
|
APRIL
25, 2003
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ISSUE.
No. 14
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2003
LONG SESSION
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Published
every Friday during legislative sessions exclusively
for NCCBI members
|
Other stories below: NCBEST
study concludes NC's tax burden is rising.... Efficiency
measures advance in House, Senate... Legislative
actions.... Senate
plans to unveil its budget next week... Weak
March numbers chill state's budget situation... NCCBI-backed
bill to improve rulemaking process advances.... Kirk
testifies against mental health parity....
House
panel OKs measure shifting urban loop
bond money to highway improvement projects
One
of the year’s major issues in state transportation policy
advanced this week when a key House panel gave its nod to a
proposal by Gov. Mike Easley to tackle a backlog of highway
maintenance and mass transit needs by taking funds from a bond
issue approved by voters for other purposes. The House
Transportation Committee on Tuesday favorably reported H.
48 North Carolina Moving Ahead, legislation that
authorizes the transfer of
$700 million the state is sitting on from a 1996 bond
referendum mainly intended to build urban loop roads and
diverting the money toward highway maintenance and other
projects. The measure, co-sponsored by Reps. Jim Crawford
(D-Granville) and Nelson Cole (D-Rockingham), now goes to the
Finance Committee.
In testimony to the committee, NCCBI
Vice President of Governmental Affairs Leslie Bevacqua said
the business community supports the legislation with some
reservations. She reminded the committee that NCCBI led the
1996 highways-school construction bond campaign and was
concerned about changing how the money from the bonds would be
allocated. However, she said the NCCBI executive committee had
discussed the issue and had given the legislation its
"support with some qualifications." See last
week’s Bulletin for that story.
The
committee approved two NCCBI-backed amendments, introduced by
Rep. Cole, which addressed two of the concerns. One addressed
the problem of delays and changes in environmental permits by
requiring the state Department of Environment and Natural
Resources to approve road permits within 90 days. The other
amendment made certain that any funds used for public
transportation, including mass transit, would be to match
federal funds.
Another
NCCBI concern was addressed in the original bill, which was a
strong statement of support for the new legislation "not
impacting the delivery of the Transportation Improvement Plan
(TIP).” NCCBI will continue to oppose the taking of highway
funds to meet General Fund obligations. Bevacqua said NCCBI's
support for the revised bill would continue as long as the
focus remained on "reducing congestion and adding
capacity" as the original bonds promised.
In a campaign coordinated by NCCBI, voters in 1996 approved a
$950 million bond issue specifically for building urban loops,
widening interstate highways, improving access to schools and
paving secondary roads.
Seven years later, $700 million of that remains unspent
because planned projects were delayed by environmental
permitting hold-ups and other reasons, officials said.
Diverting the money to other highway projects requires
legislative approval. If the measure passes, the DOT would
sell the $700 million in bonds and use the proceeds to
reimburse the Highway Trust Fund. DOT would spend $630 million
of the bond money on widening lanes, building road shoulders,
adding turn lanes and other improvements. Public transit
systems would get $70 million as long as it is used to match
federal funds.
The
NCCBI Executive Committee voted last week to give the new
spending plan its qualified endorsement, although members
expressed some dissatisfaction regarding changes made seven
years after voter approval. There was agreement that
legitimate transportation needs far outstrip available money
and that population growth had caused severe congestion,
especially around the state's cities. After the meeting, NCCBI
issued the following statement:
“NCCBI
believes the first priority of expenditure of any highway
trust fund balances should be used, as originally intended for
intrastate system projects, urban loop projects, and secondary
road projects identified in the original trust fund
legislation. We urge and support efforts by the administration
and the General Assembly to analyze, identify and resolve
legal, environmental or other impediments that are preventing
the delivery in a timely manner of authorized TIP projects
provided for in the highway trust fund that are necessary to
support a comprehensive transportation system and to promote
an enhanced quality of life. Given the delays in projects due
to environmental analyses, NCCBI urges the legislature to take
appropriate action to ensure that the Department of
Transportation and the Department of Environment and Natural
Resources are working together in constructive ways to speed
the review and permitting processes necessary to accelerate
promised construction of urban loops and intrastate highways.
“If
accelerating loop and intrastate construction projects proves
impossible due to environmental delays, NCCBI would support
flexibility in spending bond monies, as long as it does not
have a fiscal impact on delivery of the TIP and is focused, as
the bond issue was, on relieving congestion and adding
capacity to our transportation system. Any changes in the
allocation of the bond funds should be focused on urban
congestion mitigation measures such as reducing signal delays,
widening major facilities and replacing intersections with
interchanges on existing intrastate and loop facilities, and
for congestion alternatives such as urban regional rail
systems. Distribution of funds should be allocated in areas of
greatest need and should not be subject to the equity formula.
Funds used for transit should only be used for matching
federal grants.”
NCBEST
research concludes NC ranks
second in tax burden in the Southeast
North Carolina’s tax rates and business recruitment
incentives have long been linked. A 2002 survey of national
industrial site location specialists concluded that the top
four site selection factors were availability of skilled
labor, labor costs, tax exemptions, and state and local
incentives. Earlier this year several organizations released
studies that concluded North Carolina’s overall tax burden
ranked about in the middle nationally.
NCCBI felt it was time to explore how these issues come
together in the area of industrial recruitment. Consequently
NCBEST, which is NCCBI’s new information and education arm,
asked respected N.C. State economist Michael Walden to look at
tax burden, with a particular focus on the Southeast because
those states are North Carolina’s toughest competitors for
new industry. Among other conclusions, Walden determined that
North Carolina’s overall tax burden has risen from , fourth
highest among the six Southeastern states in 1990-’91 to
second highest in 1999-’00.
