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JULY
9, 2004 |
ISSUE
No. 10
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2004
SHORT SESSION
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Published
every Friday during legislative sessions exclusively
for NCCBI members
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With
few disputes remaining,
budget deal could come next week
Legislators
plan to return to Raleigh next week and hope it will take only
a few more days to wrap up work on a compromise spending plan
for the fiscal year that began July 1. The House and Senate
were holding rate floor sessions today but didn’t plan to
continue working over the weekend. Once they complete work on
the budget, the 170 House and Senate members will quickly hit
the campaign trail to get in some last-minute politicking
before the July 20 party primaries.
One sign that the end was near on the budget talks was a move
by the Senate to offer a new version of a university building
proposal (see story below). Also, observers said budget
conferees were near final agreement on spending for the
Department of Health and Human Services.
Senate
offers new proposal
on
funding
university
facilities
House
and Senate leaders appear to still be at odds over competing
proposals to build university research projects. This week the
Senate approved a new proposal, offered up as a compromise,
authorizing the issuance of special indebtedness (bonds) to
finance state facilities for health care and biotechnology
research and planning funds for three additional projects
supported by the House.
In the Senate-passed bill, $180 million was approved for a new
cancer rehabilitation and treatment center at UNC Hospitals at
Chapel Hill; $60 million was approved for the N.C.
Cardiovascular Diseases Institute at East Carolina University;
and planning money in the amount of $10 million was authorized
for three institutions to pay for the cost of land acquisition
and engineering, architectural, and other consulting services.
The three projects included the Bioinformatics Center at UNC
Charlotte, a new Pharmacy School facility at Elizabeth City
State University and the North Carolina Center for Health and
Aging to be operated as a consortium among UNC Asheville,
Western Carolina University and the Mountain Area Health
Education Consortium. Previously, the Senate had approved
funding only for the cancer center and the cardiovascular
center. The House has advocated for the two Senate-passed
projects, plus full funding for the cost of the additional
three projects. The two projects approved by the Senate are
the only two approved by the UNC Board of Governors. The bill
passed by the Senate also calls for a study of university
program offerings, building needs and how each mesh with the
economic needs of the state.
The bill now goes to the House for consideration, where the
leadership has indicated that the Senate-proposed compromise
may not be enough. Discussion on this issue appears to be a
part of the ongoing budget debate and the delay in reaching an
agreement.
Health insurance innovations
commission wins final passage
The
House on Tuesday concurred with Senate amendments to H 1463
Health Insurance Innovations Commission (C. Wilson, LaRoque
and Church) and the measure was enrolled. The legislation
would establish a 24-member panel to study the affordability
of health insurance for small businesses. House and Senate
leaders each would appoint 12 members of the commission. 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 commission would address this important issue
and represent all stakeholders while working with the N.C.
Department of Insurance. The 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 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. NCCBI enthusiastically
endorsed this legislation and conveyed its support to members
of the legislature.
School calendar bill ready for
showdown vote on House floor
On
a close voice vote, the House Committee on Appropriations gave
a favorable report to H 1464 School Calendar Changes,
sponsored by Rep. Connie Wilson (R-Mecklenburg). The bill was
reported favorably last week by the House Committee on
Commerce. Because of a pending fiscal note, the bill was
referred this week to the House Appropriations Committee for
discussion of the potential fiscal impact of the bill.
A proposed amendment calling for additional study of
the issue was ruled out of order by the committee chair, as
was a request for a delay so members could study the issue
further. Following
a lengthy discussion of the bill by committee members, the
bill was approved by what appeared to be a close vote. NCCBI
supports a study by the State Board of Education and the N.C.
Travel and Tourism Board on the issue.
Senate
postpones vote on IT reform legislation
The
Senate has scheduled a vote for Tuesday on accepting House
amendments to its bill to get better control of state
government spending on information technology and strengthen
the accountability of those running IT programs in state
government. The Senate had planned to vote on the measure
Wednesday but the bill was pulled from the calendar Thursday.
