Legislative Update

(portions of this summary were printed in the Charlotte Business Journal on July 16, 2010)

The North Carolina General Assembly officially adjourned their 2010 “short session” in the early morning hours of Saturday, July 10.  Despite an approximate $800 million revenue shortfall, the business community of Charlotte and North Carolina fared well this legislative session.  As we continue to emerge from a tough economic time, legislators seemed focused on maintaining and creating jobs in our state.

We are pleased that no taxes were raised this session and efforts to erode North Carolina’s status as a Right-to-Work state were unsuccessful.  Multi-state corporations also have more clarity regarding penalties when mandated to file combined tax returns.  The legislature showed their support for job creation by extending the expiration of the “Article 3J” tax credits for expanding companies and clarifying the State Environmental Policy Act (SEPA) review process.  The proposed ReVenture Eco-Park in northwest Mecklenburg, which is promised to create over 1,000 “green collar” jobs, will advance because of legislative support this session.  Also of note, developers in Mecklenburg County with pending local and state government permits will have until December 31, 2011 until they will see expiration.

Transportation infrastructure was clearly a priority this session.  Governor Perdue has made good on a promise to finish the I-485 loop around Charlotte by 2015 using a “design-build-finance” funding model.  An effort to derail this new financing method was successfully curbed.  The General Assembly also showed their support of transportation by creating the “Mobility Fund,” an account that will fund transportation projects of statewide significance to relieve congestion.  The first project to receive monies from this fund is the widening of I-85 on either side of what will be the new Yadkin River Bridge.

A strong public school system is a top priority as companies look to relocate and expand in Charlotte.  Legislators showed their support of North Carolina’s public schools by fully funding enrollment increases for the K-12 public school system, the UNC system and the NC Community College System.  Additionally, UNC Charlotte received special appropriations for their Energy Production Infrastructure Center (EPIC), which not only shows state support for the University, but also recognition of the Charlotte region as an energy capital.  The financing plan to begin the construction of the UNC Charlotte football stadium was also approved.  The state granted the UNC System and K-12 public school systems local flexibility to furlough employees at their discretion for the 2010-2011 school year, which will allow the systems to save full-time jobs, although due to restrictions on the furloughs, it is unlikely CMS would implement the use of a furlough.

The Charlotte Chamber would like to thank the Mecklenburg legislative delegation for their hard work and dedication through this short session.  We would like to especially recognize Senate Finance Chair Dan Clodfelter, House Transportation Chair Becky Carney and House Minority Whip Thom Tillis for their support of Charlotte and pro-business public policies.  As a final note, we would like to say farewell to retiring Senator David Hoyle, a strong advocate for business throughout his 18-year tenure in the NC Senate.

I would personally like to thank Charlotte Chamber members for their support of this crucial arm of our mission.  As the only local Chamber in the state with a full-time state lobbyist, I am proud to be that representative for our members. 

For details on the specific pieces of legislation that we monitored and mentioned above, please refer to the chart below.

For the first time since 2003 the North Carolina General Assembly passed a balanced state budget by July 1, the beginning of the state’s fiscal year.  On Wednesday, June 30, the House and Senate gave their third and final approval on the spending plan and Governor Bev Perdue signed the bill into law later that afternoon in a signing ceremony at the Capital.  To balance the budget, the General Assembly had to cut over $800 million to reach their final nearly $19 billion spending plan.  The budget includes many Charlotte Chamber priorities including:

Education

• Fully funds enrollment increases for the UNC system and the NC Community College System
• $3 million in recurring money to fund faculty and staff at UNC Charlotte’s Energy Production and Infrastructure Center (EPIC).
• Flexibility for local education authorities (K-12) and the UNC System to furlough state-funded employees only in the 2010-2011 fiscal year.

Transportation

• Creation of the “Mobility Fund,” an account that would fund transportation projects of statewide significance to relieve congestion.  The first project slated for funding is Phase II of the Yadkin River Bridge project (widening of I-85 from four to eight lanes surrounding the bridge).

Economic Development

• Gives tax relief to small businesses by establishing a 25% refundable tax credit against unemployment insurance contributions.
• Invests in several small business assistance programs to help start-up small businesses.

Taxes

• No corporate, personal or sales tax increases.
• Includes clarifying language in order to ensure fairness and due process in the assessment of penalties when the Department of Revenue mandates multi-state corporations to file combined tax returns.

You can read the full budget here, and the full money report here.

With the passage of the budget, many estimate that the legislature will adjourn their session next Friday, July 9.  Between now and then folks will be scrambling to get bills heard and passed by adjournment.  There are still several active bills the Charlotte Chamber is interested in:

HB 683 – Permit Extension

As the commercial and residential development industry has been especially hard-hit by the economic crisis, the legislature enacted a permit extension law last year that would allow any development permit from January 1, 2008 through December 31, 2010 to be considered current and valid, essentially, not letting the permit expire.  SB 683 would add to the current law by lengthening the period of time for permits to be valid by two years, from December 31, 2010 to December 31, 2012.  This bill has passed the Senate and is currently in the House Rules Committee waiting to be calendared for concurrence on the House floor.  The Charlotte Chamber supports the passage of this bill and urges the House to hear and vote on the legislation.