Also, NCBEST undertook a thorough review of a recently
published in-depth study of states’ tax burden and location
incentives done by Fluor’s Global Location Strategies
Department in Greenville, S.C.
Today’s Legislative Bulletin contains an article by Dr.
Walden. The article begins on page 8. Next week we will
present a summary of the Fluor report. NCCBI will send a news
release about the studies to statewide business reporters and
distribute the information to legislators.
Efficiency
Commission bills advance in Senate
ction
was taken this week on several bills that were introduced as a
result of recommendations from the Governor’s Council to
promote Government Efficiency and Savings on State spending.
The commission was chaired by Jim Hyler of Raleigh during his
tenure as chair of NCCBI.
S. 819 Use of State Property/Blount Street Historic
District (Rand, D-Cumberland) was approved by the Senate
Committee on State Government, Local Government and Veterans
Affairs and passed by the Senate. The bill allows the state to
sell the state-owned property in the Blount Street Historic
District. Studies have shown that these assets will meet high
demand from the private sector and will restore valuable real
estate for the local tax rolls. This bill now moves to the
House for consideration.
S. 813 Controllers Fee (Rand, D-Cumberland) was
approved by the Senate Commerce Committee and passed by the
Senate. The state Controller is responsible for establishing
policies to govern the collection of debts owed to the state.
This legislation allows the use of collection agencies and
sets a fee for the collection of past-due debt. This
legislation was proposed to help the state be more aggressive
in its collections. The
bill now moves to the House for consideration.
In addition to the Senate passed bills, the House included two
key provisions in its budget bill that address recommendations
made by the commission.
Information Technology: The House provision requires
the state office of Information Technology Services (ITS) to
analyze the existing systems and costs, develop a plan for
installing more modern information technology systems, and
record potential cost savings and efficiencies in State Agency
ITS operations. In
its report, the Commission said responsibility for IT
governance was diffuse and overlapping.
”For many years only a relative handful of people were aware
of how much money was being spent on information technology
services in state government,” said NCCBI President Phil
Kirk. “The rest of the world is catching on and wants to
take a closer look at where it is all going and if it
couldn’t be done more efficiently. Just a 10 percent
improvement in efficiency could save a minimum of $70 million
overall. (In a
related matter, the Raleigh News & Observer on
April 20 detailed efforts underway by the state to open up a
five-year, $200 million contract to process claims related to
Medicaid and replace the outmoded and outdated software being
used to handle the claims now.)
State Real Property System: The Commission recommended
that the state review its inventory of state-owned property
and recommend property that should be sold or leased to the
private sector. The
House budget provision directs the Department of
Administration in consultation with the Office of State Budget
and Management and other affected state departments, to
develop a uniform real property disposal system that will
continuously identify, evaluate, and dispose of all unused or
underused state-owned land and buildings.
Included in the charge to the state agencies are
directives to:
- Review
the current inventory of state-owned land and buildings
for accuracy and completeness;
- Determine
how and when state-owned land and buildings should be
declared surplus; and
- Examine
current state law to assess the need for changes to
support a uniform system to identify, evaluate, and
dispose of all unused or underused state-owned land and
buildings.
The
Department is to report its findings and recommendations to
the General Assembly no later than March 1, 2004. “We are
encouraged to see the General Assembly responding to the
Efficiency Commission’s recommendations,’ said NCCBI Vice
President of Governmental Affairs Leslie Bevacqua. “Moving
these initiatives forward and reducing costs for the state are
important. NCCBI has given its full endorsement to the
Efficiency Commission recommendations and we will continue
working to see that these recommendations are enacted.”
Senate
plans to unveil its budget next week
Not
wanting to be upstaged by the speed with which the House dealt
with the budget, the Senate plans to roll out its own spending
plan by early next week. Senate leaders said they could act
that quickly because its budget writers attended many recent
sessions of the House Appropriations Committee and its
subcommittees, so they are familiar with the numbers in the
House budget. If the Senate turns around a budget bill in a
week, as the House did, that would still leave the chambers
nearly two months to reach compromise on any difference in
spending priorities before the start of the new fiscal year on
July 1.
The full Senate Appropriations Committee is scheduled to begin
hearing subcommittee reports on the budget at 1 p.m. Monday.
The House sent over its budget to the Senate last Thursday
after a final 75-42
vote to approve the spending plan. The House’s $15 billion
budget for next fiscal year would raise overall spending by
$617 million and is balanced with the help of a $384 million
tax package, including extending for two years the additional
half-cent state sales tax and the higher income tax rate on
wealthy individuals. The budget funds a 1.8 percent raise for
teachers, a 2.5 percent increase for community college
instructors and 1.6 percent raise for other state employees.
Another $91 million would go to performance bonuses for
teachers at schools that meet academic achievement goals. The
House would provide $25 million to reduce class size in the
second grade and put $8.6 million toward expanding More at
Four. It robs $268.8 million from the Highway Trust Fund and
$60 million from tobacco settlement proceeds. The House budget
assumes a growth of 3.5 percent in tax revenue.
NCCBI-backed
bill to improve rulemaking process advances
Legislation
to amend the Administrative Procedure Act (APA) was favorably
reported by the House Judiciary II Committee on Wednesday. H.
1151 Improve Rulemaking Process, introduced
by Rep. Martin Nesbitt (D-Buncombe), revises the
procedure for adopting permanent rules and makes temporary
rules subject to review by the Rules Review Commission, using
the same standard used for permanent rules.