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 991 Improve State IT Efficiency and Project Management
passed the House last week 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 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 panel
approves stormwater rules for smaller towns
The
House Environment and Natural Resources Committee on Wednesday
favorably reported S 1210 Phase II Stormwater Management-1,
the measure creating temporary stormwater pollution
regulations that would apply to more than 120 small towns and
30 counties. The measure attempts to put the local governments
in compliance with the second phase of federal stormwater
rules that are designed to keep polluted stormwater from
running into streams and rivers. The measure now goes to the
full House for consideration.
Legislative Actions
The House on Wednesday gave second- and third-reading approval to H
1394 8-Year Drivers License/Internet Dl Renewal (Gillespie),
and sent the bill to the Senate.
The Senate on Wednesday gave second- and third-reading approval to H
0951 Create Civil No-Contact Protective Orders (Hackney)
and sent the bill to the House.
The House gave second- and third-reading approval Thursday to H 1370
Workers' Comp./Trucking (Saunders) and sent the measure to
the Senate.
The House on Tuesday concurred with Senate amendments to H 0964
Furniture Requirements Contracts (Warner) and it was
enrolled.
The Senate on Thursday concurred with House amendments to S
0732 Underground Storage Tank Program Amendments 2003 (Albertson) and the measure was enrolled.
Legal Beat
Appeals Court backs Randleman Dam construction
The
N.C. Court of Appeals ruled Tuesday that the N.C. Department
of Environment and Natural Resources properly issued water
quality permits allowing construction to proceed on the
Randleman Dam and Reservoir in the Triad area. The unanimous
decision by the Court of Appeals would appear to end efforts
by the American Canoe Association Inc. and Deep River
Citizens' Coalition to halt construction on the dam, which
will provide recreation and drinking water to High Point and
Greensboro. The groups have fought the dam in various legal
proceedings since 1999. Judge Patricia Timmons-Goodson wrote
the opinion in the case, NO. COA02-1657, and was joined in the
opinion by judges Robert Hunter and Rick Elmore.
The
N.C. Property Tax Commission properly reduced the appraised
value of the Burlington Holiday Inn from $4.8 million to $2.8
million, the N.C. Court of Appeals ruled in rejecting an
appeal by Alamance County. Judge John Tyson wrote the opinion
in the case, NO. COA03-1226, and was joined by judges Wanda
Bryant and Sanford Steelman.
Economic Development
German
plastics processor makes $12 million investment in plant
Pöppelmann, a leading plastics processing company,
said it would will locate its first U.S. manufacturing
facility in Claremont, in Catawba County, creating 50 new jobs
and $12 million in investment for the state. In
making the announcement, Gov. Mike Easley said North Carolina competed
with Georgia, South Carolina and Virginia for the project.
Easley said Pöppelmann will receive $300,000 in One North
Carolina funds, as well as support from Claremont, Catawba
County, the Catawba County Economic Development Commission,
the Golden LEAF Foundation, Duke Energy, the N.C. Department
of Transportation and Catawba Valley Community College. Pöppelmann,
a private German-owned company, is now one of the world’s
leading plastics processing companies and employs 1,100 people
worldwide. They manufacture high-quality plastic parts for the
horticultural and automotive industries, as well as the food,
medical and cosmetic industries. Construction on the
company’s new 33,000-square-foot production building and
55,000-square-foot warehouse in the Claremont Industrial
Business Park will begin this fall. The 50 new positions will
include both office and production personnel and will have an
average salary starting at $596 per week. Easley said that in
the past three years, the One North Carolina fund has helped
recruit more than 12,000 jobs and $1 billion in investment for
the state.
TAMSCO
expanding in Elizabeth City
Technical
and Management Services Corp. (TAMSCO), a supplier of
high-tech electronic equipment, announced that it would expand
its presence in Elizabeth City, bringing 100 new jobs and a
$20 million investment to the state. The company will receive
$125,000 from the One North Carolina Fund, as well as a $1
million Community Development Block Grant for infrastructure
improvements. TAMSCO will expand its current facility by
constructing an 110,000-square-foot heavy lift/fixed wing
maintenance hangar at an estimated cost between $8 and $9
million. It will be adjacent to the Elizabeth City-Pasquotank
County Regional Airport. The facility will be capable of
housing four C-130 Hercules Aircraft and will contain back
shop/office spaces and an adjacent aircraft apron. Salaries
for the new positions will range from $37,000 to $100,000 per
year. TAMSCO is a wholly-owned subsidiary of Engineered
Support Systems Inc. (Nasdaq: EASI), which is a diversified
supplier of high-tech, integrated military electronics,
support equipment and logistics services for all branches of
America’s armed forces and certain foreign militaries. The
Coast Guard recently awarded TAMSCO a $4.5 million, 24-month
contract.
