JULY 2, 2004	ISSUE No. 9	2004 SHORT SESSION
Published every Friday during legislative sessions exclusively for NCCBI members

Efficiency legislation moves forward
On Thursday, the House overwhelmingly approved legislation designed to get better control of state government spending on information technology and strengthen the accountability of those running IT programs in state government. The legislation will make significant changes in the way the state administers information technology, transferring much of the control from the Information Resource Management Commission (IRMC) to the state’s Chief Information Officer (CIO).

NCCBI has long called for improvements in the information technology area. The state spends $700 million a year on IT. A story in the April issue of NCCBI’S North Carolina magazine revealed numerous examples of IT overlap and lack of accountability.

S Improve State IT Efficiency and Project Management passed by a vote of 95 – 8 and was sent to the Senate for concurrence. Speaking in support of the legislation on the House floor, Rep. Joe Tolson (D-Edgecombe) said, “This is a major shift in how we handle technology. It will give us better control on our information technology projects and closer control on the dollars we spend.”

On May 5, 2004, the Governor’s Business Council on Fiscal Reform received a report and recommendations from the Office of State Budget and Management on information technology expenditures in state government. The report prepared by the State Budget Office was the result of a request by the General Assembly. The Council endorsed the recommendations in the report. (See May 7, 2004 bulletin)

The purposes of the bill are: 1) to establish a systematic process for the planning and financing of the State’s information technology resources; 2) to develop standards and accountability measures for information technology projects, including criteria for adequate project management; and 3) to implement procurement procedures that will result in cost savings on information technology purchases.

The bill gives additional authority to the state’s CIO and gives the CIO responsibility for management, oversight and accountability. Under the provisions of the bill, the CIO must approve all projects greater than $500,000 and may suspend approval of a project if it is not meeting standards.  In a letter to sent to members of the House, several members of the Council of State raised concerns about the bill and how it would affect information technology efforts in their departments. Secretary of State Elaine Marshall addressed the House Committee on Appropriations on Wednesday to voice her concerns and those of other Council of State members. “This is a major power shift, “ Marshall said. “There are a lot of good ideas here, but it really needs additional study. We would like for you to slow down and give additional consideration [to the bill].” Rep. Tolson assured Secretary Marshall that under the provisions of the bill, consultation between the CIO and department heads would occur.

The new plan is touted as a way to increase efficiency and cost savings by implementing procurement procedures that will increase efficiencies and reduce costs. Cost savings initiatives may include aggregation of hardware purchases, the use of a formal bid process instead of term contracts, restrictions of supplemental staffing, enterprise software licensing and multi-year maintenance agreements.

House votes to divert trust fund money to additional road projects
The House gave final approval Wednesday to a bill that would allow Highway Trust Fund money to be used for a greater number of road projects across the state. H 1344 Highway Trust Fund Changes (Crawford) would allow trust fund money to be used for improvements to an additional 30 road corridors that currently aren't listed as trust fund projects. Trust fund money is used primarily to build urban loops, widen four-lane intrastate highways and pave secondary dirt roads. The Senate has yet to consider the bill.

The bill specifically makes these road projects eligible for Highway Trust Fund money:
 I-26 from Tennessee to South Carolina
House panel considers measure to combat on-the-job violence
The House Judiciary I Committee on Tuesday debated but took no action on a bill that would give employers new power to protect their employees from on-the-job violence. The bill, S 916 Prevent Personal and Workplace Violence (Clodfelter), would allow employers to go to District Court and obtain a “no-contact order” on behalf of an employee when there's the possibility that violence could occur at work. It also would cover threats from disgruntled employees. Individuals already can seek a restraining order that applies to the home or workplace, but they are sometimes fearful to do so, lawmakers said. No prior injury to the person or damage to business property would be required before the order could be issued. The committee agreed to rework the bill and take it up at a future meeting. The Administrative Office of the Courts estimates that this bill could have a significant impact on the number of civil cases. Based on charges for stalking (932), communicating threats (28,468), assaults (69,994), and non-consensual sex (1,554), this bill could produce a large volume of filings for protective orders. 