NCCBI
and other organizations have raised concerns about the
proliferation of temporary rules in recent years. In 1995, the
General Assembly, with support from NCCBI, passed legislation
that made substantial revisions to the permanent rulemaking
process. The most significant change at that time was the
provision that delayed the effective date of all permanent
rules until the 31st legislative day of the next regular
session of the General Assembly unless legislation is
introduced to disapprove the rule.
The
fact that it now takes as much as 18 months for an uncontested
rule to become effective led to state agencies trying to
circumvent the process by proposing temporary rules.
Government agencies currently may impose temporary rules on
the public for up to 270 days without the benefit of public
notice or public hearing. H. 1151 sets up a new
category for emergency rules, sets stricter guidelines for
adoption of a temporary rule and makes changes regarding
permanent rules.
Speaking
in support of the legislation, Leslie Bevacqua, NCCBI vice
president of governmental affairs, said “NCCBI has expressed
concerns to state agencies about the number of temporary rules
being imposed. This legislation is a reasonable approach to
addressing this matter and addresses the issues we have
raised. It improves the process.”
Representatives
from the N.C. Home Builders Association, the N.C. Retail
Merchants Association, the N.C. Association of Realtors, and
the N.C. Bar Association all spoke in support of the bill. The
measure now goes to the House floor for consideration.
Workplace
safety tax credit bill advances in House
The
House Committee on
Occupational Safety and Health on April 16 favorably reported H.
919 Workplace Safety Tax Credits, a measure that creates a
two-year pilot program offering employers a dollar-for-dollar
tax credit for investments in workplace safety programs. The
measure, which was then referred to the House Finance
Committee, is sponsored by Reps. Wayne
Goodwin (D-Richmond) and Patrick McHenry (R-Gaston); a
companion bill also has been introduced in the Senate by Sen.
David Hoyle (D-Gaston). The bills were introduced at the
request of Labor Commissioner Cherie Berry in an attempt to
stop workplace accidents before they happen. The tax credit
would be available to companies that have had no major OSHA
violations for the past three years. Eligible expenditures
would include those to eliminate workplace hazards in order to
attain certification under a Department of Labor voluntary
recognition program; expenditures to prepare an application
and prepare the workplace for certification under a Department
of Labor voluntary recognition program; and expenditures to
eliminate workplace hazards identified through the North
Carolina Department of Labor's free consultation program.
House environmental leader
proposes consolidating agencies
The
chairman of the House Committee on Environment and Natural
Resources is advancing legislation to consolidate the
state’s three primary environmental agencies into one new
super-agency. Rep. Pryor Gibson (D-Montgomery) proposes to
consolidate the Environmental Management Commission, the
Coastal Resources Commission, the Marine Fisheries Commission
and several other state environmental boards into one
commission that would be structured much like the
quasi-judicial N.C. Utilities Commission. Gibson said the aim
of H. 1206 Consolidate Environmental Regulatory Commissions
is to improve efficiency, communication, and coordination
within state government in the development and implementation
of environmental and natural resources policy and to reduce
costs. Existing agencies that would be folded into the new
department are the Coastal Resources Commission, the existing
Environmental Management Commission, the Marine Fisheries
Commission, the Mining Commission, the Radiation Protection
Commission, the Sedimentation Control Commission, the Soil And
Water Conservation Commission, the Water Pollution Control
System Operators Certification Commission, the Water Treatment
Facility Operators Board Of Certification, and the Well
Contractors Certification Commission. Gibson said he doesn’t
expect the General Assembly to adopt the legislation this
year; rather, he believes it will be assigned to a study
committee that will report its recommendations to the
legislature next year.
House agrees to comply
with new federal voting law
The
House voted 104-2 on Tuesday to approve legislation to bring
North Carolina into compliance with the federal Help America
Vote Act, the tougher voting standards imposed by Congress
after the disastrous presidential balloting in Florida in
2000. H. 842 (Michaux and Stam) Help America Vote Act
Compliance now goes to the Senate for consideration. The
federal law contains carrot-and-stick features. It gives
states money to replace punch card ballots and lever voting
machines with newer technology, but requires additional
measures to standardize voter registration and improve access
to the ballot box. The federal law requires states to oversee
all voter registration and the assignment of an identification
number to each voter. Election boards also will have to inform
voters whose ballots are challenged whether their votes were
counted.
Senate passes bill calling
for appointed state schools superintendent
With
one vote to spare, the Senate approved legislation Tuesday
that would amend the state constitution to allow the state
school superintendent to be appointed rather than elected. The
bill, S. 568 (Gulley) Superintendent of Public Instruction
Appointed, was approved by a 31-18 vote, one more than the
three-fifths margin required for passage of constitutional
amendment bills. The measure now goes to the House. This is
the fifth time in recent years that the Senate has passed such
legislation. Gulley has said now is a good time to make the
switch because incumbent Superintendent Mike Ward has
announced he will not seek re-election. Ward supports the
change, as does NCCBI, Gov. Mike Easley and several others.
The North Carolina Association of Educators, the state's
largest teacher group, is against the change.
Sen.
Kinnaird again offers anti-discrimination bill
Sen.
Ellie Kinnaird (D-Orange) has again introduced a bill to
specifically allow cities and counties to adopt ordinances
outlawing discrimination in employment, housing and public
accommodations. NCCBI opposes the measure, S. 798
City/County Anti-discrimination Ordinance, because it
duplicates laws already on the books at the federal level.
