportation Committee and resides in the House Finance Committee. The Senate version of the bill was scheduled to be heard this past Tuesday but the committee ran out of time before the bill was brought up for discussion. NCRMA met again with Jim Trogdon on Legislative Transportation staff this week to make sure that some necessary tweaks would be included in the legislation before it gets to the Senate Floor. DOT has raised a concern with legislators that there may be a problem with outsourcing express permits to engineering firms because they would be viewing a competitors' work. NCRMA spoke with the American Council of Engineering Companies of NC who assured us as well as Senator Jenkins that they have no problem with this proposal and actually conduct peer review on multiple levels within their industry. We expect the bill to be discussed in Senate Commerce on Tuesday and if voted out, the bill will go to the Senate Finance Committee and then onto the Senate Floor.
3. Energy Star Sales Tax Holiday -- SB 1769, Senator John Snow (D-Cherokee)
http://www.ncleg.net/Sessions/2007/Bills/Senate/HTML/S1769v1.html
SB 1944: Senator Fletcher Hartsell (R-Cabarrus)
HB 2605: Paul Luebke (D-Durham), Pricey Harrison (D-Guilford), Jennifer Weiss (D-Wake), Lucy Allen (D-Franklin)
http://www.ncleg.net/Sessions/2007/Bills/House/HTML/H2605v1.html
NCRMA has been working on legislation to provide for an Energy Star Sales Tax Holiday in North Carolina. The House included language in their budget for an Energy Star holiday for the first weekend in November, modeled after the Governor's proposal. Senator John Snow is still pushing the Senate proposal which would be scheduled around Earth Day in April and run for an entire week; set a $6,000 threshold and will include televisions under $800 for the first year following the Digital TV conversion. There is some concern about the amount of the fiscal note on the Senate Bill and we anticipate that the dollar threshold will remain at $6,000 for HVAC systems and be lowered to $3,000 for all other products except for televisions which will remain at $800.
During the floor debate on the House Budget, some House members felt that the first weekend in November was too political as it would occur just before the fall elections. Your NCRMA lobbying team was pulled outside of the House chamber on Wednesday to get our thoughts on having the Energy Star Sales Tax Holiday on Thanksgiving Weekend. We quickly responded that holding the Energy Star Tax Free Holiday on Thanksgiving Weekend be a logistical nightmare and would defeat the purpose of the holiday. We also explained that it would be more difficult, during the Thanksgiving and Christmas Holidays, to include the education component of the tax holiday of focusing on energy efficient appliances. The House version remained as is on the first weekend of November and we have encouraged the House and Senate to work together on one proposal and date that can encompass everyone's interests.
Energy Star on page 192 of the House Budget: http://ncleg.net/Sessions/2007/Bills/House/PDF/H2436v4.pdf
4. Electronics Recycling -- HB 2500: Representatives Lucy Allen (D-Franklin), Pryor Gibson (D-Anson), Ruth Samuelson (R-Mecklenburg) SB 1926: Senator Janet Cowell (D-Wake)
http://www.ncleg.net/Sessions/2007/Bills/House/HTML/H2500v0.html
NCRMA worked until late yesterday evening on finalizing a draft proposal that is a consensus from most of the various stakeholders involved in the electronics recycling bill. In this draft, we have been successful in our efforts to add televisions to the manufacturer responsibility legislation that passed for computers last year. This morning, a larger working group met for 3 hours at the Legislature to iron out any remaining differences. The group included retailers, computer and television manufacturers, environmental advocates, the Department of Environment and Natural Resources, and representatives from solid waste companies and collection entities. At the end of the day, we only had a couple of minor questions left with close to everyone in agreement with the proposal. The next working group is scheduled for next Friday, June 13 at 2pm where the Environmental Review Commission staff plans to roll out a draft for review that can be brought to committee the following week. NCRMA continues to be vigilant on this issue but are pleased with the amount of progress that has been made thus far toward a positive end result. Most importantly, we seemed to have shifted the debate away from taxes at the point of sale – the dreaded Advance Disposal Fee – and have shifted to a manufacturer responsibility program with little burden to North Carolina retailers.
5. Pervious Pavement -- HB 2504: Representatives Lucy Allen (D-Franklin), Pryor Gibson (D-Anson)
http://www.ncleg.net/Sessions/2007/Bills/House/HTML/H2504v0.html
NCRMA staff, Scott Mason and Duane Coen of Lowe's Home Improvement and a small group of stakeholders met for over an hour with Senate President Pro Tem Marc Basnight on Tuesday to discuss last year's budget provision requiring 20% pervious pavement on parking surfaces. As NCRMA has taken the lead on this issue, we were invited to share our concerns with this provision as they relate to the fast approaching effective date of October 1 and the complexity regarding the implementation of the new pervious pavement standards for parking areas throughout North Carolina. After a productive meeting, we felt that Senator Basnight was amenable to allowing for some additional options to give some flexibility on projects and also possibly moving the effective date forward to provide more time to better develop a pervious pavement standard that can be effectively implemented in North Carolina with full understanding of the requirements of the new standard.
