JUNE 4, 2004	ISSUE No. 4	2004 SHORT SESSION
Published every Friday during legislative sessions exclusively for NCCBI members

The House leadership had to rob Peter to pay Paul to give the governor what he wanted. To get all the money he wanted for reducing third-grade classes, they took $27 million in sales tax reimbursements that was supposed to remain in local school districts. House leaders didn't agree to everything Easley wanted, giving him $8 million less than he sought for child-care subsidies.

If the House does move the appropriations bills to the Senate in the next few days, the legislature will be on track to adopt a revised budget for the 2005-05 year and adjourn by early July as planned. Legislators are eager to keep to that schedule, because most want to hit the campaign train. They’re all up for re-election, with the party primaries coming on July 20. Legislators can’t solicit campaign contributions from lobbyists while the General Assembly is in session.

Black drops ‘balloon mortgage’ plan to pay for projects
House Co-Speaker Jim Black said he would drop his “balloon mortgage” plan for financing a $180 million cancer treatment center at UNC-Chapel Hill and a $60 million stroke center at East Carolina University as well as other projects. Black said he instead would advocate using conventional bonds to pay for the projects.  He had been floating a plan in which the state would make interest-only payments on the debt for 20 years, and then pay off the entire principal at the end of the loan term. State Treasurer' Richard Moore questioned the prudence of Black’s original proposal. Black's change means it's more likely the centers will pass, although the co-speaker wants to add three other projects to the borrowing plan: a bioinformatics center at UNC-Charlotte; an aging and wellness center at UNC-Asheville and a pharmacy school at Elizabeth City State University. The Senate recently passed legislation that would require the state to issue certificates of participation, which don't require statewide voter approval, to pay for the projects, at a maximum cost of $25 million a year.  


Health Insurance Commission bill advances to floor vote
Legislation strongly supported by NCCBI that would establish the N.C. Health Insurance Innovations Commission was favorably reported by the House Insurance Committee on Wednesday and is expected to be voted on by the full House next week. H 1463 Health Insurance Innovations Commission, sponsored by Rep. Connie Wilson (R-Mecklenburg) would establish a 24-member panel to study the affordability of health insurance for small businesses. The House and Senate leaders each would appoint 12 members of the commission. The bill now goes to the House floor. With the rising cost of health care premiums and the decreasing number of insurance carriers offering coverage in North Carolina, it is extremely difficult for businesses, especially small businesses, to continue providing insurance for employees. The proposed commission would address this important issue and represent all stakeholders while working with the N.C. Department of Insurance (which also supports the bill). The proposed commission would establish pilot demonstration projects across the state to test the modification of various state insurance regulations to allow carriers to develop and test alternative insurance policy designs. A Duke Endowment funded organization of hospitals, doctors, insurance carriers and brokers, and UNC-Charlotte collaborated to develop a slate of recommendations to help North Carolina’s small businesses. The House bill is based on this research. The bill does not request state funding. The commission would apply through its staff at UNC-Charlotte for federal and philanthropic funding.


Bill expanding J-DIG remains in Senate Finance
Legislation expanding the state’s key economic incentive program remains before the Senate Finance Committee. Passage of the bill is one of NCCBI’s top economic development recommendations this year. S 1062 Extend and Expand JDIG would extend the Job Development Investment Grant program, which is currently due to sunset this year, through 2009; would expand the number of grants that can be made under the program from 15 to 25. The legislation also would expand the annual dollar cap for grants made in a single year from $10 million to $18 million. Expansion of the JDIG program was part of NCCBI’s recommendations presented to the Joint Select Committee on Economic Growth and Development. As NCCBI President Phil Kirk said to the select committee, expanding the program would be a significant step in “reinforcing our competitive strengths” in North Carolina. The JDIG program has helped the state land 13 major industrial projects in the past 18 months. If the program is not extended and expanded, North Carolina will be unable to use this tool to recruit key projects that the state is competing for currently. See related story, page 5.

Legislative Actions     

Morgan again tangles with GOP critic
House Republican Speaker Richard Morgan on Monday removed one of his critics, Rep. John Blust (R-Guilford), from the House Appropriations Committee and replaced him with Rep. Bill McGee (R-Forsyth). Blust is a frequent critic of Morgan for striking the power-sharing agreement with House Democrats. The most recent dust-up apparently was triggered by Blust’s allegation that Morgan improperly used the state helicopter. Last week, Blust filed H 1777 State Helicopter Budget, a measure that cuts 10 percent from operational expenditures on the state helicopter, and imposing a rule that “except in emergency situations, no member, officer, or employee in the Legislative Branch shall use any state helicopter.”