“There is no need for duplication which will result in
costly and burdensome confusion for many employers in this
state and throughout the nation," NCCBI President Phil
Kirk said. "The federal law is very adequate according to
my information." Sam Johnson, lobbying on behalf of N.C.
Associated Industries, said, "Our various businesses and
institutions are under a lot of pressure to produce a product
or service and to meet payroll and other expenses. I hope
legislators will consider this point of view." The bill
is before Senate Judiciary II, which is chaired by Sen.
Fletcher Hartsell (R-Cabarrus). Kirk added, "Not only is
this more unnecessary government intrusion but it would result
in another unfunded mandate for local governments and this is
not sound public policy."
Senate passes bill giving
soldiers in-state tuition rates
The
Senate voted unanimously on April 17 for S. 61 (Rand)
Military Personnel/Tuition, a measure that would ensure
soldiers, Marines and airmen stationed in North Carolina and
their dependents pay in-state rather than out-of-state tuition
rates to attend classes at UNC System and community college
campuses. UNC schools currently charge out-of-state tuition to
most military personnel and the military typically picks up
some but not all of the difference above in-state tuition
rates. The state already ensures that out-of-pocket expenses
for the military never exceed the total costs of the in-state
tuition charges. But the change would allow military personnel
to pay only in-state rates for the entire portion that the
military doesn't pick up, further reducing their cost. The
measure now goes to the House.
Senate again votes to ban
video poker machines
The
Senate was voted 48-1 on Tuesday to pass a bill banning video
poker machines everywhere in North Carolina except on the
Cherokee Indian Reservation. The measure, S. 6 Ban Video
Poker/ All But Reservations, which was sponsored by Sen.
Charles Albertson (D-Duplin) and co-sponsored by 28 other
senators, now goes to the House. Video poker machines
currently are allowed in North Carolina with several
restrictions, primarily a limitation on the number of machines
in a location and that prizes cannot be worth more than $10
credit or token. However, police say the restrictions often
are ignored. The N.C. Sheriffs' Association and district
attorneys' conference support the ban. The N.C. Amusement
Machines Association opposes the idea. The Senate passed a
bill banning video poker last year but it died in the House
when Speaker Jim Black sent it to a study committee.

Kirk
testifies against mental health parity bill
The
House Insurance Committee debated but took no action Wednesday
on a bill to require
that group health insurers provide coverage for the treatment
of chemical dependency and mental illness at the same level
and subject to the same limits as benefits are provided for
physical illness. In
his testimony to the committee, NCCBI President Phil Kirk said
the business community opposes H.
654 (Alexander, Insko, Hackney, Wainwright) Mental
Health/Chemical Dependency Parity
because of the added costs for business and industry which
provide health care coverage for employees. "We oppose
all mandates for health insurance coverage," Kirk
emphasized. "Most of the mandated coverage people seek is
well-intended, but drives up the cost of insurance. Unintended
consequences often result -- employers drop health insurance
for their employees or they make them pay higher co-pays or
part of the cost of the coverage. For cost reasons, we oppose
mandates in good economic times, but we strongly urge you to
reject this bill due to the poor economy and rising health
care costs," Kirk said.
House reverses course,
gives restaurants a cocktail break
After
initially rejecting the measure by a 59-55 vote, the House on
Thursday reconsidered its action and gave third-reading
approval to a bill that would lower the threshold of food
sales which restaurants must meet in order to sell mixed
drinks. Under current state law, restaurants must derive 40
percent of their revenue from food in order to keep a mixed
drink permit. H. 900 (Gibson, McComas) Restaurant ABC
Permits State would lower the threshold to 30 percent. The
measure does not apply to private clubs, which don’t have
any restrictions about food sales and mixed drinks. The
measure now goes to the Senate.
Senate extends crossover
deadline until May 1
Acting
to coordinate its schedule with the House, the Senate voted
Wednesday to extend its crossover deadline until May 1.
Originally, the Senate had set Thursday as the date when all
but appropriation bills must pass at least one chamber to
remain eligible for consideration in that chamber during the
remainder of the session. The House had set May 1 at its
crossover deadline at the beginning of the session. The
approach of the crossover deadline always prompts a frenetic
pace in the legislature, which means next week will be a mad
house on Jones Street.
Legislative
Actions
The
Senate voted unanimously on April 17 for S. 593 (Albertson)
Extend Swine Moratoria, a measure that would extend for
four years the current moratorium on new large hog farms that
use open-air lagoons and spray irrigation systems to process
waste. The moratorium, set to expire on Sept. 1, has been on
the books since 1997. The proposal now goes to the House.
By
a vote of 75-34, the House gave final approval Thursday to H.
678 (Glazier and Dickson) Eliminate High School Exit Exam,
a measure that bars the use of an exit exam that would have
been required of North Carolina's high school seniors
beginning in 2005. The bill, which now goes to the Senate,
also prohibits the Department of Public Instruction from
adding additional standardized tests unless they are required
by federal law.
The
House on Monday gave second- and third reading approval to H.
273 (Glazier, Warner, Lucas, Goodwin) Adverse Reactions to
Smallpox Vaccination, H. 345 (Gorman, Parmon)
Charter Schools Approved for 10 Years, H. 743 (Nesbitt,
Walend) Nurse Testimonial Privilege, H. 626 (Adams,
Bowie, Jeffus, Jones) Greensboro/Airport Annexation Agreements,
H. 744 (Hackney) Managed Care Patient Assistance, H.
17 (Miller) School Curriculum Should Include Consumer
Education, and H. 152 (Alexander) Unauthorized
Medication/Prevent Sudden Infant Death Syndrome/Child Care.