Legislative Actions

 The House Transportation Committee on Wednesday favorably reported legislation that would allow drivers between the ages of 18 and 38 to renew their licenses every eight years instead of every five. H 1394 8-Year Drivers License/Internet Drivers License Renewal (Gillespie) specifies, however, that drivers over 38 must continue to renew their licenses every five years. Under the legislation, all drivers with acceptable driving records can renew their licenses online for a five-year term.

 The Senate on Monday gave second- and third-reading approval to H 1463 Health Insurance Innovations Commission (C. Wilson) and returned the bill to the House for concurrence in an amendment.

 The House on Tuesday gave third-reading approval to H 1609 Correct Streamlined Sales Tax Inequity (Miner) and sent the bill to the Senate.

 The House gave second- and third-reading approval Wednesday H 1760 Clawback Failed Incentives (Luebke) and H 1636 Renewable Fuel Tax Credits (Tolson).

 The Senate on Tuesday voted unanimously to reject House amendments to S 1063 Eliminate IRB Wage Standard (Hartsell)

 The House Finance Committee on Tuesday favorably reported H 1430 IRC Update and Other Tax Changes, H 1636 Renewable Energy Tax Credits, H 1760 No Credit For Net Job Loss and S 0277 Exempt Higher Ed Property.

 The House Finance Committee on Wednesday favorably reported S 1171 Motor Fuels Tax Changes (Kerr), a Senate-passed bill that modifies the taxation of motor fuels, allows the secretary of Revenue to appoint employees of the Motor Fuels Tax Division as revenue law enforcement officers, and transfers the audit functions for the international registration plan to the Department of Revenue from the Division of Motor Vehicles. 

 At a called meeting Wednesday, the House Appropriations Committee favorably reported H 1423 Apprenticeship Tax Credit (Howard), a measure that gives eligible businesses a tax credit equal to 15 percent of the wages paid to apprentices registered through a new program to be administered by the state Department of Labor.

 The House Appropriations Committee on Wednesday favorably reported S 0991 Consumer's Right to Know and Act (Reeves), a Senate-passed bill that would provide that state government may only contract for telemarketing services with companies that employ only American citizens. The legislation is in response to the state contracting with a company in India last year.

Economic Development

49,000 new jobs created, but fewer people are actually working
North Carolina leads the Southeast in the rate of job creation for 2004 and trails only three states – California, Florida and Texas – in total job gains, according to U.S. Bureau of Labor Statistics (BLS) cited by Gov. Mike Easley. However, the state’s labor force – the number of people actually employed plus those actively looking for work – is smaller now than a year ago, other BLS statistics show.

Quoting the BLS, Easley said North Carolina has gained 49,000 jobs since January. “While this is good news and means we are headed in the right direction, there is still much more work to do,” the governor said. North Carolina non-farm industry employment increased by 1.3 percent over the past few months compared to the national average growth of 0.8 percent over the same period, according to the BLS data. North Carolina outpaced all of its Southeastern neighbors in the rate of job growth, compared to 0.2 percent for Tennessee, 0.9 percent for Virginia, 0.6 percent for South Carolina and –0.5 percent for Georgia.

However, as the chart above indicates, North Carolina’s labor force shrunk by 31,600 jobs between May 2003 and May 2004. All other states in the Southeast saw an increase in their labor forces. An official with the state Employment Security Commission said the seemingly contradictory statistics are not mutually exclusive. One possible explanation is that the number of unemployed people who gave up looking for work – and thus are no longer counted in the labor force -- was far greater than the 49,000 new jobs created in the first five months of the year.