6. Vertical Drivers' Licenses -- HB 2487: Representative Dale Folwell (R-Forsyth)
http://ncleg.net/Sessions/2007/Bills/House/HTML/H2487v2.html
This bill would require drivers under 21 to be issued vertical driver's licenses, rather than the current horizontal cards. The schedule for issuing licenses to younger, provisional drivers wouldn't change. The final provisional license expires on a driver's 21st birthday. The change is expected to cost on $50,000. NCRMA sent a letter to committee members supporting the legislation as we assured legislators that we are always attune to new tools and distinctions that will help prevent the sale of alcohol to an underage. The bill cleared the House Transportation Committee on Wednesday and heads to the House Appropriations Committee.
7. WOTC -- SB 1704: Senator Fletcher Hartsell (R-Cabarrus)
http://ncleg.net/Sessions/2007/Bills/Senate/HTML/S1704v2.html
NCRMA was successful last year in passing a NC Work Opportunity Tax Credit to provide a 6% federal match to employers who hire someone from a designated target category. This bill tweaks the WOTC to ensure that these credits benefit jobs located in North Carolina and adds a sunset date of January 1, 2012 to evaluate the success of the program. The bill passed the Senate and now moves to the House.
8. Pharmacy Update -- The House Budget had no cuts to traditional pharmacy reimbursement as reimbursement remained at MAC plus $5.60 for generics and AWP-10% plus $4.00 for brands. There was savings of $4.4 million in the Budget that is to be derived from the implementation of a State MAC list on specialty drugs. Up until this time we have been unable to get our hands on the drugs that would be included in this MAC List because Mercer Consulting deemed this information proprietary and would not release it to North Carolina Medicaid. We have had a legislator request the list by drug name and are awaiting the information and will pass it along as soon as it is received.
The House Budget also contained $275,000 in non-recurring money to recruit minority pharmacy students. The Senate is expected to make swift work of the Budget and have it back to the House to begin conference by June 20, 2008 at the latest. There is talk like we have never seen before of the General Assembly adjourning by July 18th or even earlier which is like the speed of light compared to past sessions.
NCRMA is continuing to try and work out a hold-harmless provision for tamper proof prescription pads with the Medical Society but the issue is still pending resolution.
Other Legislation of Interest…
Liability Protection for Private Entities -- SB 1766: Senator Tony Rand (D-Cumberland)
This bill provides liability Protection for Private Associations, Private Corporations, and Private Nonprofit Entities and Organizations When Responding to In-State Incidents, as Recommended by the Joint Select Committee on Governmental Immunity and the Joint Select Committee on Emergency Preparedness and Disaster Management Recovery.
Prohibit Tax on Interior Design Services -- SB 1657: Senator John Snow (D-Cherokee)
This bill would clarify North Carolina tax law that interior design services that are provided in combination with the sales of furniture, curtains or other tangible personal property are not subject to Sales and Use Tax. This legislation is in response to the North Carolina Department of Revenue's attempt to begin levying this tax after auditing several interior design firms.
Extend Small Business Health Benefits Credit -- HB 2335: Luebke (D30); Wainwright (D12); Gibson (D69) and others
Increases the Credit for Small Business Employee Health Benefits and to Extend the Sunset. This bill has passed House Finance and was included in the House Budget (HB 2436) awaits a vote by the full House. The tax credit would be increased from $250 to $300 for tax years beginning on or after January 1, 2008.
10. NCRMA Files Amicus Brief With North Carolina Court of Appeals in Tax Case -- On May 28, 2008, NCRMA and the North Carolina Chamber filed an amicus curiae (friend of the court) brief with the North Carolina Court of Appeals in the matter of Wal-Mart Stores v. Reginald S. Hinton, Secretary of the North Carolina Department of Revenue. The case concerns recent attempts by the North Carolina Department of Revenue to force businesses to file combined income tax returns in North Carolina . NCRMA believes that the Department lacks the statutory authority to do so unless the Department can demonstrate that businesses are not reporting their true income because fair market value is not being paid for services between affiliated companies.
Thank you for allowing us to continue to represent the retail perspective before the North Carolina General Assembly since 1902. Your NCRMA lobbying team is working hard to ensure that your interests are represented in the halls of the legislative building. Please let us know if you have any questions as we always welcome your feedback.
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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