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Friday Fax – Legislative Update
To our disappointment, the NC General Assembly has not yet adjourned. Though there was much talk of adjournment by today, legislators did not meet their self-imposed deadline and plan to return next week and attempt to complete their work. However, NCRMA does still have a couple of issues left on the table that we would like to see addressed before lawmakers leave town. At this time of year, time is of the essence, so we have been scurrying around the legislative building to resolve differences and strategize on those pending legislative matters of importance to retailers.
In other news, Governor Mike Easley signed the $18.9 billion budget bill into law Monday, saying the plan rewarded state employees and maintained a commitment to public education. The governor praised legislators for being fiscally disciplined in the lean years that preceded a record surplus this past year. He also noted the lack of pork in plan, saying it allowed more money to go to the people who need it most.
Also, the House and Senate are making more progress on the issue of ethics reform, which has been a priority for this session and many think an issue they must address before they leave Raleigh . Both chambers gave final approval to a bill that will prohibit candidates and elected officials from converting campaign funds for personal use but allow unspent campaign funds to be donated to charity, political parties or other campaigns. The House and Senate are also trying to finalize legislation that will increase disclosure of campaign contributions, require further regulation of lobbyists, and improve the ethics laws governing the Executive and Legislative Branches. The Senate Judiciary I committee has been meeting regularly in the past two weeks to consider ethics legislation. All ten of these bills were part of the recommendations made by the House Select Committee on Ethics and Governmental Reform.
Highlights from NCRMA's fast-paced week at the General Assembly follow. Anything can happen during the waning days of session, so NCRMA is paying close attention so that nothing slips through the cracks.
July 14, 2006
1. Temporary Solution Reached on Tax Matter
2. Minimum Wage Hike Passes, Signed by Governor
3. Pharmacy Issues
4. Keg Regs in Conference Committee
5. Alcohol Coupons Hit Roadblock
6. Price Gouging Bill Passes Senate
7. Veteran ID Theft Legislation Sent to Governor
8. Meth Legislation Reaches Compromise
1. Temporary Solution Reached on Tax Matter -- It was brought to the attention of NCRMA that there is a major problem that has been brewing between a number of retailers (and other businesses) and the North Carolina Department of Revenue. The issue has been escalating to a breaking point. The Department, over the last three years, has been reviewing tax liabilities of a number of NCRMA member companies and other corporate citizens and imposing involuntary combination of the separate corporate entities held by a single taxpayer, which results in a much larger amount of taxes owed plus a 35% penalty.
NCRMA saw a possible opportunity to bring this problem to the legislature before the end of the short session and possibly receive some relief for affected retailers. NCRMA has worked with lobbyist, tax expert and former legislator Chuck Neely and the NC Bankers Association on a partial legislative remedy in this short session, with the plan to consider a more complicated, more complete resolution to this problem during the 2007 Long Session. On Monday morning, NCRMA and our group met with legislative staff and Senator Clodfelter, who agreed to be our champion on this issue to finalize draft legislation.
By Tuesday, as anticipated, Secretary of Revenue, Norris Tolson, reacted negatively and stated that our bill would deprive the State of $225 million in revenue. Based on that representation, the Senate leadership's support for the issue began to erode.
We explained that the law had been applied inconsistently and not in compliance with its provisions and that the lack of clarity in the statute demanded legislative response, particularly because the Department had refused to issue regulations or policy guidance on how to comply with the statute. We made it clear that regardless of what happened in the short session, the issue was not going away.
A compromise with the Department was finally reached which, among other things, directed the Revenue Laws Study Committee to thoroughly examine involuntary combination and report a bill back to the 2007 long session of the General Assembly.
This provides NCRMA and other business trade associations a significant opportunity to mobilize our forces and to begin to work the issue of tax reform for 2007.
Clearly, we have been successful in highlighting the business communities' concern over the Department's overreaching in its indiscriminate use of forced combination. In addition, we have focused the attention of the legislative leadership on the issue of tax reform for potential action in 2007. Stay tuned.
2. Minimum Wage Hike Passes, Signed by Governor -- Governor Easley signed HB 2174 which increases the state's minimum wage by $1 from $5.15 to $6.15 per hour. The bill will go into effect on January 1, 2007 . One year ago, the issue surfaced only to be defeated not once, but three times, thanks to the efforts of NCRMA and other pro-business advocates. The issue resurfaced during this short session with the momentum from extraordinarily high poll numbers (92% of likely Democratic voters that said they support an increase).
More than 20 states currently have minimum wages that are higher than the federal rate of $5.15 per hour, according to the Let Justice Roll Living Wage Campaign, but none of them border North Carolina, putting NC at a disadvantage when it comes to luring new business to the state.
NCRMA 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. While most NCRMA members do not pay minimum wage, many NCRMA members are concerned about the ratcheting effect of those employees that make in the $6 to $8 range. NCRMA emphasized that delaying the start date until January 1, 2007 was a must for businesses mandated to implement such a change.
Following the bill signing, Easley and others said that the state might examine indexing the minimum wage to inflation but that more attention would be put on trying to force federal action.