Those bills now go to the Senate.
The
House voted 111-0 on Tuesday to pass a bill allowing private
businesses to build bridges across rivers and streams if they
are constructed to state standards. H. 824 (Allred)
Department of Transportation Bridge Encroachments at first
was a local bill to allow the Twin Lakes Retirement Center in
Elon to build a bridge across the proposed Cook Road Bypass.
But the bill was amended to apply statewide. The bill now goes
to the Senate.
By
a vote of 83-23, the House on Thursday gave final approval to H.
31 (Allred) Raise Cap on Charter Schools, a measure that
would allow another 10 charter schools to open in the state in
addition to the 100 already open. The measure now goes to the
Senate.
The
House Election Law And Campaign Finance Reform Committee on
Monday gave favorable reports to H. 787 Reporting by
Federal PAC, H. 869 Reporting Absentee Votes, H.
1119 Election Law Changes – 1, and H. 1147 Absentee
Ballot Requests.
The
House on Tuesday gave second- and third-reading approval to H.
357 (Barnhart) No Credit Card Numbers on Receipts, a
measure that would prohibit a business that accepts credit,
charge, or debit cards from printing more than five digits of
a credit card account number or an expiration date on a sales
receipt. The measure also would prohibit a person from selling
a cash register that cannot be programmed to produce a receipt
with five or fewer digits of the credit card number and no
expiration date printed on the receipt. The bill now goes to
the Senate.
The
Senate on Tuesday gave second- and third-reading approval to S.
965 (Dalton) Amend Constitution/School Fines and Forfeitures,
a bill that would amend the state constitution to provide that
clear proceeds of all civil penalties, civil forfeitures, and
civil fines collected by a state agency are remitted to the
Civil Penalty and Forfeiture Fund and used exclusively for
maintaining free public schools. The bill now goes to the
House.
The
Senate on Tuesday gave second- and third-reading approval to S.
326 (Hoyle) Soliciting SUTA Dumping a Felony, the measure
that attacks the practice of shifting employees to a dummy
company in order to avoid higher unemployment insurance taxes.
The bill now goes to the House.
The
Senate on Tuesday gave second- and third-reading approval to S.
558 (Hoyle) Disclosure of Prior MV Damage, a bill
requiring that any motor vehicle that is declared a
total loss shall have the title and registration card marked
"Total Loss Claim" in 14-point type or larger and
have a metal plate or other permanent marker inserted into the
doorjamb of that vehicle that states "Total Loss
Claim". The measure further requires that should that
vehicle be later reconstructed, the plate or other permanent
marker shall be inserted in the doorjamb of the reconstructed
vehicle.
The
House on Wednesday gave second- and third-reading approval to
H. 1082 (Gibson) Environmental Reports Consolidation
and H. 1083 (Gibson) Environmental Technical Corrections.
Three
Left Out:
A recent bulletin listed the organizations involved in the
coalition which secured the passage of H. 429 Property Rights
or Just Compensation. Regretfully, three organizations
involved in the coalition were omitted from the list -- the
Independent Garage Owners of North Carolina, N.C. Restaurant
Association, and the N.C. Homebuilders Association.
State Government
Weak
March numbers chill state’s budget outlook
March
was a bad month for the state General Fund, with tax revenues
for the month coming in $120.5 million below budget. The
deficit more than wiped out a revenue surplus that had
accumulated over the past few months and left the state $36.8
million behind plan at the end of its fiscal third quarter.
Individual income taxes, corporate income taxes and sales
taxes – the state’s three primary sources of tax revenue
– all were below expectations in March, according to figures
supplied to NCCBI by the State Controller’s Office.
Individual income taxes in March were $347.7 million, $28.5
million below target. Corporate income taxes at $141.9 million
were $84.2 million below budget. See
the chart below for a detailed budget report.
While the state has taken in less than expected in tax and
non-tax revenue, expenditures also are below target. Through
nine months income and outgo should be 75 percent of budget,
but the state’s actual income is 71.8 percent and
expenditures are 70.6 percent of plan, the Controller’s
Office said. Year-to-date, total tax and non-tax revenue are
99.1 percent within budget, which puts the red ink into
perspective.
While corporate income taxes were down in March, they remain
strong for the year at $573.6 million in actual collections
vs. $553.1 million budgeted. That’s about $240 million more
than had been collected in corporate income taxes at this
point last year. And those are net numbers, after transfers to
other accounts such as local government tax reimbursements and
the school building fund. Gross collections of corporate
income taxes are $619.5 million through nine months, which
compares to $591.7 million at this point last year.
DENR, DOT
receive national award for helping the environment
Two
state agencies received national environmental protection
awards during special ceremonies in Washington marking Earth
Day. The N.C. Department of Transportation and the Department
of Environment and Natural Resources were received the
Environmental Leadership Award from the Federal Highway
Administration. The award recognizes outstanding
transportation projects, processes and people who incorporate
environmental stewardship into their transportation programs.
DOT and DENR were cited for creating a senior leadership team
made up of the secretaries and two deputy secretaries from
each department, who meet monthly to discuss strategic issues
about transportation and the environment. This leadership
team, said to be the first of its kind in the nation, has
overseen improvements in the environmental permit approval
process, air quality programs and landmark wildlife
conservation. The most notable results from this partnership
are the process improvements in environmental permitting and
wetland, stream and buffer mitigation processes.
