NCCBI counts several wins from legislative session

The business community fared pretty well during the legislative session that ended July 20, mainly because lawmakers held the line on taxes despite terrific pressure to find extra revenue to close the budget gap. The only tax proposal that was approved was an extension of the half-cent sales tax and the upper income tax bracket, measures that NCCBI did not oppose. Late in the session moves were made to raise taxes on cigarettes, beer, wine and liquor, but they didn’t pass.

Legislation also was introduced to address the issue of subsidiary dividends, to conform the bank expense deduction, to make changes to the William S. Lee tax credits, and to reduce the corporate income tax and others.  Although no new study commissions were authorized, the permanent Revenue Laws Study Commission is expected to continue work on tax and revenue issues prior to the 2004 session.

In addition to no new taxes, NCCBI can count several accomplishments for its members during the session. They’re listed below, in no certain order:

Transportation

• Helped secure an additional $700 million in transportation funding.

• Approved language that gives the Department of Transportation new tools to help speed up the permitting process and expedite project delivery.

• Approved establishment of a blue ribbon commission to study the unique mobility needs of urban areas in North Carolina.

• Approved study committee to examine all aspects of the Highway Trust Fund.

• Reaffirmed position to fully repay funds that have been transferred from the Highway Trust Fund to the General Fund.

Economic Development

• Approved a constitutional amendment to provide for project development financing. The issue will be put to voters in a November 2004 referendum.

• Provided additional funding for regional partnerships.

• Extended the qualified business venture tax credit.

• Extended the state ports tax credit.

• Expanded usury exemption to keep N.C. banks competitive.

• Clarified laws relating to R&D tax credit.

  Environment

• Revised air permitting law to allow existing businesses to move forward with construction prior to obtaining an air permit.

• Made changes to the Administrative Procedures Act to help with the rulemaking process.

• Defeated legislation that would have made it possible for local health agencies to adopt regulations more stringent than state regulations.

  Education

• Funded enrollment increases for universities and community colleges.

• Funded More-at-Four and Smart Start.

• Provided additional incentives to help with teacher retention and recruitment.

  Other

• Held the line on health care legislation – no new costly mandates were approved.

• Held off attempts to make changes to the Worker’s Comp Act that would have raised costs to employers.

• Delayed the reinstatement of the unemployment insurance surtax, which will save employers money.

• Placed a moratorium on ordinances being enacted by local governments that would require the removal of outdoor advertising through amortization until the proposed “just compensation” legislation can be resolved.

• Approved legislation to help the N.C. wine industry by allowing wineries to ship wine directly to consumers across state lines.

• Approved streamline sales tax legislation to aid N.C. in collecting taxes owed in N.C. as a result of the purchase of goods over the Internet. 

  Leftovers

In the General Assembly’s rush to adjourn after finally resolving the budget dispute, several things were left undone, including:
 Session limits, which passed the Senate but didn’t come to a vote in the House.
 Legislation creating an appointed state superintendent of public instruction also passed the Senate but didn’t come up for a vote in the House.
 Tort reform and medical malpractice reform were extensively debated in committee but no action was taken by either chamber (see separate story below).

General Assembly moves slowly on efficiency recommendations
As a follow up to the work of the Governor’s Commission to Promote Government Efficiency and Savings on State Spending, several bills were introduced this session. Some of the items proposed were ratified in separate legislation or in the budget bill. Other items were included in the legislative studies bill that failed to pass in the final hours of the legislative session. Here is a summary of action or inaction on the efficiency legislation:

Ratified Bills
 S. 100 State Government Sales Tax Exempt (Kerr, D-Wayne) allows a sales and use tax exemption for state agencies instead of a sales and use tax refund to state agencies. It also was recommended that the same opportunity be given to public schools and local governments. However, that recommendation carried with it a one-time cost of about $100 million. Because of the revenue required, a provision for public schools and local governments was not enacted.

 S. 819 Use of State Property / Blount Street Historic District (Rand, D-Cumberland) clears the way for the historic properties on Blount Street that are owned by the state to be sold. Funds from the sale of the property will be used as follows: 1) to reimburse the Department of Administration for funds expended to sell the property; 2) the next $5 million will be placed in trust and used solely for the upkeep, repair and maintenance of the Executive Mansion; 3) the remainder of the funds will go to the General Fund. The legislation also established the Blount Street Historic District Oversight Committee to oversee these transactions.

