We are getting very close to falling off of the "fiscal cliff".  December 31 will be upon us before we can turn around and Congress is doing nothing that we can see.  I'm sure there are behind the scenes discussions going on but it doesn't appear to be anything positive.  Call or e-mail your representative and tell them to put away petty politics and do something positive for the country.  Someone's ox is going to get gored so let's make sure it will put our economy on  a better fiscal foundation.  We don't want to fall off this cliff.

FYI

Here are some early committee chair appointments made by House Speaker Tillis and Senate Pro Tem Berger

HOUSE

Appropriations:

Senior Chair – Rep. Nelson Dollar (Wake)
Chair – Rep. Mitch Gillespie (Burke, McDowell)
Chair – Rep. Linda Johnson (Mecklenburg)
Chair – Rep. Bryan Holloway (Rockingham, Stokes)
Chair – Rep. Justin Burr (Stanly)

Finance:

Senior Chair – Rep. Julia Howard (Davie, Iredell)
Chair – Rep. Mitchell Setzer (Catawba, Iredell)
Chair – Rep. David Lewis (Harnett)
Chair – Rep. Robert Brawley (Mecklenburg)

The House also elected its caucus leadership positions over the weekend:

Speaker Pro-Tem – Rep. Paul Stam (Wake)
Majority Leader – Rep. Edgar Starnes (Caldwell)
Majority Whip – Rep. Mike Hager (Cleveland, Rutherfordton)

A couple of observations on House Appointments:

-With Rep. Justin Burr moving to a full Appropriations Committee Chairmanship  -   vacant chair for the HHS Appropriations Sub-Committee.

SENATE

Appropriations:

Chair – Sen. Neal Hunt (Wake)
Chair – Sen. Pete Brunstetter (Forsyth)
Chair – Sen. Harry Brown (Onslow)

Finance:

Chair – Sen. Bob Rucho (Mecklenburg)
Chair – Sen. Bill Rabon (Brunswick)

Health and HHS Appropriations:

Chair – Sen. Louis Pate (Wayne)
Chair – Sen. Ralph Hise (6 western counties)
*It’s important to note that Sen. Stan Bingham did not retain his chairmanship on the HHS subcommittee.

Education and Appropriations Sub-committee on Education:

Chair – Sen. Jerry Tillman (Randolph)
Chair – Sen. Dan Soucek (Alexander, Ashe, Watauga, Wilkes)
Chair – Sen. Tom Apodaca (Education Committee only)

Rules:

Chair – Sen. Tom Apodaca (Henderson)

Agriculture:

Chair – Sen. Andrew Brock (Davie)
Chair – Sen. Brent Jackson (Duplin, Lenoir, Sampson)

Chairs of the subcommittees of the House Appropriations Committee:

HHS: Rep. Avila (Wake), Rep. Brisson (D-Bladen) and Rep. Hollo (Alexander)
Education: Rep. Blackwell (Burke), Rep. Horn (Union) and Rep. McGrady (Henderson)
General Government: Rep. Cleveland (Onslow) and Rep. Brown (Davidson)
Justice and Public Safety: Rep. Daughtry (Johnston), Rep. Boles (Moore), Rep. Hurley (Randolph) and Rep. Faircloth (Guilford)
Environment and Natural Resources: Rep. West (Cherokee) and Rep. McElraft (Cartaret)
Transportation: Rep. Torbett (Gaston) and Rep. Shepherd (Onslow)
Information Technology: Rep. Saine (Lincoln)

Just because the General Assembly is not in session doesn't mean things are not happening in Raleigh.  The Joint Revenue Laws Study Committee has produced a bill that would address the $2.48 billion debt owned to the Federal Government that the state incurred in making unemployment benefit payments.  Under the proposed legislation, the following would take place:

• reduce the maximum weekly benefits from $506 to $350
• reduce the maximum weeks of benefits from 26 to a sliding scale of between 12 and 20 weeks
• increase state unemployment taxes for some employers and expands the groups of employers required to pay those taxes. The maximum state unemployment tax rate would rise from 5.7 percent to 5.76 percent on employee wages up to $20,900.  In addition, employers who currently are exempt from paying state unemployment taxes because they don’t have a history of layoffs would have to pay a minimum rate of six-hundredths of a percent on wages up to $20,900
• Nonprofits and local governments, which currently don’t pay state unemployment taxes but do have to reimburse the state 100 percent for the benefits received by their laid-off workers, also would have to contribute to the state unemployment trust fund.