Names
in the News
Veteran
legislator Ed Warren dies at 76
FFFormer
Pitt County Sen. Ed Warren, 76, died Thursday from cardiac
arrest and a memorial service will be held Saturday in
Greenville. Warren, who served more than 20 years in the House
and Senate, was a former high school principal, teacher and
coach. A Democrat, Warren was first elected to the House in
1981 and served five terms there before moving to the Senate
in 1990. He did not seek re-election last year. The memorial
service will be held at 1:30 p.m. Saturday at Wilkerson
Funeral Chapel in Greenville. Visitation is from 5:30 p.m. to
7:30 p.m. tonight at Wilkerson Funeral Home. Memorials may be
made to the American Heart Association.
Cisco executive takes helm
of Business Committee for Education
Joe
Freddoso
of Cisco Systems is the new chairman of the North Carolina
Business Committee for Education, succeeding Krista Tillman
of BellSouth, who held the position for several years.
Freddoso, who is based at Cisco’s RTP campus, handles media
relations for the Southeastern states. Other officers include Catherine
Lough of Wachovia, vice-chair; Joel Harper, who is also
the president of the group, secretary; and Rob Mallernee
of U.S. Trust Company of North Carolina, treasurer. The group
promotes business involvement in education and is housed in
the Governor's Office. It was begun in the Hunt administration
and has continued through the Martin, Hunt (again), and Easley
administrations.
George
Edgar Tatum of Fayetteville, who has served as Cumberland
County Register of Deeds since 1984, was appointed by Gov.
Mike Easley as commissioner of the Division of Motor Vehicles
(DMV). Tatum, 50, replaces Carol Howard. He is a 1974 graduate
of Campbell University.
N.C.
Superior Court Judge Ola M. Lewis has switched from the
Democratic to the Republican Party. She becomes one of only
two African-American women Republicans on the Superior Court
bench. Lewis serves in the 13th Judicial District, which
covers Brunswick, Bladen and Columbus counties.
Wake
County Economic Development,
a program of the Greater Raleigh Chamber of Commerce, has been
designated as one of the top 10 non-state economic development
agencies in the country by Site Selection magazine in its May
issue. This ranking recognizes agencies that excelled in their
efforts to attract business expansion activity relative to
other groups throughout the country. The top groups were
chosen based on four objective categories: new jobs, new jobs
per 10,000 residents, new investment amount, and new
investment amount per 10,000 residents.
Federal
Issues
EPA settles major case
against Virginia Power
The
Department of Justice and the Environmental Protection Agency
on Monday announced the largest Clean Air Act enforcement
settlement with a power utility. Virginia Electric Power Co.
has agreed to spend $1.2 billion between now and 2013 to
eliminate 237,000 tons of sulfur dioxide and nitrogen oxides
emissions each year from eight coal-fired electricity
generating plants in Virginia and West Virginia. The
settlement is the latest in a series of cases that the Bush
Administration pursued to bring the coal-fired power plant
industry into full compliance with the New Source Review
requirements of the Clean Air Act. This settlement resolves
charges that VEPCO made major modifications to its power
plants without installing equipment to control pollution that
causes smog, acid rain and soot.
In addition to providing for major pollution reductions, VEPCO
agreed to pay a $5.3 million civil penalty and spend at least
$13.9 million for projects in each of the five states that
participated in the case and its settlement to offset the
impact of past emissions. Specifically, VEPCO agreed to
projects ranging from retrofitting or otherwise reducing
emissions from diesel engines, including those on school
buses, to installing photovoltaic cells on municipal
buildings, to purchasing conservation easements to preserve
environmentally sensitive areas, and to providing
alternative-fueled vehicles for use in the Shenandoah National
Park.
Status
of the
General Fund
Dollars in millions
|
March
|
Nine
Months Year-to-Date
|
|
Budget
|
Actual
|
+
or -
|
Budget
|
+
or -
|
Percent
Realized
|
|
|
|
Tax
Revenue
|
|
Individual Income
|
$347.7
|
$319.2
|
$-28.5
|
$5,219.3
|
$5,177.2
|
99.2%
|
|
Corporate
Income
|
226.1
|
141.9
|
-84.2
|
553.1
|
573.6
|
103.7%
|
|
Sales
and Use
|
275.7
|
261.2
|
-14.5
|
3,006.1
|
2,942.4
|
97.9%
|
|
Franchise
|
133.6
|
137.1
|
3.5
|
334.7
|
368.1
|
110.0%
|
|
Insurance
|
46.6
|
46.1
|
-0.5
|
160.9
|
169.7
|
105.5%
|
|
Beverage
|
13.5
|
14.1
|
0.6
|
127.7
|
126.9
|
99.4%
|
|
Inheritance
|
8.6
|
8.7
|
0.1
|
78.2
|
88.6
|
113.3%
|
|
Privilege
License
|
1.2
|
0.8
|
-0.4
|
31.9
|
28.5
|
89.3%
|
|
Tobacco
Products
|
3.9
|
3.1
|
-0.8
|
34.0
|
31.7
|
93.2%
|
|
Real
Estate
|
—
|
—
|
—
|
10.0
|
10.0
|
100.0%
|
|
Gift
|