Unemployment rates for the state’s MSAs for May compared with April, were:

Asheville, 3.2 percent, up from 3.0 percent
Charlotte/Gastonia/RockHill, NC/SC, 5.9 percent, up from 5.6 percent
Fayetteville, 4.3 percent, up from 4.1 percent
Goldsboro, 4.5 percent, up from 4.3 percent
Greensboro/Winston-Salem/High Point, 5.1 percent, up from 4.9 percent
Greenville, 5.9 percent, up from 5.1 percent
Hickory/Morganton/Lenoir, 6.9 percent, up from 6.7 percent
Jacksonville, 4.2 percent, up from 4.1 percent
Raleigh/Durham/Chapel Hill, 3.5 percent, up from 3.3 percent
Rocky Mount, 7.6 percent, up from 7.3 percent
Wilmington, 3.7 percent, up from 3.6 percent

Fayetteville tire plant getting major improvements
Goodyear said it plans to invest $17.7 million in its Kelly-Springfield tire plant in Fayetteville to improve the plant’s competitive position and meet consumer demand for premium and high performance tires. The project is scheduled for completion by the end of 2004. “These improvements will allow the plant to adapt its operations to meet market demands for premium products such as 20-inch and high performance tires,” said Plant Manager Jim Konneker. He said the project will not add square footage, increase daily capacity or require the addition of new employees. With 2,850 employees, Kelly-Springfield is the largest industrial employer in Cumberland County and has an economic impact on the local economy of more $335 million per year. “This investment means Goodyear plans to take on global competition right here in Fayetteville,” said Tony Chavonne, chairman of the Fayetteville Area Economic Development Corporation. The Fayetteville plant is the largest tire plant in the world in terms of tonnage produced. Nearly 60,000 tires are produced a day at the 2 million square foot facility situated on 400 acres. The investment will qualify for incentives under Cumberland County’s Economic Development Policy.

Pharmaceutical firm picks RTP for U.S. headquarters
Synthon Pharmaceuticals said it would locate its U.S. headquarters, as well as R&D and manufacturing operations, in the Research Triangle Park, creating 157 new jobs and a $10.3 million investment for the state. Gov. Mike Easley said North Carolina competed for this project with Virginia, New York, Spain and Argentina. He said Synthon Pharmaceuticals’ decision to expand operations in North Carolina “reaffirms our position as a global leader in pharmaceutical manufacturing and research and development.”  The company will receive $200,000 in One N.C. Funds, as well as support from Wake Tech Community College and the Research Triangle Foundation. A private company with global headquarters in Nijmegen, Netherlands, Synthon employs about 650 people and develops and markets both active pharmaceutical ingredients and finished pharmaceutical dosages. The company currently has an operation in Chapel Hill that employs 34 people. Those employees will be transferred to the RTP location and will, in addition to the 157 new employees, manufacture pharmaceuticals and conduct research and development for future products. The average salary will start at $700 per week plus benefits.

Auto auction company to become Currituck’s largest employer
Tidewater Auto Auction said it would relocate its auto auction facility from Chesapeake, Va., to Moyock in Currituck County, creating 250 new jobs and a $10 million investment for the state. The company hopes to expand to 500 employees during the next three to five years. Tidewater will convert its Chesapeake facility into a public auction site for local car dealers. The company will become Currituck County’s largest private employer once operations begin. Tidewater Auto Auction’s new site will include a 45,000-square-foot sales facility and 20,000-square-foot reconditioning facility.


Legal Beat

Supreme Court issues groundbreaking workers’ comp ruling
A groundbreaking ruling by the N.C. Supreme Court will make it more difficult for companies to fire workers who demonstrate sub-par performance after returning from a work-related injury. The high court’s ruling emphasizes that companies must be able to demonstrate that the termination was totally unrelated to the employee’s injury in order to legally discontinue paying benefits.