S 1154 – UNC Nonappropriated Capital Projects (Includes UNC Charlotte Football)

The passage of this legislation will essentially allow the UNC System to move forward with financing plans for the construction of various projects on campuses across the system.  There is no general fund money used in any projects included in the legislation.  One item of particular interest to the Charlotte business community in this bill is the construction of the UNC Charlotte football complex.  When this bill is passed, UNC Charlotte will be able to move forward with the project.  The bill has passed the Senate and is currently in House Appropriations.  It is likely that the bill will move out of committee and to the full House floor for a vote this week.

HB 1973 – Various Economic Incentives

This legislation provides expansion of several economic development incentives, including extending the Article 3J tax credits from January 1, 2011 to January 1, 2014.  The legislation also provides incentives for several targeted industries, which will likely result in the creation of jobs as economic developers work to bring those types of companies to North Carolina.  This legislation passed the House in late June and passed out of the Senate Finance Committee Thursday, July 1.  It will be heard by the full Senate this week.

House and Senate budget conferees have been busy attempting to hammer out a final state spending plan by the beginning of the 2010-2011 fiscal year, July 1.  Although no one knows for certain what will be included or not included in the final budget, we are optimistic that the Mobility Fund and local furlough flexibility for public education is included.  The creation of the Mobility Fund will allow the state to more efficiently tackle significant transportation projects across North Carolina.  The first project slated to receive funds from this account is Phase II of the Yadkin River Bridge project, which will widen the lanes on either side of I-85 once the bridge is replaced.  Furlough flexibilities for our public education systems will allow furlough decisions to be made at the local level.  This flexibility will give local education authorities more options on the table as they struggle to manage their own budgets in this tough economic time.

Football at UNC Charlotte is one step closer to reality as House Finance passed SB 1154 June 24.  This bill now heads to the House floor for a full vote next week, and when approved, will be sent to Governor Perdue for her signature.  The legislation approves the funding method to begin construction on the football complex, and requires no General Fund dollars.

Also given approval this week was a bill that would lengthen the existing development permit extension legislation that was passed last year by two years, from December 1, 2010 to December 1, 2012.  The Senate passed HB 683 on June 23, which would allow all development permits issued by any governmental agency between January 1, 2008 and December 31, 2012 to be considered valid.  The purpose of this legislation is to help an industry that has been especially hard-hit in the current economy.  The further extension of the Permit Extensions Act of 2009 shows the commitment of the legislature to see developers through this recession.  Contact your Senators and thank them for approving this legislation, and contact your House members and urge them to vote for concurrence on this bill when it is taken up early next week.  Contact information can be found here.

Bill Tracking

This week, as the budget remains in conference committee, the Charlotte Chamber continued to advocate for the inclusion of the Mobility Fund and temporary furlough flexibility for local education authorities in the final budget proposal. 

Predictably, the Senate voted not to concur (read: reject) on the House of Representatives state budget this week. Since the House and Senate have approved spending plans with many differences, each chamber appointed members to a conference committee this week to develop a compromise and work out the discrepancies to balance the state budget. If an item is included in both proposals, it is expected to be included in the final budget. The debate will lie with items included in only one version, which must be adopted and sent to Governor Perdue for her signature by July 1, the beginning of the 2010-2011 fiscal year. You can find a comparison of some items in the proposed spending plans below.

In their spending plan, the House created the “Mobility Fund” that would finance transportation projects of statewide and regional significance to relieve congestion (which I discussed in my previous blog post, below). Because this fund was only created in one budget proposal, it is an item that is not guaranteed to be included in the final version. The Charlotte Chamber supports the inclusion of this provision in the final spending plan as a way to help address the critical transportation and congestion needs facing our state. As we work aggressively to create jobs in Charlotte and North Carolina, we must focus on the traffic and congestion issues that not only affect our quality of life, but our ability to attract companies and jobs to our region and our state. The House’s proposal does not raise taxes or fees to pay for this fund, and the first project that would be funded from the new account would be the widening of I-85 surrounding the Yadkin River Bridge. The bridge is already on track to be replaced and widened from four to eight lanes.

The Charlotte Chamber additionally supports the inclusion of temporary flexibility for local education authorities to administer furloughs. The Senate has included a provision in their budget for this temporary flexibility in fiscal year 2010-2011. Charlotte Mecklenburg Schools Superintendant Dr. Peter Gorman estimates that a one-day furlough of ten-month employees could save CMS about $3 million. This flexibility would allow CMS, at their discretion, to preserve jobs and help maintain adequate staffing levels, while they face a difficult budget year.

We are pleased that in the final spending plan we can expect full funding for enrollment growth of the UNC System and the NC Community College System as well as funds for faculty of UNC Charlotte’s Energy Production and Infrastructure Center (EPIC).

Another piece of legislation of note that saw action this week is the UNC System nonappropriated funds bill. The Senate Finance Committee unanimously approved this bill, and it is expected to be approved in a final vote of the full Senate on Monday, June 14. This legislation, which does not ask for any General Fund money, just approval of taking on debt, would allow UNC Charlotte to move forward with the construction of a football complex. Go ‘Niners!

Budget Comparisons

Bill Tracking