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Friday Fax – Legislative Update
"'Twas the week after crossover and all through the House visions of a budget appeared faster than the click of a mouse.
Appropriations Chairs were hidden away in back corner rooms looking at who to tax or what programs to wield the ax.
A long summer ahead many did whine while other looked ahead to the US Open an hour south in the land of Long Leaf Pines."
Now you see why we spend our time as lobbyists rather than as poets. It was a busy week again on Jones Street even with legislators still suffering from a crossover hangover from the week before.
This week was spent working on the House tax package that rolled out on Tuesday. Key work was also done circling back to meet with key legislators on pieces of legislation that had met crossover and to begin getting bills scheduled or corrected.
On Friday morning the House Appropriations Subcommittees rolled out their spending plans to a large audience of lobbyists but to few legislators - many of which had already gone home. We anticipate a full Appropriations Committee meeting next Tuesday to review the House Budget with a floor vote to follow on Wednesday and Thursday.
June 10, 2005
1) Revenue Package and Continuing Resolution Clear House
2) House Budget Starts down the Tracks
3) Minimum Wage to be Resurrected?
4) Split Case Fees on Wine Likely to be Heard on Tuesday
5) Methamphetamine Legislation Back in Play
6) Sales Tax Holiday Just Around the Corner
1) Revenue Package and Continuing Resolution Clear House -- On Tuesday, in what some viewed as a surprise, the House unveiled its revenue plan combined with a continuing resolution. Many old-timers said that this was the earliest they could remember a continuing resolution surfacing. With a half-cent of sales tax and a higher personal income tax set to expire on June 30, 2005, the House Leadership thought that it was time to put these issues on the table. Part of the impetus for doing so at this early stage was to make life easier on retailers. Under similar circumstances in 2003, the General Assembly took the reauthorization of these taxes down to the wire leaving many retailers in limbo as to maintain the sales tax on their cash registers or reprogram with a lower sales tax.
The House revenue package was contained in House Bill 1630, 2005 Continuing Budget Authority/Revenue. First and foremost, House Bill 1630 would act as a continuing budget resolution for a period of thirty days beginning June 30, 2005.
House Bill 1630 passed on second reading by a vote of 63-56 and on third reading by a vote of 63-54 with both votes being strictly party line. House Democrats who brought forth the revenue package talked about funding the needs of the state - increased enrollment, Medicaid, reduction of class size - while House Republicans chided House Democrats for bringing them what was seen in the Republican eyes as a tax increase for a third straight session. House Democrats responded that the Republicans were full of rhetoric but not solutions.
While the House revenue package closely mirrors the Senate revenue package in most respects these two plans are not totally alike. Rather than make the half-cent sales tax permanent like the Senate, the House is merely extending the half-cent sales tax for an additional two years. The House is also extending the higher income tax rate for personal income tax purposes rather than allowing this tax to expire like the Senate. The House also chose to not include a cigarette tax in their revenue package and will likely include that one single tax in the House Budget next week. Many feel that the House will propose an increase from $0.05 to $0.25 per pack rather than going to $0.35 cents like the Senate. The House also did not include a change in the apportionment formula for corporate income tax purposes. The Senate's inclusion of the throw-out rule had sent many North Carolina businesses scurrying to try and remove this provision from the House Revenue Package. Finally, the House chose to not include their version of the Lottery in House Bill 1630.
The House revenue package also includes all of the necessary components for North Carolina to remain in compliance with the Streamlined Sales Tax Agreement. It was especially nice to hear Representatives - both Democrat and Republican - say that it was imperative to brick and mortar retailers that North Carolina be a leader in leveling the playing field with Internet retailers. Finally, the House Revenue Package would apply the general sales and use tax rate of 7% to two new items - candy and service agreements/warranties.
Here is a link to the full text of House Bill 1630: http://www.ncga.state.nc.us/Sessions/2005/Bills/House/HTML/H1630v2.html
2) House Budget Starts down the Tracks -- When the House convened at 8:30 a.m. on Thursday morning many assumed that the House Leadership was eager to get out of Raleigh and back home after a contentious vote on the House Revenue Package. Thursday's session was headed down that path and legislators began packing up their desks during the normal round of announcements just before session adjourned for the weekend. However, the last announcement that Appropriations Subcommittees would meet on Friday morning at 8:30 a.m. threw many Representatives, including some Subcommittee Co-chairmen, for a loop. Many Democrats scrambled to check back into their hotel rooms while most Republicans packed the car and went home.