Provisions Ratified as Part of the Budget Bill
 Consider Sale or Lease of State Property (proposed as S. 809 – Rand, D-Cumberland and H. 1053 – Owens, D-Pasquotank) sections 6.8(a) – 6.8 (g) of the budget bill set out a procedure for the disposal of state property. The Department of Administration is directed to develop and implement a state-owned surplus real property disposal system and to establish a system that will continuously identify state-owned surplus property, evaluate that property and dispose of it as appropriate. Unless otherwise provided by law, the clear proceeds of the sale of state-owned surplus real property shall be credited to the General Fund. It also calls on the Department of Administration to review the highest and best use of state-owned property and determine if less expensive alternative sites should be acquired for state use and the former sites sold or marketed by sale and leaseback until the alternative site is ready for use.

 Establish Statewide Benefit Committee (proposed as H. 1068 – Dockham, R-Davidson) sections 30.21(a) – 30.21(h) of the budget bill put into place a study for the establishment of a statewide benefit committee to provide a menu of portable supplemental benefits for all state employees. The commission has nine members and is to submit a report of the results of its study, including any legislative recommendations, to the General Assembly no later than Jan. 1, 2005.

Proposals Included in the Studies Bill
Several recommendations from the Efficiency Study were included in the end-of-session studies bill that did not pass (see story below). Some of these items are eligible for consideration in 2004 and others may be looked at by other groups prior to that time.

 Combine State Safety Programs (S. 807– Rand, D-Cumberland) was introduced as a “place holder” to look at combining worker safety programs found in the Industrial Commission and the Department of Labor. No specific recommendations have been made regarding how to combine those programs.

 Consolidate Administrative Functions (S. 805 – Rand, D-Cumberland and H. 1052 – Owens, D-Pasquotank) requires consolidation of administrative and support functions in areas of high concentrations of state facilities and requires state agencies to present plans for consolidation by May 1, 2004. The bill passed the Senate and at the time of adjournment was pending in the House Committee on Rules. The legislation is eligible for consideration next year and could be adopted with a change in the reporting date.

 DMV-NCDL / Registration Extensions (S. 804 – Rand, D-Cumberland) would extend vehicle registration to two years and drivers license renewal to eight years.

 Reduce the Scope, Size and Numbers of Boards and Commissions (S. 924 – Rand, D-Cumberland and H. 1067 – Dockham, R-Davidson) would require a review of all state boards and commissions to determine if changes need to be made to reduce their scope, size and numbers.

Other Items
 Workforce Development Programs. A proposal to consolidate workforce development programs was included in the Senate version of the proposed budget bill, but was not included in the final legislation. A subcommittee of the N.C. Economic Development Board, chaired by Mac Everett of Charlotte, the Wachovia Bank executive who is a former NCCBI chair, is working on recommendations for consolidation of these programs and a report to the full board is expected early this fall.


Other bills passed during session’s final days
During the final days of the legislative session, several bills were approved that affect the business community. Below is a recap of those items.

 N.C. Moving Ahead (H. 48 – Crawford, D-Granville). With the support of NCCBI and others, this legislation passed the House early in the session, but was the last bill to be approved in a joint House and Senate conference report, just prior to adjournment. The bill allows the financing of road improvement projects with bonds approved by voters in 1996 and were never sold. Under the approved plan, the money can be spent over two years to resurface roads, add turn lanes on two-lane highways, replace bridges and widen paved shoulders. Of the $700 million package, $70 million will go to public transportation to be used for regional rail and urban transit systems. At the request of NCCBI, the House-passed version of the bill included language to help speed up the environmental permitting process for transportation projects. This provision was not in the final bill, but instead was included in the budget bill that was passed on June 30. (See Section 29.6 of H. 397). The final bill did include a provision requiring that the state’s General Fund repay the money taken from the Highway Trust Fund over the last several years to balance the state’s budget, but deleted a controversial provision added by the Senate to require the Department of Transportation to establish a new ferry service from Currituck to Corolla. Passage of the bill clears the way for spending transportation funds all across North Carolina and should provide new jobs and help stimulate the economy in many areas of the state.

 Just Compensation (H. 429 – Culpepper, D- Chowan). Legislation promoted by the N.C. Outdoor Advertising Association and supported by a broad coalition, including NCCBI, passed the House and was pending in the Senate Judiciary I Committee at the time of adjournment. While this bill did not pass, H. 754, which places a moratorium on any ordinances being enacted or amended by local governments that require the removal of outdoor advertising through the process of amortization, was enacted during the final hours of the session. This moratorium, which is in effect until Dec. 31, 2004, will give parties interested in passing H. 429 additional time to work with the N.C. League of Municipalities and the N.C. Association of County Commissioners without the concern that cities or counties will rush out and pass ordinances that amortize outdoor advertising.