Western
counties receive ARC grants for infrastructure projects
Grants
totaling $357,500 from the Appalachian Regional Commission
(ARC) will aid businesses in Buncombe, Graham, Madison and
Ashe Counties, Gov. Mike Easley said Wednesday. The grants
were made to AdvantageWest and the town of West Jefferson to
create and support the infrastructure necessary for new and
expanding businesses to grow, the governor said. AdvantageWest
will receive $157,500 from ARC to create the Blue Ridge Food
Ventures Network in Buncombe, Graham and Madison counties. The
network will establish Food and Drug Administration (FDA)
approved food-processing sites to help small food and
agricultural business entrepreneurs succeed in value-added
food production, which includes the repackaging and processing
of foods for a broader sales market. AdvantageWest expects to
assist 135 local businesses, and create 45 new jobs and $1
million in investment over the next three years through the
Blue Ridge Food Ventures Network.
In
Ashe County, the town of West Jefferson will receive $200,000
from ARC to construct the water and sewer infrastructure
necessary to support the first phase of a new assisted living
facility called the Villages of Ashe. Initially, the facility
is expected to create 25 new jobs and a $2.5 million
investment for the state.
State Government
Audit
faults computers security procedures at most community
colleges
Computer
systems on North Carolina’s 59 community college campuses
and at the North Carolina Community College System office are
at a high risk for intrusion or misuse, State Auditor Ralph
Campbell said in an audit report released Thursday. The
year-long audit of all community college campuses and the
central office analyzed security practices, disaster recovery
procedures, and systems development and software for computer
systems that contain both financial information and student
records at the colleges.
Auditors found that only one campus had developed adequate,
formal information technology standards, policies and
procedures that promoted good security. While some security
controls on the campuses and the System Office were effective,
others posed extreme security risks. Auditors also found that
access controls, which restrict the use of information systems
to those with an authorized need, were inadequate and
ineffective across the entire system. In addition, auditors
found that the Systems Office did not include security
requirements in its policies and procedures for implementing
new critical applications. Procedures to notify campuses of
changes to the critical operating system were ineffective.
Auditors found 10 community colleges were not secure from
preventable physical threats such as fire, water, electrical
problems and vandalism. They found that only six community
college campuses had adequate disaster recovery plans that
would be needed in case of an extended disruption. Fifteen
campuses had no formal disaster recovery plan. In addition,
the community colleges are relying on the Systems Office as an
alternate disaster recovery site, but the office only has
enough space on their back-up server to handle a few campuses
at a time. Auditors said the problems uncovered in the series
of audits relate to the operating systems of the colleges, and
are not associated with the Colleague systems the community
colleges are developing.
NCCBI News
Garner summit examines economic
development issues
North
Carolina voters should look past the political rhetoric aimed
at economic development incentives and look at all the factors
involved in creating jobs, NCCBI President Phil Kirk urged
those attending the 2004 Garner EXPO Economic
Development Summit on Wednesday.
"Many of us would do away with economic development
incentives in all 50 states if that were possible, but that is
not the real world," Kirk said. He asked the audience to
support NCCBI's goal of getting the corporate and personal
income taxes lowered in the next session of the General
Assembly. Pointing out that North Carolina has the highest
personal income tax rate in the Southeast, Kirk said that the
message that many small businesses pay taxes based on the
personal income tax rate, rather than the corporate one
because of the way they are organized, has not gotten across
to the media, the legislators, or the public in general.
He praised the role which community colleges play in economic
development and urged continued support from the taxpayers. He
also spoke on the importance of partnerships and positive
attitudes in creating more jobs for the Garner area and
throughout the state.
