APRIL 25, 2003

ISSUE. No. 14

2003 LONG SESSION
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
O
ne 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
N
ot 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
T
he 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
T
he 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
T
he 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
W
ith 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
T
he 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
T
he 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
T
he 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
A
fter 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
A
cting 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 VaccinationH. 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
T
wo 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
F
FFormer 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
T
he 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. 

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