Senate Budget Passed

The North Carolina Senate passed an updated $19.7 billion budget that would spend $300 million more than originally proposed on public schools while continuing to let the temporary sales and income taxes expire on time. The Senate version restores funding for teachers assistants for grades 1-3 and includes $62 million to hire over 1,100 teachers in lower grades. However, there is a catch.  The updated plan includes a provision requiring local school districts to cut an additional $124 million at their discretion.  The increase in education spending from the original Senate proposal is covered by cuts in several areas such as state building repairs, state pension fund contribution and forgoing the quarter-percentage point personal income tax cut.  Additionally, the new budget establishes a tax exemption for the first $50,000 of net income for small businesses. Republicans estimate that 17,000 jobs will be created within the next year as a result of the small business tax break and expiration of temporary taxes.  It is now up to the Governor and she has expressed her criticism of the budget.  Probably headed for a veto.  Keep tuned.  I have hear that the House leadership feels they have the necessary votes to override a veto.

Unemployment Benefits Extended

Gov. Perdue signed Executive Order 93 on Friday (6/3) restoring federal unemployment insurance benefits for NC citizens. Perdue refused to sign proposed legislation that tied the extension of unemployment benefits to a stop-gap spending plan that would serve as back up if a state budget was not finalized by July 1.  The Senate included a provision in their budget that would restore the benefits.  The governor was able to use her authority as the state’s chief executive to extend the benefits since they are not state funded.

With budget negotiations moving quickly, legislative leaders hope to end this year’s long session as early as June 17. Two special sessions would be scheduled before the May 2012 session to address district maps and proposed constitutional amendments. The first special session would start as soon as July 11 to redraw congressional and legislative districts based on population changes in the 2010 U.S. Census. The second special session has not been scheduled but will be held to deal with the proposed amendments to the N.C. Constitution that were submitted during this legislative session

Tort Reform:

H542: Tort Reform for Businesses and Citizens has cleared the House and is now on its way to the Senate.

Workers’ Compensation Passes in House

The House passed HB709: Protect and Put NC Back to Work. One of the primary objectives of this legislation was to bring North Carolina’s indemnity costs in line with surrounding states by limiting the duration of temporary total disability (TTD) benefits. The bill is now headed to the Senate.

Watch the Budget Debate.

The Senate Appropriations Committee approved a $19.4 billion budget proposal Wednesday (5/25) after reviewing and rejecting several Democratic amendments. The bill (H.200) will come before the Senate this afternoon (5/31). The Senate’s budget spends $129 million more than the House budget but $473 million less than the Gov. Perdue’s proposed budget.  Republicans refuse to extend a temporary penny sales tax and an income tax surcharge scheduled to expire in June. The Senate tax package reduces the rate for all individual income tax brackets by a quarter-percentage point, dropping the rates to 5.75, 6.75 and 7.5 percent. Additionally, the measure would exempt the first $50,000 of net business income of small and start-up companies whose gross receipts do not exceed $825,000.  The Senate budget also saves the state an estimated $18 million by repealing the tax deduction for severance wages, the tax credit for recycling oyster shells, the sales tax holiday on energy-efficient appliances, among others. 

The Senate budgeted $10.7 billion for education, over $62 million more than the House proposed. The bill seeks to begin reducing class size to the targeted ratio of 1 teacher for 15 students in early grades by hiring over 1,100 teachers. The plan would eliminate funding for teachers’ assistants in all grades except kindergarten, which accounts for 13,000 positions. The Senate budget also includes $1 million to research and develop a performance-based pay model for teachers and $115 million for district school construction.

After the Senate approves its budget, House and Senate members will iron out their differences and present a final budget to Gov. Perdue in June. Perdue has said that she will veto the budget if it “undermines our schools and fails to protect the quality of our education system.”  I think you will see a veto.  Not sure if the House will have the votes necessary to override.  We’ll see.

Senate proposal raised concerns over their plan to eliminate Medicaid coverage for an array of optional services including physical, occupational, speech, and respiratory therapy, and would limit dental care to emergency cases, unless the patient is pregnant. These services would be cut mid-2012 according to the budget The Senate also proposes to dissolve the NC Partnership for Children, the central office for Smart Start, and moves supervision of Smart Start to the state Department of Health and Human Services

Workers’ Comp Moves Past Committee

The House Select Committee on Tort Reform voted to pass HB709: Protect and Put NC Back to Work on Thursday (5/26). After extensive negotiations between parties on both sides of the issue, the committee approved a consensus bill that would be the first significant workers’ comp reform in the General Assembly since 1994. One of the primary objectives of this legislation was to bring North Carolina’s indemnity costs in line with surrounding states by limiting the duration of temporary total disability (TTD) benefits. The proposed legislation would place a 500 week cap on temporary total disability benefits, increase the cap on temporary partial disability benefits from 300 weeks to 500 weeks, improve the structure, operation and accountability of the Industrial Commission, improve communication between the employer and the doctor to better facilitate employee’s return to work and ensures that both parties have equal access to medical information.