0.4
|
0.8
|
0.4
|
2.2
|
3.5
|
159.1%
|
|
White
Goods Disposal
|
0.4
|
0.4
|
—
|
1.0
|
1.0
|
100.0%
|
|
Scrap
Tire Disposal
|
0.7
|
0.7
|
—
|
2.4
|
2.4
|
100.0%
|
|
Freight
Car Lines
|
—
|
—
|
—
|
—
|
—
|
—
|
|
Piped
Natural Gas
|
-0.9
|
2.8
|
3.7
|
33.9
|
34.8
|
102.7%
|
|
Other
|
—
|
0.1
|
0.1
|
—
|
0.2
|
—
|
|
Total
Tax Revenue
|
$1,057.5
|
$937.0
|
$-120.5
|
$9,595.4
|
$9,558.6
|
99.6%
|
|
|
|
|
|
|
|
|
|
Non-Tax
Revenue
|
|
|
|
|
|
|
|
Treasurer's Investments
|
9.7
|
6.5
|
-3.2
|
86.9
|
82.3
|
94.7%
|
|
Judicial
Fees
|
12.0
|
11.4
|
-0.6
|
100.7
|
91.6
|
91.0%
|
|
Insurance
|
0.1
|
2.2
|
2.1
|
29.9
|
19.9
|
66.6%
|
|
Disproportionate
share
|
—
|
—
|
—
|
107.3
|
107.3
|
100.0%
|
|
Highway
Fund Transfer In
|
—
|
—
|
—
|
11.5
|
11.5
|
100.0%
|
|
Highway
Trust Fund Transfer In
|
—
|
—
|
—
|
283.1
|
283.1
|
100.0%
|
|
Intra
State Transfer In
|
—
|
—
|
—
|
—
|
—
|
—
|
|
Other
|
9.9
|
11.7
|
1.8
|
146.0
|
113.4
|
77.7%
|
|
Total
Non-Tax Revenue
|
$31.7
|
$31.8
|
$0.1
|
$765.4
|
$709.1
|
92.6%
|
|
|
|
|
|
|
|
|
|
Total
Revenue
|
$1,089.2
|
$968.8
|
$-120.4
|
$10,360.8
|
$10,267.7
|
99.1%
|
|
|
|
|
|
|
|
|
|
North
Carolina's Relative Tax Burden
A research report authored by Dr. Michael L. Walden
commissioned by NCCBI
It
is important for public policymakers to know the tax burden of
North Carolina, and how North Carolina's tax burden compares
to those of other states. It is also important to know how
North Carolina's tax burden and ranking have changed over
time. But how can a state's tax burden be measured?
There are numerous taxes and tax rates, and most of
them differ from state to state.
The most direct way to measure a state's tax burden is to
calculate taxes paid as a percent of income earned by the
state's residents. This is a commonsensical measure because it
indicates how many cents from each dollar of personal income
is paid in taxes. Because public functions performed by state
and local governments vary among states, the combined state
and local tax burden is calculated for each state.
This method ensures an "apples to apples"
comparison.
Last, specifically labeled taxes, like the income, sales, and
property taxes, are included in the tax burden, and state and
local government fees and charges are also part of the tax
burden. However,
revenues to public utilities, state liquor stores, and
insurance trust funds are not included.
Changes
in North Carolina's Tax Burden
Table
1 below shows North Carolina's tax rate in fiscal year
1999-2000 compared to its tax burden in fiscal year 1991-92.
Both periods are years when the U.S. Census Bureau did a
complete survey of state taxes.
Table 1. North
Carolina's Tax Burden, Measured as Taxes Paid
as a Percent of State Personal Income, 1991-1992 and
1999-2000
|
|
1991-‘92
|
1999-‘00
|
All Taxes, Fees, &
Charges
|
15.4%
|
15.8%
|
Individual
& Corporate Income Taxes
|
3.7%
|
4.1%
|
Sales
Tax
|
2.6%
|
3.0%
|
Property
Tax
|
2.3%
|
2.3%
|
Motor
Fuel & Vehicle License Taxes
|
1.0%
|
0.7%
|
Other
Taxes
|
1.3%
|
0.4%
|
Fees
& Charges
|
4.5%
|
5.3%
|
Notes: State and local taxes, fees, and charges combined
Personal income measured in fourth quarters of 1991 and
1999
Source: Author's calculations from U.S. Census Bureau
data
|
North Carolina's overall tax burden increased over the
eight-year period, from 15.4 percent of personal income in
1991-92 to 15.8% of personal income in 1999-00.
Among individual taxes, the tax burden increased for
income taxes, the sales tax, and fees and charges.
The tax burden declined for the motor fuel and vehicle
license taxes and other taxes and remained constant for the
property tax.
Changes in North
Carolina's Tax Burden Ranking Among All States
Table 2 shows North Carolina's tax burden ranking among the
fifty states in fiscal years 1991-92 and 1999-00.
Table
2. North
Carolina's Tax Burden Ranking
Among the Fifty States, 1991-1992 and 1999-2000
|
|
1991-‘92
|
1999-‘00
|
All Taxes, Fees, &
Charges
|
39
|
30
|
Individual
& Corporate Income Taxes
|
11
|
9
|
Sales
Tax
|
29
|
26
|
Property
Tax
|
41
|
41
|
Motor
Fuel & Vehicle License Taxes
|
13
|
23
|
Other
Taxes
|
27
|
40
|
Fees
& Charges
|
40
|
20
|
Notes: Rankings based on tax as a percent of personal
income. State and local taxes, fees, and charges
combined. Personal income measured in fourth quarters of
1991 and 1999. Source: Author's calculations from U.S.
Census Bureau data
|
North Carolina's tax burden ranking rose over the eight-year
period, from 39th in 1991-92 to 30th in 1999-00.
The tax burden ranking rose for income and sales taxes
and for fees and charges, fell for motor fuel and vehicle
license taxes and other taxes, and was unchanged for the
property tax.
In 1991-92, North Carolina ranked in the top fifteen of states
in income taxes and in the motor fuel and vehicle license
taxes, and ranked in the bottom half of states in the sales,
property, and other taxes and in fees and charges.