The House on Wednesday gave second- and third-reading approval to H 1444 Job Development Investment Grant - Encourage Use of NC Small Businesses (LaRoque and Church), a measure encouraging, but not requiring, J-DIG grant recipients to contract for services from small businesses headquartered in the state. The measure now goes to the Senate.

The Senate voted 36-11 Tuesday to broaden the state’s existing child safety seats to include older and bigger children. The measure S 1218 Child Restraint Systems Modified, sponsored by Sen. Bill Purcell (D-Scotland), says children younger than 8 or who weigh less than 80 pounds must ride in a child safety seat. Current law requires safety seats for children younger than 5 and under 40 pounds. The change would bring North Carolina law into line with statutes in 25 other states. The bill now goes to the House for consideration.

The House on Tuesday failed to concur with Senate amendments to H 1303 Nonprofits Exempt From Admissions Tax (Starnes), and a conference committee was appointed.


NCCBI News

Members invited to meet with the president of Amtrak
David L. Gunn, president and CEO of Amtrak, will meet with NCCBI members on Tuesday, June 22, from 9 a.m. – 10:30 a.m. in the NCCBI board room in downtown Raleigh. If you are interested in attending, please contact Debbie Mueller, NCCBI legislative assistant, at dmueller@nccbi.org. Gunn brings a reputation of strong leadership and extensive experience in the rail industry as president and CEO of Amtrak. Appointed on May 15, 2002, he directs America’s intercity passenger rail system serving, on average daily, 65,000 people in more than 500 communities across 46 states, on 265 daily trains through 22,000 miles of track.

Do you want a copy of the report the higher education bonds?
As we mentioned in last week’s Bulletin, a progress report has been published that gives a comprehensive update on the 2000 Higher Education Bond Referendum, which was passed overwhelmingly nearly four years ago. The referendum authorized $3.1 billion –the largest capital bond issue for higher education in U.S. History – to benefit the state’s public universities and community colleges. The report, Responding to a new imperative, released by the North Carolina Business-Higher Education Foundation, Inc., charts the progress of the bond program to date and shows that the progress has been substantial. If you would like a copy of the report, please e-mail Debbie Mueller, NCCBI legislative assistant, at dmueller@nccbi.org.

Power-sharing coalition backers
leap in rankings of effectiveness
Members of the coalition of Democrats and Republicans that elected co-speakers of the state House top the rankings of the most effective legislators, according to a report released by the N.C. Center for Public Policy Research.  These results helped four Republicans and six Democrats rank in the top 10 in the new effectiveness rankings.

Co-Speakers Jim Black (D-Mecklenburg) and Richard Morgan (R-Moore) rank 1st and 2nd in effectiveness, respectively. The other high-ranking Republicans are Harold J. Brubaker (R-Randolph), ranking 5th, Wilma M. Sherrill (R-Buncombe) at 7th, and Daniel (Danny) F. McComas (R-New Hanover) at 9th. The other high-ranking Democrats are William (Bill) T. Culpepper III (D-Chowan), ranking 3rd, Joe Hackney (D-Orange), 4th, James (Jim) W. Crawford, Jr. (D-Granville), 6th, William (Bill) C. Owens, Jr. (D-Pasquotank), 8th, and Gordon P. Allen (D-Person) at 10th.

“This time, the power-sharing agreement between Democrats and Republicans gave legislators in both parties opportunities to shine,” said Ran Coble, director of the nonpartisan think tank in Raleigh.

Senate President Pro Tem Marc Basnight (D-Dare) maintained his ranking as the most effective Senator, a distinction he has held for all six sessions that he has served at the top Senate officer. Sens. Tony Rand (D-Cumberland) and David Hoyle (D-Gaston) are rated as 2nd and 3rd most effective.

Basnight chose a more limited power-sharing arrangement, giving one full committee chairmanship and five co-chairmanships to Republicans. The highest ranking Republican in the Senate is Fletcher L. Hartsell, Jr. (R-Cabarrus) at 10th, who chairs the Judiciary II Committee. The second highest-ranked Republican is former Minority Leader Patrick Ballantine (R-New Hanover), who ranks 13th but resigned from the Senate in April to seek the Republican nomination for Governor.