The case involves a woman who started working at the Toastmaster clock assembly plant in Laurinburg in 1996. After a couple of years on the job, she complained of pain and numbness in her hands, and she subsequently was diagnosed with carpal tunnel syndrome. She had surgery on both wrists and later returned to work, where she was assigned light-duty tasks. About a year later, however, the company put her back on her original job. Her job performance fell and she was reprimanded several times. She was terminated in May 1999.

During the times when she was disabled, the company paid all her medical and hospital bills and $167 a week in workers’ comp benefits during the 16 weeks she was out of work. After firing her, though, the company moved to end her benefits. She appealed to the state Industrial Commission, which sided with Toastmaster. She appealed to the state Court of Appeals, which upheld the Industrial Commission in a divided opinion issued in May 2003. 

In writing the high court’s opinion reversing the Court of Appeals decision, Chief Justice I. Beverly Lake Jr. noted that “only a handful of cases concerning the termination of injured employees have been scrutinized by the state’s appellate courts – and none by this court. We thus recognize that our decision here will impact many workers’ compensation claims that involve an employee who is not performing his work-related duties at pre-injury levels.”

State Government

Auto emissions testing program expands to five more counties
The state’s auto emissions testing program expanded to five more counties on July 1 when Buncombe, Cleveland, Granville, Harnett and Rockingham were added to the program. Motorists in those five plus the 23 counties already covered must have their cars’ On Board Diagnostic (OBD) systems tested to receive a new safety inspection sticker. Cars and light duty trucks made since 1996 must be tested to determine whether a vehicle's pollution controls are working, and if not, what equipment needs to be repaired. Emissions system tests are conducted on gasoline-powered vehicles (not diesels) as part of the annual safety inspection. Emissions tests currently are required in 23 counties: Alamance, Cabarrus, Catawba, Chatham, Cumberland, Davidson, Durham, Forsyth, Franklin, Gaston, Guilford, Iredell, Johnston, Lee, Lincoln, Mecklenburg, Moore, Orange, Randolph, Rowan, Stanly, Union and Wake. New counties are being added to the emissions testing program each January and July, eventually including 48 counties by 2006. Counties were selected for the program based on air monitoring data as well as the number of registered vehicles and commuting patterns. Along with the new test, the legislature also increased the inspection fee to a maximum of $30, but stations can charge less than that amount. In counties where emissions testing is not required, the fee for safety inspections alone is $9.10.


Names in the News

Former House speaker Stewart named chair of Ports Authority
Carl J. Stewart Jr. of Gastonia, who served six terms in the state House, including two terms as speaker, was appointed by Gov. Mike Easley as chairman of the North Carolina State Ports Authority Board. Stewart, who now practices law in Gastonia, replaces Richard Futrell, who has served as chair since 1999. Stewart represented Lincoln and Gaston counties in the House from 1967 through 1980. He was elected speaker in 1977 and again in 1979. Stewart served on the state Board of Transportation from 1981 until 1983. He was a member of the Economic Development Board and the North Carolina Board of Technology from 1999-2001. He received his undergraduate and his law degrees from Duke University. He and his wife, Donna, have five children. There are 11 members on the Ports board; seven are appointed by the governor, including the chair, and four are appointed by the legislature.

 State Rep. William “Bill” Owens (D-Pasquotank) received the Extraordinary Leadership in Economic Development Award presented through the North Carolina Economic Developers Association (NCEDA). Owens, a native of Elizabeth City, is co-chair of the House Appropriations Committee and vice chair of the N.C. Economic Development Board. New officers of the NCEDA are David “Mac” Williams, economic development director for the City of Asheville, president; Scott L. Millar, president of the Catawba County EDC, vice president; and Ronnie Goswick, director of the Franklin County EDC, secretary/treasurer. The new officers assumed their positions July 1. NCEDA also elected three new board members, who will serve until 2007. They are: John Hunter, attorney with Womble Carlyle Sandridge & Rice PLLP; Katherine Thomas, manager of economic development for North Carolina with Progress Energy; and James “Jimmy” Smith, director of economic development and community with Four County Electric Membership Corp.