Others appearing on the program, which was organized by the
Garner Chamber of Commerce, were Dr. Steve Scott, president of
Wake Technical Community College; Ken Atkins, senior vice
president, Office of Economic Development; Dave Heilman,
ConAgra plant manager; Sam Bridges, mayor of Garner; Amy
White, a member of the Wake County Board of Education; and
Kevin Nelson, president of the Garner Chamber of Commerce. The
panel discussion was moderated by Monte Knight with NBC
Channel 17.
Elizabeth City welcomes magazine
profile
"The Northeast's Harbor of
Hospitality" is a very appropriate title for the
Elizabeth City area community profile in the July edition of
the NORTH CAROLINA magazine," NCCBI President Phil Kirk
told more than 50 community leaders at a breakfast on Thursday
morning at the Quality Inn in Elizabeth City.
"Much of your progress is related to the quality of life
here, especially the friendly people," Kirk said.
"You are experiencing tremendous growth in Pasquotank and
Camden counties, and you are working hard to deal with the
challenges that come with that growth. You know very well that
not much is accomplished these days by working alone." He
emphasized the importance of partnerships, volunteerism, and
public service.
He emphasized the importance of the military and travel and
tourism in the area and cited the $20 billion impact of the
military bases in North Carolina and the $12 billion in direct
economic impact from tourism and another $20 billion in
indirect economic benefits.
"In deciding which areas to highlight in our magazine, we
look for places which believe and practice economic
development," Kirk said. "To have good jobs, you
need a strong system of public education at every level. You
believe in high standards and high expectations." He
praised the Elizabeth City/Pasquotank and Camden County
Schools, College of Albemarle, Elizabeth City State
University, and East Carolina University for their
contributions to economic development and the quality of life
in the region.
Kirk was introduced by Ben Berry, chairman, president and CEO
of Gateway Bank and a member of the NCCBI board of directors.
Another NCCBI board member, Bruce Biggs, also was present.
Rhonda Twiddy, president of the Elizabeth City Area
Chamber of Commerce, gave the opening and closing remarks.
Stephen Wissink, sales and marketing director for the NORTH
CAROLINA magazine, was thanked for his role in creating the
community profile.
Washington Update
Tort
reform effort stalls in Senate
The
U.S. Chamber of Commerce expressed disappointment at the U.S.
Senate’s 44-43 vote Thursday against invoking cloture (60
votes are needed to invoke cloture) on S. 2062, the Class
Action Fairness Act. “This was a vote against America’s
workers, employers and consumers that
continue to be victimized by a legal system run amok,” said
Stanton D. Anderson, executive vice president and chief legal
officer of the U.S. Chamber, and chair of the Class Action
Fairness Coalition. “Although we are disappointed at the procedural gimmicks
that continue to stymie an
up-or-down vote on the bill, we remain committed to passing
this reasonable and vital piece of legislation this year.”
The procedural legislation would curb class action lawsuit
abuse in state courts by allowing greater scrutiny of
settlements that provide coupons or something else of little
or no value to consumers, but return millions in legal fees to
class action attorneys. In addition, the bill would stop the
rampant practice of venue shopping of large national class
actions by allowing federal courts to hear more national class
action lawsuits involving plaintiffs and defendants from
multiple states.
Last November, a bipartisan group of Senators negotiated a
legislative compromise on class action lawsuit abuse.
That compromise ensures genuine local class action
lawsuits remain in state courts where they belong, and that
legal fees in coupon settlements be determined as a percentage
of the actual coupons redeemed or the number of hours the
lawyers actually worked.
“After months of negotiation and bipartisan agreement on a
compromise bill, the time to pass class action reform is
now,” continued Anderson. “We urge the Senate to put
partisanship aside in the name of true reform that benefits
all Americans.”
The mission of the Institute for Legal Reform is to make
America's legal system simpler, fairer and faster for
everyone. The
U.S. Chamber of Commerce is the world's largest business
federation, representing more than three million businesses
and organizations of every size, sector and region.
Giving ambulance chasers a bad name
An infamous personal-injury lawyer intent on milking the
system for as much money as possible via outrageous television
commercials and Web links catering to accident victims and
potential asbestos claimants has been suspended from
practicing law in New York for one year.
His television ads were found to be misleading and he was also
punished for soliciting business from a comatose accident
victim.