On Friday morning, the Health and Human Services (HHS) Appropriations Subcommittee unveiled their spending plan. Of importance to NCRMA's pharmacy members was the fact that the HHS Subcommittee had removed the Medicaid reimbursement cut of 1% that had been included in the Senate Budget. Also included in the House Budget was a new provision limiting Medicaid recipients to three brand name drugs and allowing for coverage of unlimited generic drugs. Co-payments for generic drugs would be increased from $1 to $3 under the House proposal. Finally, an amendment passed in the HHS Subcommittee would require the Medicaid Department to implement the use of a PDA system to prevent Medicaid fraud and reduce duplication of prescription drugs in the Medicaid program.
The House Full Appropriations Committee will take the House Spending Package up on Tuesday. The bill will probably be referred to the House Finance Committee for approval of an increased tax on tobacco. The bill will then head to the House Floor for a vote on Wednesday and Thursday. The Senate will not concur with the House version of the Budget leaving the Senate and House a full two weeks to try and iron out their differences before the beginning of the fiscal year of July 1, 2005. If the Senate approves House Bill 1630 (summarized above) the House and Senate will have thirty additional days to adopt their conference report.
3) Minimum Wage to be Resurrected? -- While many assumed that the minimum wage issue was dead for the remainder of the two-biennium, this may not necessarily be the case. As we told you last week, House Bill 330, as introduced by Representative Alma Adams (D-Guilford), would have raised North Carolina 's minimum wage by $1 from $5.15 to $6.15 on January 1, 2006. After an intensive late-night lobbying effort by NCRMA and some other business groups, the measure went down by a vote of 66-52.
Just this week, Representative Adams made an impassioned plea to a meeting of the NAACP to put pressure on the ten Democrats that had voted against the measure. Representative Adams passed out the vote count. According to the News and Observer, Speaker Jim Black told the crowd that the issue may not be dead for this session or could be part of a study bill in the interim before the 2006 Short Session thereby reviving the issue.
Today, we heard rumors that there might be a move affront to amend the House Budget on the House Floor to increase the minimum wage by $0.50 this year with a second $0.50 increase next year. Many assumed that the inclusion of the minimum wage increase in the House Budget may be the carrot some in the Black Caucus need to cast an Aye vote next week.
We have been in contact today with our other allies on this issue to encourage them to have their members make a thank-you call to the ten Democrats that voted against the measure last week and encourage them to stay the course. We encourage you to do the same by calling 919.733.4111 and asking for the Representatives listed below.
Nelson Cole (D-Rockingham)
Jim Crawford (D-Granville)
Pryor Gibson (D-Anson)
Jim Harrell (D-Surry)
Dewey Hill (D-Columbus)
Hugh Holloman (D-Davidson)
Edd Nye (D-Bladen)
Ronnie Sutton (D-Robeson)
Joe Tolson (D-Edgecombe)
Winkie Wilkins (D-Person)
4) Split Case Fees on Wine Likely to be Heard on Tuesday -- The House ABC Committee did not meet this week due to the House devoting its time and energy passing its revenue package and a continuing resolution. We anticipate that the House ABC Committee will take up Senate Bill 828 on Tuesday. Senate Bill 828 would rectify the decision rendered by the ABC Commission requiring wine wholesalers to charge a fee to split a case of wine.
5) Methamphetamine Legislation Back in Play -- NCRMA began meeting with legislators again this week on Senate Bill 686 - Methamphetamine Lab Prevention Act. NCRMA met with the bill sponsor, Senator Walter Dalton (D-Rutherford), as well as the House Judiciary IV Committee Chair, Representative Jennifer Weiss (D-Wake), and officials of the Attorney General's Office. NCRMA is pushing for a compromise bill that would allow all retailers to continue selling cold medicine containing pseudoephedrine with reasonable restrictions to prevent these products falling into the wrong hands. It is going to be essential to NCRMA's lobbying efforts that retailers get on the phone and call their legislator to tell them retailers support reasonable restrictions but that Senate Bill 686 goes too far, too fast. Stayed tuned for a grassroots push.
6 ) Sales Tax Holiday Just Around the Corner -- North Carolina will again hold its Sales Tax Holiday. This year the dates are from August 5 th - 7 th, 2005. NCRMA has worked closely with the North Carolina Department of Revenue to prepare handy materials, including a poster containing a list of taxed and non-taxed items to place at your registers to help employees and customers identify tax-free items. Please call NCRMA at 1.800.662.7211 to obtain copies of these free-to-members posters to help ensure the weekend runs smoothly for your store, your employees and your customers. Visit our Sales Tax Holiday page for more information.
‘TIL NEXT WEEK
Fran Preston
Andy Ellen
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