 
Mark Your Calendar

N.C. Association of Health Plans to hold annual conference
The N.C. Association of Health Plans annual conference will be held Sept. 29-30 at the Grandover Resort and Conference Center in Greensboro. Speakers will include Congressman and U.S. Senate candidate Richard Burr, U.S. Senate Candidate Erskine Bowles, Mike Pucci with GSK, Gale Adcock with SAS, Bob Gfeller with Lowe’s Companies and Bob Greczyn with Blue Cross & Blue Shield of N.C. The meeting will allow business leaders to connect with leading North Carolina health care plan executives, to network with a variety of health care plans, employers and benefit professionals and to hear influential speakers on health care trends. For more information and to register on-line, go to www.ncahp.org.

One-stop voting period begins
One-stop voting for the July 20 primary election began Thursday and ends at 1 p.m. on July 17. Democrats and Republicans will vote on candidates for local, state and federal offices. Unaffiliated voters can vote in the primary of their choice.

Watch out for these major road construction work zones
If you plan to be traveling across the state over the Fourth of July holiday, the state Department of Transportations says to watch out for road construction in the following major work zones:
 

Mountains
I-26 in Polk and Henderson counties – Lane closures from Exit 54 to Exit 62. All lanes open on weekends and holidays.
I-40 in Haywood County – Lane closures from Exit 15 to Exit 20. I-40 in Haywood County – Eastbound lane closure(s) at Exit 2. All lanes open on weekends.
U.S. 70 in McDowell County – Lane closures from N.C. 80 to the Catawba River. N.C. 191 in Buncombe County - Lane closures from the Blue Ridge Parkway to N.C.112.
N.C. 181 in Burke County – Lane closures from Fleming Place to Mortimer Rd. N.C. 226 in Mitchell County – Lane closures and off-site detours from the Blue Ridge Parkway to U.S. 19E in Spruce Pine.

Piedmont/Central N.C.
U.S. 421/I-40 Business in Forsyth County – East and westbound lanes reduced to one lane from U.S. 52 to U.S.158.
U.S. 421 in Forsyth County – Lane closures and paving from U.S. 52 to Linville Road.
U.S. 52 in Forsyth and Stokes counties –Lane closures and paving north of Winston-Salem.
I-85 in Mecklenburg County – Off-ramp from I-85 to City Boulevard closed – signed detours are in place.
I-77 in Mecklenburg County – Northbound left lane closed from LaSalle Street to I-85.
I-440 in Wake County – Lane closures for the construction of the Knightdale Bypass.
I-40 in Orange County – Widening project from Orange County line to N.C. 147.
I-85 in Durham County – Widening project from Exit 170 to the U.S. 15-501 interchange.
I-95 and U.S. 13 in Cumberland County – Fayetteville Outer Loop project – possible slowed traffic.

Beach Travelers
U.S. 64 in Washington and Tyrrell counties – Interchange construction near Creswell.
U.S. 64 in Tyrrell County – Widening and bridge construction project near Scuppernog River and Columbia.
U.S. 17 in Onslow County – Lane closures south of Jacksonville and N.C. 24 East.
N.C. 50 in Pender/Onslow counties – Resurfacing project at N.C. 50 from N.C. 53 to the Onslow County line and N.C. 50 from Holly Ridge to N.C. 210.
N.C. 133 in New Hanover County – Construction of Martin Luther King Jr. Parkway from U.S. 421 to the Smith Creek Bridge.

Washington Watch

EPA faults broad areas of state for fine airborne particles

The EPA plans to fully implement the PM2.5 rules in the spring of 2005. Nonattainment areas will have until February 2008 to submit plans detailing how they will come into compliance with the rules. All areas must meet the new standards by February 2010. Extensive information about the PM2.5 standard is at the EPA web site at http://www.epa.gov/pmdesignations/.