Six first-time legislators made the top half of the effectiveness rankings in the 120-member House. They are: Don Munford (R-Wake), ranked 37th; Deborah K. Ross (D-Wake), ranked 41st; Rick Glazier (D-Cumberland), 44th; Karen B. Ray (R-Iredell), 54th; Lucy T. Allen (D-Franklin), 55th; and Margaret Highsmith Dickson (D-Cumberland) at 58th. These six represent the most first-term legislators in the top half of the House effectiveness rankings since 1995. The two highest-ranked freshmen in the Senate are Richard Y. Stevens (R-Wake), who ranks 25th, and Fred Smith (R-Johnston) at 30th. Stevens’ showing is the highest for a freshman Republican in the Senate since the Center began ranking lawmakers in 1978.

Reps. Julia Craven Howard (R-Davie), Jeffrey (Jeff) L. Barnhart (R-Cabarrus), and Leo Daughtry (R-Johnston) experienced the greatest change in their effectiveness rankings in the House. Howard moved up 74 spots from 85th in 2001 to 11th in 2003, and Barnhart moved up 70 spots from 108th to 38th, while Daughtry dropped 74 spots from 11th to 85th. Howard is a key ally of Republican Co-Speaker Morgan, and Barnhart gained a key post as an Appropriations Subcommittee Co-Chair. Daughtry lost the race for House Speaker and also opposed the House power-sharing agreement.

The senator with the largest gain in rankings is Philip E. Berger (R-Rockingham), who moved up 23 spots from 44th in 2001 to 21st in 2003. Senator Linda Garrou (D-Forsyth), who ranks 7th, is the highest-ranked woman in the state Senate and Kay R. Hagan (D-Guilford) is the second highest at 9th. Rep. Wilma M. Sherrill (R-Buncombe) is the highest-ranked woman in the House at 7th, while Julia Howard (R-Davie) is second highest at 11th.

Names in the News

Rep. Rick Glazier (D-Cumberland) was elected class speaker for the 2003-04 graduating class of Leadership North Carolina. There were 45 in this year’s graduating class. Glazier will deliver the graduation message at Leadership North Carolina's annual meeting June 11 in Greensboro.


Economic Development

J-DIG lures Harris Microwave from Silicon Valley
Harris Microwave Communications Division said Thursday that it would relocate its corporate headquarters to from California to Durham’s Keystone Business Park, creating 258 new jobs and an investment of $1 million for the state. The company will receive a grant from the state’s Job Development Investment Grant program worth $4 million over 10 years. Harris Microwave Communications Division, one of five divisions within Harris Corp. (NYSE: HRS), becomes the 13th recipient of a J-DIG award.

Harris Microwave is the largest supplier of microwave systems in North America and a leading supplier worldwide. The division delivers wireless solutions to service providers of all types including public network operators; fixed wireless operators; transportation; state; local and federal agencies; and power utilities. Its product line includes both microwave and millimeter wave systems for point-to-point and point-to-multipoint architectures. The new in Durham include opportunities in marketing, engineering, finance and supply chain management.

Under the terms of the J-DIG agreement, authorized unanimously by the state Economic Investment Committee, a 10-year grant will be established. Over the life of the grant, the N.C. Department of Commerce estimates the project will:

 Generate a cumulative gross state product value of about $3.7 billion.
 Produce a positive cumulative net state revenue impact of $165 million.
 Contribute nearly $1.3 million to the state’s Industrial Development Fund for infrastructure improvements in rural North Carolina. This contribution is required of grant recipients that locate in a Tier 5 urban county.

For each year in which the company meets the required performance targets, the state will provide a grant equal to 69 percent of the personal state withholding taxes derived from the creation of new jobs. If the company creates the jobs called for under the agreement and sustains them for 10 years, the agreement could yield maximum benefits to the company of as much as $4 million over the life of the grant.

The J-DIG program awards up to 15 grants annually to strategically important new and expanding businesses and industrial projects. These grants are only awarded to projects whose benefits exceed their costs to the state and which would not locate in North Carolina without the grant. Cumulative annual grant amounts are capped at $10 million.

Including Harris, officials said the J-DIG program has resulted in more than 5,000 jobs and $593 million in investment for the state.

State Government

DOT board awards contract for Henderson Western Outer Loop
The N.C. Board of Transportation awarded contracts totaling $31.5 million for highway improvements in 13 counties at its monthly meeting Thursday in Raleigh. The contracts are for projects in Ashe, Cabarrus, Caswell, Cleveland, Granville, Guilford, Martin, Orange, Randolph, Robeson, Stokes, Vance and Wayne counties. Included are contracts to:

 Build the Henderson Western Outer Loop, a 2.5-mile, four-lane divided highway, from Ruin Creek Road to County Home Road (S.R. 1101) in Vance County;

 Resurface 18.4 miles of N.C. 96 from U.S. 158 Business just north of Oxford to the Virginia state line in Granville County;

 Install weigh-in-motion detectors at the truck weigh station on Interstate 40/85 south of Hillsborough in Orange County; and

 Build a 1.2-mile section of the Concord-Kannapolis Westside Bypass from Weddington Road (S.R. 1431) to Grand Canyon Road (S.R. 1555) in Cabarrus County.