Check This Out

Do you want to contribute all or part of your income tax return from the state to the state's coffers?  We'll, if you do, House Bill 877 will let you check off on your income tax return that you would be delighted to give the state either all or part of your tax refund.  You can designate it to go to the following departments or to the general fund:

• The Department of Cultural Resources. 
• The Department of Health and Human Services. 
• The Department of Public Instruction. 
• The Department of Public Safety. 
• The University of North Carolina

Wow, isn't that nice of the state to make it easy for us to give our money back.  Seems like I heard a pledge from this Legislature that they were going to put more money back into the pockets of the tax payer.  I suppose some tax payer, some where in the state, will be magnanimous and give their tax refund back to the state - not me!

Speaking of taxes, the Senate is still working on their version of the budget.  The Education community is holding its breath.  It is rumored that the Senate will take money form public education and move it into the UNC system.

The "Tort Reform Bill" (H542) was scheduled to be on the House calendar for second reading but was postponed until 5/31.  There is still time to make your opinions know about the bill.

Tort Reform

The tort reform bill (H.542) is on the House calendar today for second and third readings.  Check it out it could be a good move.

State Budget Getting Closer

The House passed budget is now in the Senate.  As of today it looks like the Senate version will spend less than the house version and public education will take it on the chin, but the University system will get more.  Doesn't make sense to me.  Most people figure the Senate will vote on their budget in June, then a compromise bill with the House will be arrived at very quickly.  Look for a veto from the governor.  Big questions is whether or not the legislature has enough votes in the House to override a veto.  We'll see.

Both the House Committee on Insurance and the House Committee on Appropriations voted this week to approve H115: North Carolina Health Benefit Exchange required under the federal health care overhaul law.  This bill will create an on-line market for individuals and small businesses to purchase qualified health care plans.  So say the bill give the insurance companies to much control so some changes have been proposed that will take away some of the discretion of the insurance companies.  It will probably be heard by the full House this week.  You might want to check it out.

As you know the Governor veto the bill to extend unemployment insurance to more than 37,000 individuals receiving extended unemployment benefits; individuals that have been unemployed for a shorter amount of time are still receiving payments.  It sounds like there is a stalemate between the Governor and the Legislature regarding this piece of legislation.  Don't know what's going to happen.

Legislators concluded final public hearings regarding the redistricting of boundaries for both congressional and General Assembly seats that will remain for the next ten years.  It is hopeful that the redistricting plans will be ready to present to legislators later this month, and that the final maps can be approved and sent to attorneys at the U.S. Justice Department for approval under civil rights laws by mid-June.

On the Federal level there is some proposed regulation coming out of the Obama administration that will have a very detrimental impact on the housing marketing.  Federal banking regulators last month proposed a 20 percent down payment requirement on QRMs.(Qualified Residential Mortgage)  The 20 percent down payment requirement leaves millions of qualified potential homeowners with two grim alternatives: pay higher rates upfront for a mortgage that falls outside the regulators' proposed QRM standard or delay home ownership for a decade or more to save for an onerous down payment.  This will put homes out of reach for many Americans and further cripple the fragile housing recovery.  Just goes to show you that federal regulators who write the rules associated with legislation can have a significant impact on our lives. It pays to watch what's happening with the regulators as well as the legislators.

This past Tuesday, several members of the Chamber spent about 6 hours in Raleigh meeting with our local delegation and several members of the administration.  Here are some highlights of the meeting:

• The budget was all the talk. The Speaker of the House had called the house into session at 9:00 am that morning and told the House members that the session would not end until all the amendments to the House budget bill (H200) had been heard.  I understand the session went well into the evening.
• Secretary of Cultural Affairs, Linda Carlisle, was concerned about her budget that had been cut 23%. However,  in a late move the House reduced the cuts to 15%.  Cleveland County gets money for the arts through the Department of Cultural Affairs and the Scruggs Center and Don Gibson Theatre have also been recipients of grants form this department.  Secretary Carlisle is in charge of all state historical parks and with this being the 150 Anniversary of the Civil War, it would be ashamed if we had to close those parks.
• NCDOT had some good news for us.  Right of Way acquisition for sections one and two have begun with construction of phase 1 to get underway in 2012 and construction of phase 2 to begin in 2013.  That sounds promising.
• Secretary of Commerce, Keith Crisco, was not able to meet with us very long as we were invited to the House floor to meet the Speaker of the House, Tom Tillis.  However, Secretary Crisco did go with us and told the Speaker that "Cleveland County had the most aggressive economic development team in the State of North Carolina."  Pretty high accolades coming from the state's chief economic developer.
• President Pro Temp of the Senate, Phil Berger, was very gracious with his time and listened to our concerns as they related to several pieces of legislation.  In particular, we expressed our reservations about the proposal to funnel the next two payments from the tobacco settlement into the General Fund.  The Chamber's Board of Directors is on record in opposition to this move and we once again explained our reasoning to Senator Berger.  He was very nice but informed us that the monies would be going to the General Fund for the next two years.  Oh well, we tried.

It was a good day and Senator Clary and Representative Moore's staffs were very helpful in setting up all the appointments and making sure we didn't get lost.    Many thanks to them for their help.  We would also like to express our thanks to Senator Clary, Representative Moore, Representative Hastings and Representative Hager for taking time out of a very busy day to be with us.  Next year I hope more members will go.