By 1999-00, the state had moved up two levels in the
income tax ranking to now be in the top ten of states, rose
three levels in the sales tax ranking, and moved ahead twenty
levels in the ranking of fees and charges.
The state's rankings dropped for the motor fuel and
vehicle license taxes and other taxes.
Changes in North
Carolina's Tax Burden Among Southeastern States
It is equally, if not more, important to compare North
Carolina's tax burden to those of neighboring states in the
Southeast. North Carolina often competes with these states for
new businesses.
Table 3 shows the tax burden of the six Southeastern states --
Virginia, North Carolina, South Carolina, Tennessee, Georgia,
and Florida -- in fiscal years 1991-92 and 1999-00, and Table
4 shows North Carolina's tax burden ranking among those six
states.
Table 3: The Tax Burden of Six Southeastern States,
Measured as Taxes Paid as a Percent of State Personal
Income, 1991-1992
|
|
Florida
|
Georgia
|
NC
|
SC
|
Tenn.
|
Virginia
|
All
Taxes
|
15.7
|
15.7
|
15.4
|
16.1
|
14.5
|
14.5
|
Income
Taxes
|
0.3
|
3.0
|
3.7
|
2.8
|
0.5
|
2.8
|
Sales
Taxes
|
3.4
|
3.1
|
2.6
|
2.7
|
4.1
|
1.6
|
Property
Taxes
|
3.9
|
3.2
|
2.3
|
3.0
|
2.1
|
3.3
|
Vehicle
Taxes
|
0.8
|
0.4
|
1.0
|
0.7
|
1.1
|
0.8
|
Other
Taxes
|
1.9
|
1.0
|
1.3
|
1.2
|
1.7
|
1.5
|
Fees/Charges
|
5.4
|
5.0
|
4.5
|
5.7
|
5.0
|
4.5
|
|
|
|
|
|
|
|
Table
3. The Tax
Burden of Six Southeastern States,
Measured as Taxes Paid as a Percent of State Personal
Income, 1999-2000
|
|
Florida
|
Georgia
|
NC
|
SC
|
Tenn.
|
Virginia
|
All Taxes
|
15.1
|
15.3
|
15.8
|
16.8
|
13.1
|
14.8
|
Income
Taxes
|
0.3
|
3.3
|
4.1
|
2.9
|
0.6
|
3.6
|
Sales
Taxes
|
4.7
|
4.1
|
3.0
|
3.5
|
4.6
|
2.5
|
Property
Taxes
|
3.3
|
2.8
|
2.3
|
2.9
|
2.0
|
2.9
|
Vehicle
Taxes
|
0.8
|
0.4
|
0.7
|
0.5
|
0.8
|
0.6
|
Other
Taxes
|
0.8
|
0.3
|
0.4
|
0.6
|
0.8
|
0.6
|
Fees
& Charges
|
5.2
|
4.4
|
5.3
|
6.4
|
4.3
|
4.6
|
|
Notes:
State and local taxes combined. Personal income measured
in fourth quarters
of 1991 and 1999. Source: Author's calculations from
U.S. Census Bureau data.
|
Table
4. North
Carolina's Tax Burden Ranking
Among Six Southeastern States, 1991-1992 and 1999-2000
|
|
1991-‘92
|
1999-‘00
|
All Taxes, Fees, &
Charges
|
4
|
2
|
Individual
& Corporate Income Taxes
|
1
|
1
|
Sales
Tax
|
5
|
5
|
Property
Tax
|
5
|
5
|
Motor
Fuel & Vehicle License Taxes
|
2
|
3
|
Other
Taxes
|
4
|
5
|
Fees
& Charges
|
5
|
2
|
Notes: Rankings based on tax as a percent of personal
income. State and local taxes, fees, and charges
combined. Personal income measured in fourth quarters of
1991 and 1999. Source:
Author's calculations from U.S. Census Bureau
data.
|
Table 3 shows the tax burden of North Carolina, South
Carolina, and Virginia rose from 1991-92 to 1999-00, while the
tax burden of Florida, Georgia, and Tennessee fell.
Consequently, North Carolina's Southeastern tax burden
ranking rose from 4th in 1991-92 to 2nd in 1999-00 (Table 4).
The increase was primarily due to a rise of three
levels in the ranking for fees and charges. The ranking fell
one level for other taxes, fell one level for motor fuel and
vehicle license taxes, and the rankings for the other
components of North Carolina's tax burden remained constant in
the two years.
Looking at both years, among Southeastern states North
Carolina has a low ranking for the sales, property, and other
taxes and a high ranking for the income and motor fuel and
vehicle license taxes. North Carolina's ranking was low for
fees and charges in 1991-92 but was high in 1999-00.
Conclusion
Although North Carolina's tax burden ranking is still in the
lower half of states, the state's ranking did increase
significantly in the 1990s. The rise in the state's ranking
was driven by increases in rankings for the income and sales
taxes and fees and charges.
Among six Southeastern states, North Carolina's tax burden
ranking also increased, from 4th to 2nd, in the 1990s. The
main reason was an increase in the ranking for fees and
charges.
North Carolina is still a relatively low tax state among the
fifty states but is now a high tax state in the Southeast. As
the world becomes smaller due to modern communication and
transportation technologies, businesses increasingly can
consider virtually any geographical area for location of their
activities. This means a state's tax burden can be a more
important factor in business locations decisions, and recent
surveys of economic development professionals support this
conclusion. For this reason and others, continued measurement
and monitoring of North Carolina's tax burden and tax burden
ranking are warranted.
|