The board also awarded contracts to replace bridges over: Dog Branch on Bear Grass Road (S.R. 1001) south of Williamston in Martin County; Falling Creek on Corbett Hill Road (S.R. 1006) south of Grantham in Wayne County; CSX Transportation railroad tracks on N.C. 20 southeast of Lumber Bridge in Robeson County; North Buffalo Creek on Rankin Mill Road (S.R. 2832) northeast of Greensboro in Guilford County; Lynch Creek on John Oakley Road (S.R. 1723) southwest of Hightowers in Caswell County; Cable Creek on Cable Creek Road (S.R. 1320) southwest of Asheboro in Randolph County; Dan River on Seven Island Road (S.R. 1668) northwest of Danbury in Stokes County; Big Horse Creek on Little Windfall Road (S.R. 1358) southeast of Husk in Ashe County; and  Asheworth Creek on Whelchel Road (S.R. 1209) southwest of Boiling Springs in Cleveland County.


Wildlife Resources Commission supports economic development
For the first time in its history, the state Wildlife Resources Commission has stocked a stream with adult fish – not fingerlings – as a means of helping the economy. The development came last week when Wildlife Resources officers released 259 adult bass – each between 14 and 18 inches long and weighing 2 to 4 pounds – into the Roanoke River at Plymouth. When Hurricane Isabel ripped through Eastern North Carolina last September, it devastated fish populations in several coastal rivers. The economies of many northeastern river towns rely on fishing and fishing tournaments. Had the river been restocked with fingerlings, it would be four to five years before they grew large enough to support the fishing tournaments. So the Wildlife Commission, in cooperation with the town of Plymouth, stocked catchable-size adult fish into the Roanoke to jump-start both the fish population and the local economy.


DOT plans public hearings on extending Fayetteville Outer Loop
The N.C. Department of Transportation will hold four informational workshops on extending the Fayetteville Outer Loop from US 401 (Ramsey Street) west and southward to I-95 south of Fayetteville. The workshops, at which DOT representatives will present preliminary road plans for the project, will be held Monday, June 14, at 71st High School from 4 p.m. to 8 p.m.; on Tuesday, June 15, at College Lakes Elementary School from 10 a.m. to 1 p.m. and from 4 p.m. to 8 p.m.; and Thursday, June 17, at Jack Britt High School from 4 p.m. to 8 p.m.

Outdoor burning banned on high ozone days
Outdoor burning will be prohibited in parts or all of 41 counties areas across the state when air quality forecasts call for high levels of ozone or particle pollution in those areas, under a rule change that takes effect today. The rule adopted by the N.C. Environmental Management Commission, which took effect June 1, bans outdoor burning on days when the Division of Air Quality or local air programs forecast Code Orange, Red or worse conditions for a particular area. Many of the counties covered by the air quality forecasts are included in non-attainment areas that the EPA designated for ozone in April and for areas it plans to designate for particle pollution later this year. The burning ban is one of a series of steps the state is taking to bring these areas back into compliance with national air quality standards. Areas covered by the new open burning rule include 41 counties in the Asheville, Charlotte, Fayetteville, Hickory, Rocky Mount, Triad and Triangle metro areas. A map showing all of the forecast counties is posted on the DAQ web site at this page: www.daq.state.nc.us/airaware/ozone/monitors/.

verruling a final agency determination by the N.C. Department of Environment, Health and Natural Resources, the Court of Appeals said a Kernersville gas station owner should be allowed to get financial help from the state’s Leaking Underground Storage Tank Fund to remove gasoline-tainted soil under the station. At issue in the case was whether the contamination was discovered before or just after the state set up the Commercial Leaking Petroleum Underground Storage Tank Cleanup Fund in 1988, funded by fees paid by tank owners.

A man living beside the One-Stop gas station reported to DENR in July 1986 that gasoline had contaminated his well. A DENR inspector investigated and confirmed that the well was contaminated with gasoline. But it took until November 1988 that DENR issued a report blaming One-Stop for the problem. Shortly before DENR issued the order, the General Assembly created the LUST fund to help speed cleanup of such contamination. The station owner subsequently applied for a grant from the LUST fund to help pay for the cleanup, which DENR denied because it said the leak was discovered after the effective date for the LUST fund. Judge Howard Hunter wrote the opinion reversing the agency decision and remanding the matter to the trial courts. Judges James A. Wynn Jr. and John Tyson concurred. No. COA03-674.