 If the measures in the bill are adopted, the committee’s staff estimates the state would accelerate repayment of the debt – erasing it by 2015, instead of in 2018 if the state does nothing. That acceleration would eliminate three years of paying higher FUTA taxes.

There is a lot of opposition to these proposals and things could change dramatically by the time the General Assembly moves into session.  Keep listening and I'll try to keep you abreast of any other proposals that are being floated.

Read more here: http://www.newsobserver.com/2012/12/05/2526625/bill-calls-for-reduced-benefits.html#emlnl=Politics#storylink=cpy

Read more here: http://www.newsobserver.com/2012/12/05/2526625/bill-calls-for-reduced-benefits.html#emlnl=Politics#storylink=cpy

Read more here: http://www.newsobserver.com/2012/12/05/2526625/bill-calls-for-reduced-benefits.html#emlnl=Politics#storylink=cpy

Read more here: http://www.newsobserver.com/2012/12/05/2526625/bill-calls-for-reduced-benefits.html#emlnl=Politics#storylink=cpy

Read more here: http://www.newsobserver.com/2012/12/05/2526625/bill-calls-for-reduced-benefits.html#emlnl=Politics#storylink=cpy

Read more here: http://www.newsobserver.com/2012/12/05/2526625/bill-calls-for-reduced-benefits.html#emlnl=Politics#storylink=cpy

As I discussed in my Monday Minute there are several new locations for early voting.  I will list them on this post and I hope you will pass the locations, dates, and times along to your employees or to your friends and acquaintances.  Only one week remains and early voting will end on November 3.  Please vote.

Early Voting Locations

Boyce Memorial ARP Church Fellowship Hall
111 Edgemont Drive
Kings Mountain
October 29 - November 03, 2012
10:30 am - 6:30 pm -  Monday - Friday
9am - 1pm - Saturday - 11/03/2012

Boiling Springs Town Hall
145 S. Main St.
Boiling Springs
November 1 - November 3, 2012
10:30 am - 6:30pm - Thursday & Friday
9 am - 1pm - Saturday, 11/03/2012

Palm Tree United Methodist Church
1160 W. Stagecoach Trail
Lawndale
November 1 - November 3, 2012
10:30am - 6:30pm Thursday & Friday
9am - 1pm - Saturday, 11/03/2012

You can also vote at the Board of Elections Office at 215 Patton Drive in Shelby.
8am - 7pm - Weekdays
8am - 1pm - Saturday, 11/03/2012

Fiscal Cliff

By now you have probably heard the term, sequestration.  Do you know what it's all about?  Sequestration is a method adopted by Congress to insure Congress will reach a deal to reduce the deficit. The 'sequester" was passed last August when Congress reached an impasse on efforts to reduce the budget deficit.  If an agreement is not worked out before December the  “sequester” will trigger $1.2 trillion in automatic spending cuts, evenly split between defense and non-defense spending.  The December date is the "fiscal cliff" we keep reading about in the paper.  So what happens if Congress can't come together and agree on one trillion in budget cuts and a deficit reduction of one trillion? The NC Chamber recently heard a report from Scott Nystom with Regional Economic Model, Inc.(REMI)  that painted a pretty bleak picture.  In 2013, alone, sequestration will cut $54.7 billion from defense spending, $38.6 from non-defense and certain discretionary programs, and $16.1 billion from non-exempted and mandatory programs. Education funding will be subject to cuts ranging from 9.1% in 2013 to 5.5% in 2021, according to the Center on Budget and Policy Priorities.
According to REMI, it could cause the loss of between 2.8 and 3.2 million jobs over the next decade. While no state is safe,  NC will be one of the top ten states hit the hardest for job loss. Additionally, no industry will be left unscathed, with professional and technical services being hit the hardest.  The upcoming elections will make a big difference in Congress's ability to keep us from going over the "cliff".  What can you do about it. - VOTE.  If you want to learn more about the impact of the sequestration, click here and watch the video produced by the NC Chamber in which Jay Timmons, president and CEO of NAM; Will Austin, director of government affairs at Lord; and Lew Ebert, president and CEO of the NC Chamber, on sequestration’s impact on North Carolina manufacturers.