3. Pharmacy Issues -- NCRMA has worked diligently with legislators and staff to explain to legislators the drastic impact of Medicare Part D and the DRA could have on access to prescription drugs and was successful in holding onto budget language requiring the Department of Health and Human Service s to analyze the impact of Medicare Part D and the DRA and develop strategies to ensure access to prescription drugs into the conference committee discussions.
While we are very pleased with the inclusion of this budget provision given the nature of budget negotiations this year, NCRMA is working with Mike James and Bill Rustin with the community pharmacists to further clarify the intent of this provision and insert language in the Studies Bill requiring a Cost of Dispensing a Prescription Drug Study.
4. Keg Regs in Conference Committee -- A conference committee has been appointed to sort out the differences in HB 1025, Governor's DWI Task Force Recommendations, now that the bill has passed the Senate. It will be a difficult task to hold the Senate language, worked out by NCRMA, legislators and staff. Many legislators would rather have you comply with language that is much more onerous, but NCRMA will be working hard to maintain the language currently included in the Senate version of the bill. The Senate version only applies to kegs holding more than eight gallons while the House version requires record-keeping for all kegs. Additionally, the Senate version requires retailers to keep a copy of the purchase-transport permit for thirty days while the House wants records to be maintained for six months.
5. Alcohol Coupons Hit Roadblock -- HB 1025, which included NCRMA's provision on alcohol coupons, was heard in the Senate Finance committee on Tuesday. Currently, North Carolina does not allow alcohol coupons, meaning that retail stores that provide consumer discount or membership cards must exclusively exempt alcohol as a benefit of that membership. The coupon provision would have allowed retailers to issue alcohol coupons to their customers. Reverend Mark Creech, representing the Christian Action League of NC, has been actively lobbying against our provision.
Senator Fletcher Hartsell ran an amendment to take out the coupon language which passed 13-12, in turn deleting our coupon provision. NCRMA received commitments from a majority of committee members prior to the meeting that they supported our position; however a couple of those members reversed their position in committee. There were also a couple of legislators who found us after the committee and said that they were confused by the amendment language and voted the wrong way. While we certainly wish we could revote the amendment in committee, procedurally, we are not allowed to do so.
We scurried to talk to Senators in anticipation of running an amendment on the floor to reinsert the coupon provision and had the votes to do so. Unfortunately, due to a debacle on a floor vote on Wednesday, Senate Leadership asked us not to run an amendment on the floor.
We have been meeting with legislative leaders since the committee meeting and are looking at our procedural options for regaining our position. We will keep you posted on our progress.
6. Price Gouging Bill Passes Senate -- HB 1231 became the new vehicle for alterations to the current statute on price gouging. The Senate passed the measure 48-2 on Wednesday. After a meeting with the Bill Sponsors - Senators Clark Jenkins and A.B. Swindell, NCRMA and the Attorney General's office were able to come to an agreement on the legislation after the Attorney General's Office agreed to remove two provisions NCRMA strongly opposed. To our satisfaction, the Attorney General's office reluctantly agreed to leave language in the law that requires a retailer to have "knowledge and intent" that they are charging an unreasonably excessive price to be guilty of price gouging and to limit the area regulated by the price gouging to the area affected by the disaster.
In addition, NCRMA has been meeting with representatives from Governor Easley's office to ensure that we will receive proper notification in the event of a declaration of a state of emergency, disaster or market disruption which would trigger the price gouging law. We want to ensure that we know as soon as possible so that we can distribute information to you in such a circumstance.
NCRMA has drafted language and is currently working with the Governor's and AG's office to add language in the House that would allow the Governor flexibility to exclude the triggering of the price gouging law from a declaration.
Finally, as part of our negotiations with Governor Easley's Office, NCRMA will be included in disaster response communications and exercises to better help NCRMA members distribute goods to North Carolina citizens during times of disaster.
The bill now sits with the House Judiciary IV committee.
7. Veteran Breach Legislation Awaits Governor's Signature -- On Wednesday, the General Assembly approved HB 2883, sponsored by Representative Bruce Goforth (D-Buncombe), which exempts veterans, active duty military and members of the National Guard from the $10 fee charged to place a freeze on a credit report. NCRMA was able to work out a compromise which will provide relief to credit bureaus once the VA implements their program, as long as it is not before the first 90 days that the bill is in place. If the VA does not act, the bill remains in effect until January 1.
The bill was in response to the news of a recent theft of a federal government database in Washington, D.C. that included the names, Social Security numbers and birthdates of 26.5 million veterans across the nation (800,000 in NC). The laptop has since been recovered, and federal investigators believe the data had not been accessed. Worried veterans, however, will not have to pay the up to $10 state law permits for credit reporting agencies to charge for the credit freeze, which prevents any credit from being taken in their name. Surviving spouses of military personnel can also get a credit freeze under the proposal, and family members can act on behalf of active-duty personnel overseas.
Veterans who suspect identity theft should call (800) FED-INFO or (800) 333-4636 or go to: www.firstgov.gov/veteransinfo.shtml .
8. Meth Legislation Reached Compromise -- NCRMA has met over the past two months with representatives from the AG's office, legislators and staff with the sole purpose of developing 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.
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 adopts legislation to comply with the Federal.
As of yesterday, it seems that we are on track with legislation to address our primary concerns and expect to see the bill next week.
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 Adjournment,
Fran Preston
Andy Ellen
Elizabeth Dalton
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