In other decisions issued June 1 by the Court of Appeals:

 After four years of appeals, the Town of Highlands in mountainous Macon County apparently can finally can proceed with condemning land to pave a street. In an opinion written by Judge Sanford L. Spellman, a unanimous Court of Appeals panel upheld a Superior Court decision that Highlands had properly condemned the property. No. COA03-55.

 The Court for Complex Business Cases was right to order an insurance agent to surrender commissions he received for selling health insurance in a company that failed under questionable circumstances, the court said in an opinion written by Judge Douglas McCollough. The case involves insurance policies sold through the International Workers Guild (IWG) labor union and the National Association of Business Owners and Professionals (NABOP), both New York-based entities. To participate in the health benefits plan, employers would join NABOP and their employees would join IWG, which allowed the plans to quality under the federal Employee Retirement Income Security Act (ERISA). Insurance agent Chris Hammonds represented the IWG fund in North Carolina. He and other agents he recruited sold health insurance policies offered by IWG. However, The U.S. Department of Labor filed a civil action against IWG and NABOP in 1998 after a series of valid claims went unpaid. In 2000, the N.C. Attorney General’s office filed suit to recover premiums from agents who sold the policies in North Carolina, including Hammond and at least 26 others. Most settled but Hammond appealed to the Business Court. Special Superior Court Judge Ben Tennille ruled for the state, a decision upheld by the Appeals Court. Joining McCullough in the opinion were judges Howard Hunter and Eric Levinson. No. COA03-638.

Jobless rate falls in 84 counties, most MSAs
County unemployment rates fell in 84 counties in April, marking a second consecutive month that the vast majority of the state’s counties experienced a drop in the not-seasonally adjusted rates, according to the Employment Security Commission. The rates fell in nine Metropolitan Statistical Areas and six Labor Market Areas as well. Nearly half of the counties — 46 — had unemployment rates below five percent. Only two had unemployment rates above 10 percent, compared to 10 counties in April 2003.

For the first time in 27 months, the state in April paid out less than $100 million in unemployment insurance benefits. The total in April was $72.3 million in benefits paid to 102,435 individuals. The five counties receiving the highest amount in unemployment insurance benefits in April were: Mecklenburg, $6.7 million; Wake, $5.5 million; Guilford, $3.7 million; Forsyth, $2.5 million; and Gaston, $2.1 million.

Unemployment rates for the MSAs for April compared with March, were:

Asheville, 3.0 percent, down from 3.4 percent
Charlotte/Gastonia/RockHill, NC/SC, 5.6 percent, down from 5.9 percent
Fayetteville, 4.1 percent, down from 4.2 percent
Goldsboro, 4.3 percent, down from 4.6 percent
Greensboro/Winston-Salem/High Point, 4.8 percent, down from 5.0 percent
Greenville, 5.1 percent, unchanged
Hickory/Morganton/Lenoir, 6.7 percent, down from 7.0 percent
Jacksonville, 4.0 percent, down from 4.5 percent
Raleigh/Durham/Chapel Hill, 3.2 percent, down from 3.5 percent
Rocky Mount, 7.3 percent, unchanged
Wilmington, 3.6 percent, down from 4.1 percent

Data show that big companies anchor state’s economy
While most attention rightly is focused on the health of small businesses in North Carolina, the fact remains that it’s the big companies in the state – those with more than 500 employees – that anchor our economy. As the chart above shows, only about 10 percent of all firms and establishments employ 500 or more people. But they employ more than half the state’s workforce and provide 58 percent of total annual payroll.

Other Census Bureau data also tend to question the conventional wisdom that small companies create more jobs than big concerns. From 1992 to 2000, companies with 500 or more workers averaged a 3.22 percent growth in employment, compared to 2.02 percent for companies with between 10 and 19 employees.

Big companies in North Carolina also pay better. The average annual wage for companies with 500 or more employees was $32,742 compared to $25,849 at companies with between 10 and 19 workers.

North Carolina’s Largest Manufacturing and Non-Manufacturing Companies
Ranked by the N.C. Employment Security Commission according to second quarter 2003 employment. Note: The ESC does not release exact employment numbers for individual companies. The ESC said all these companies have at least 1,000 employees.