Congressional Gridlock May Be Costly

As you probably know there are several tax breaks that will sunset on December 31.  The administration is in favor of letting some of these breaks expire and the Republicans in Congress want to protect the tax breaks and implement some budget cuts. The tax cuts that were enacted in 2001 and 2003 were then renewed in 2010.  As those rates return to their pre-2001 and 2003 numbers, in effect that will mean a tax increase on Americans.

Here are the taxes due to expire:

• Marginal tax rates will increase:
• The 10% tax bracket will expire, reverting to 15%.
• The 25% tax rate will rise to 28%.
• The 28% rate will rise to 31%.
• The 33% rate will rise to 36%.
• The 35% rate will rise to 39.6%.
• The tax rate on long-term capital gains will rise from 15% to 20%.
• The tax rate on qualified dividends will rise from 15% to ordinary wage tax rates.
• The PEP and Pease provisions will be restored, rescinding from certain taxpayers the value of some exemptions and deductions.
• The two “marriage penalty elimination” provisions will expire, so that:
• The standard deduction for married couples will fall, no longer double what it is for single filers; and
• The ceiling of the 15% bracket for married couples will fall, no longer double what it is for single filers.
• The child tax credit will fall from $1,000 to $500.
• The estate tax will be restored with an exemption level of $1 million (per spouse) and rates of 55%.

But wait! There’s more!  The taxes that were enacted as part of the Patient Protection and Affordable Care Act will also go into effect in 2013.  That means, on top of all of the above:

• The 3.8% surtax on investment income
• An additional 0.9 percentage Medicare Hospital Insurance tax (HI tax) on self-employed individuals and employees with respect to earnings and wages received during the year above $200,000 for individuals, and above $250,000 for joint filers
• $2,500 limitation on FSA contributions
• 2.3% excise tax on medical devices
• Increase in threshold for claiming an itemized deduction for unreimbursed medical expenses for regular tax purposes from 7.5% of AGI to 10% (except for those over 65)

 Not a very rosy scenario.  As a matter of fact, several studies have indicated that should these taxes sunset, the resulting lose in economic vitality would be considerable.  In the case of one study done by the Congressional Budget Office (CBO), it forecast we could see another recession in 2013.  However, if all current policies were extended for a prolonged period, federal debt held by the public would rise much faster than GDP, a path that could not be sustained indefinitely. 

We find ourselves between the proverbial "rock and a hard place".  We have to find a way out of this economic dilemma.  There is going to be some pain no matter what solutions we adopt.  Congress has to put away its partisan politics and work together to find a way out of this morass.  Some economist feel that the U.S. economy is in as much trouble as some of the European economies.  The only thing that keeps us afloat is the size of our economy.  Let's get it fixed before we are faced with the dire consequences that some of our European brothers are facing.  It's going to take compromise.

State Behind the Eight Ball

With the Supreme Court's ruling that the Patient Protection and Affordable Care Act is constitutional, it has put North Carolina behind the eight ball in setting up a mandated marketplace where uninsured people and small businesses can shop for health insurance. The law mandated that each state establish a health benefits exchange or the federal government would assume that responsibility.  Here again, do we want to manage our own our let the Federal government do it for us?



States that want to retain control of the exchanges are  facing a mid-November deadline to apply to have detailed plans approved by January so they can begin operating a year later. 2014 would be the earliest a state could begin operating.  North Carolina has no plan. Although both chambers approved a provision in a technical corrections bill expressing their intention to establish an exchange, only the House passed legislation actually creating it. The Senate did not act on the house bill and now that the law was ruled constitutional North Carolina is facing a deadline it cannot meet.




So it appears the  U.S. Department of Health and Human Services will take control of North Carolina’s exchange. The state can apply to take control back, but it won’t be able to do so until it does enough work to show that it can take over the program at least a year before it actually does.  So the State of North Carolina is somewhat in limbo and dependent on the Federal government to administer its health benefits exchange.  Not a good position to be in.  Let's hope our state officials get busy and return as much control as possible back to the state.



Don't forget there is an election tomorrow, July 17th.  Go vote.  It is the run-off elections.  Many people have forgotten about the run-offs so turn out will be light.  GO VOTE!!

If you read the Monday Minute you know by now that several Chamber members spent last Wednesday in Raleigh meeting with our local legislative delegation as well as several government officials and the President Pro Tempore of the Senate, Phil Berger and the Speaker of the House, Thom Tillis.  The big topic of discussion was the budget.  There are several areas of disagreement between the Senate versions and the House versions and the leaders of each assembly felt that a conference committee would be formed by the weekend to hammer out a consensus.  I don't think that has happen as I can't find any indication that a conference committee has been appointed - maybe today.  They hope to be finished with the short session by the end of the month so stay tuned and I'll try to keep you updated.