The “misleading commercials” part of the story started
when the lawyer, in 2002, was hit with a $1.9 million judgment
in a legal-malpractice case by a state Supreme Court jury in
New York. A car accident victim's brother fell for a
commercial in which the lawyer said he would personally “get
you the biggest, fattest cash award I can, as fast I can, from
as many defendants as I can find. Just call me! Day or night,
I'll talk to you free.”
What the brother got was a lawyer who later admitted he had
never tried a case in court, lived in Florida and used
subordinates to deal with New York clients. The cash
settlement for the accident victim was too low to cover
medical expenses.
The lawyer's suspension was also based on a letter he sent to
a comatose woman seeking her business when she felt better
after her car crashed into a train. The court said any
reasonable lawyer would know not to solicit business when the
victim's life hung in the balance.
Don't sleep too easy. Remember, he's only suspended in one
state.
Updates on other important issues in Congress,
supplied by the National Association of Manufacturers
2004 Tax Bill:
At
press time, Congress was in the process of picking conferees
to reconcile the House and Senate jobs bills, respectively,
H.R. 4520 and S. 1637. Conferees were expected to be named
prior to 7/23, when Congress is expected to adjourn for the
Democratic National Convention and the August recess. A formal
conference is unlikely to occur before Labor Day. The bills
bring us within range of replacing the extraterritorial income
(ETI) and ending the E.U. retaliatory tariffs -- 9 percent as
of 7/1 -- on U.S. exports, which the E.U. began imposing in
March to protest a series of U.S. tax breaks for exports,
known as FSC/ETI. The tariffs will continue to increase by 1
percentage point each month to a maximum of 17 percent or
until the ETI regime is repealed. The NAM is working
diligently with both parties and chambers to enact fair and
balanced legislation that resolves the FSC/ETI dispute while
keeping U.S. manufacturers competitive. The NAM is hopeful
that Congress will quickly renew retroactively and strengthen
the R&D tax credit -- which expired 6/30 -- promptly, as
well.
Do
Not Fax Bill:
For
more than 10 years, businesses and consumers have relied on
the established business relationship (EBR) exception to FCC
rules prohibiting unsolicited faxes in order to send and
receive commercial information. In July 2003, despite few
complaints from business customers, the FCC eliminated the EBR
and prohibited the faxing of routine commercial information to
regular customers. Unless Congress changes the law, a person
or business must have written, signed consent from the
recipient before sending a requested fax. Even commercial
information specifically requested by phone or face-to-face
cannot be faxed without this burdensome process. H.R. 4600,
the Junk Fax Prevention Act, would protect the EBR while
keeping junk faxes illegal.
Action
on Trade Agreements:
The
White House on 7/2 sent Congress formal implementing
legislation for the U.S.-Australia free trade agreement (FTA).
Floor votes were expected in both chambers before the August
recess. Additionally, in early June, the U.S. signed an FTA
with Morocco signaling a step forward toward the eventual goal
of a Middle East Free Trade Agreement by 2013. Making American
consumer goods and industrial inputs more affordable to
individuals and firms based in Morocco not only will improve
their standard of living and make their companies more
competitive, it will also boost U.S. sales. Similarly,
ensuring Moroccan companies’ access to the U.S. market will
help build their economy.
Alien
Tort Ruling:
The NAM welcomed a recent
unanimous Supreme Court ruling that significantly limits the
practical scope of the Alien Tort provision (ATP) of the
Judiciary Act of 1789. Due to a growing number of lawsuits
brought against U.S. companies that operate in foreign
countries targeted by human rights activists, the court ruled
that the ATP simply authorizes a forum, but doesn’t give
substantive rights. Foreign citizens should take up legal
matters with their own governments as American laws and
procedures are substantially different from other countries,
and applying our rules to conduct abroad is unnecessary,
burdensome and in conflict with the concept of sovereignty.
Overtime: Prior to the release of
Washington Update, there remained the possibility of a
Congressional Review Act fight or a Senate amendment in the
appropriations process to overturn the Section 541 white
collar regulations that define white collar (executive,
administrative, professional and outside sales) employees
exempt from the federal Fair Labor Standards Act overtime
regulations. Note that employers must be in compliance with
these new regulations by 8/23.
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