General Assembly Update

The Senate passed Senate Bill 820: Clean Energy and Economic Security Act this past Thursday and they have worked out a compromise with the House so that the Senate bill will now go before the House for ratification.  This bill would authorize hydraulic fracturing and horizontal drilling as early as July 2014, establish an Oil & Gas Board with regulatory authority, and create a Joint Legislative Commission on Energy Policy.  This bill will aid in reducing our dependence on foreign oil.


On a local front a House subcommittee voted to concur on Senate Bill 236 which recognizes the Shelby Liver Mush Festival as the official fall Liver Mush festival of the State of North Carolina.  I heard this being talked about on one of the Charlotte radio stations this morning.  We asked for this legislation because it gives us additional recognition all over the state and it is a great marketing tool.  The Liver Mush Festival promises to be bigger and better this year.  Mark your calendar for October 13th for the festival

Businesses in the State of North Carolina are facing an increased tax burden because of the debt owned the Federal government due to extending the unemployment benefits.  The State has borrowed money from the Federal Government to pay the extended unemployment benefits and are now faced with the task of repaying this money. The unpaid debt is triggering mandatory federal tax increases, which threaten jobs and economic recovery. In January 2012, employers saw an average tax increase of $21 per employee. That tax will continue to rise by roughly the same amount every year until the debt is retired. The cost to employers is projected to reach $420 per employee, if nothing is done.  The State is currently investigating means to reduce this debt.  Watch for future developments.

On the legislative front, Senate President Pro Tem Phil Berger presented SB795 to the Senate Committee on Education/Higher Education on Wednesday (5/23).  The Committee passed the Excellent Public Schools Act (SB795) yesterday and sent it to the Senate Appropriations Committee.  This bill contains some provisions that should help in getting more teachers into the classroom and aid in improving the states K- 3 reading scores.  A recent study by the Annie E. Casey Foundation found students who do not read at grade-level by the end of third grade are four times more likely to not graduate from high school.  If you want to know more about the the bill Click here.

In my last post I talked about House Bill 645: Motor Fuel Excise Tax Adjustments and Studies.  This bill would cap the gas tax at 37.5 for one year.  This will definitely have an impact on DOT projects.  I don't think it will effect the HWY 74 By-pass project but it could.  Need to watch this bill.

That's all for this week.  If you haven't made you reservation for the Raleigh trip please give me a call.  It would be a good day to get an up date on these pieces of legislation and many others. 

2012 Short Session Begins

2012 Legislative Session Convenes

The 2012 Legislative Session officially convened on Wednesday (5/16) and is expected to move quickly. Legislative leaders aim to conclude the session before the start of the next fiscal year on July 1. 

Here are a couple of Legislative that will come before the General Assembly during this session.

 

Education Reform

During a special session in April, Senate President Pro Tem Phil Berger, along with Senators Jerry Tillman and Tom Apodaca, introduced Senate Bill 795: Excellent Public Schools Act. This piece of legislation has several items impacting our local school system.  A couple of items found in the legislation is the promoting public-private partnerships through a streamlined lateral entry process that allows business professionals to enter the classroom at a faster rate and pushing for reading-intensive instruction that ensures students have a solid foundation to continue learning.  Another item is the funding for the five additional days of instruction that was added to the school calender this past year. Click here to learn more about the Senate plan.

Transportation and Infrastructure

Last November, the House passed House Bill 645: Motor Fuel Excise Tax Adjustments and Studies, which would cap the gas tax at 35 cents for one year. On Wednesday (5/16), the Senate referred the bill to the Senate Finance Committee where it is expected to be heard during the short session. This legislation may negatively impact road maintenance, bridge repairs, decreasing traffic congestion and other vital transportation projects statewide, including the Hwy 74 By-pass.  Watch this bill.




A couple of pieces of legislation concerning Tax Policy have been introduced.   Senate Bill 827: Extend Tax Provisions, would extend tax credits that are scheduled to expire on January 1, 2013 for one year. Click on the link above to see which job creation tax credits are being extended.

That's the first look at this session of the Legislature.  I'll try to keep you up to date on the development of the above mentioned legislation and other bills that will impact the business community.  

Don't forget our trip to Raleigh.  June 13th.  Call and make your reservation.