 ESC Surtax Delay (H. 1241 – Luebke, D-Durham). In the final hours of the legislative session, legislation was approved to delay the automatic triggering of the 20 percent Employment Security Commission (ESC) surtax until after the recently doubled ESC tax refills the Unemployment Insurance Fund (UIF) to the level of $500 million. The proposal was made by the governor to keep businesses from experiencing another increase in their unemployment insurance payments. With the downturn in the economy, funds in the state’s UIF have been steadily going down, requiring the state to have to borrow some funds from the federal government to meet all unemployment claims. There are two state funds, referred to as the Trust Fund and the Reserve Fund, that are set up on automatic triggers to refill the funds when they fall below a certain level. Companies recently saw an increase in their unemployment payments when the Trust Fund fell below $800 million and triggered an automatic increase. If the legislation had not been approved, the trigger to begin collecting additional funds for the Reserve Fund would have gone into affect, requiring additional payments by business and industry. The legislation delays additional payments to the Reserve Fund for one year.

 Expand Usury Exemption (H. 1182 – Goodwin, D-Rockingham). This bill, proposed by banking advocates and supported by consumer groups, deregulates the rate of interest and fees on: 1) loans made to a person other than a natural person (e.g., a loan made to a corporation, partnership, LLC or association, including non-profits); 2) a loan made to a natural person if made for other than personal, family or household purposes (such as a business loan made to a sole proprietorship); 3) a credit card loan made by a bank (it specifically permits any rate of interest and fees agreed upon); and 4)deregulates the rate of interest and fees that may be imposed on a bank-originated home equity line of credit with an original line of credit of $10,000 or more. The bill subjects all home equity lines of credit (whether or not originated by a bank) to N.C.’s predatory lending laws (previously the predatory lending law applied only to closed-end loans). This bill improves N.C.’s lending laws, and will keep N.C. competitive with other states. This legislation will be an incentive for banks to locate additional operations in N.C.

 Qualified Business Venture Tax Credit (H. 1294 – Rep. Gorden Allen, D-Person). This bill extends until Jan. 1, 2007, the tax credit to help small, high-tech, start-up companies that was scheduled to expire at the end of the year. An amendment added to the bill in the Senate also extends the state ports tax credit until Jan. 1, 2009. Both provisions were strongly supported by NCCBI.

 Revenue Administrative Changes (S. 236 – Kerr, D- Wayne). This legislation generally, as the title says, makes administrative changes requested by the State Department of Revenue. Two provisions were of particular significance to NCCBI members. Section 8 of the bill clarifies eligibility for the research and development tax credit. Eligibility for some companies came into question last year when the Department of Revenue tried to interpret the previous law. The new language clears up the ambiguity. The original language in Section 9 added a provision that would have required additional reporting by N.C. corporations who have affiliates outside the state and would have been a major burden on many N.C. corporations. With strong support in the House, the onerous provision was deleted and a study was added (see June 27 Legislative Bulletin). In the final days of the session, the Senate concurred with the House version of the bill. Consequently, the objections that NCCBI had with the bill were removed. 

 Wine Shippers Permit (S. 668 – Metcalf, D-Buncombe). This bill authorizes the Alcoholic Beverage Control Commission to issue wine shippers permits to allow the direct shipment of wines to residents of North Carolina and to establish a mechanism for collecting the taxes due on wine shipped to North Carolina. This bill was supported by NCCBI as a way to increase business for North Carolina wineries.

 Project Development Financing (S. 725 – Clodfelter, D-Mecklenburg). Passage of this legislation clears the way for this proposed constitutional amendment to be placed on the ballot in November 2004. If the constitutional amendment is approved, it would give local governments a powerful tool to use to encourage investment in struggling downtown areas. It would allow local governments to use a new financing mechanism to invest in public infrastructure. It is a way for public investment to pay its own way and is designed to attract private sector investment and stimulate economic development. This legislation was strongly supported by NCCBI, the N.C. Economic Developers Association, local chambers of commerce, the N.C. County Commissioners Association, the N.C. League of Municipalities and others. The bill was passed on second reading with a vote of 100–13 and on third reading by a vote of 86-23. An amendment proposed by Rep. Russell Capps (R-Wake) to place limitations on projects that could use this financing mechanism was defeated. (Rep. Capps’ amendment would have prevented using this financing option for convention centers or sports facilities). Below is a list of how House members voted on third reading:

House members voting for the legislation: Black, Adams, Alexander, B. Allen, G. Allen, L. Allen, Baker, Barbee, Barnhart, Bell, Blackwood, Blust, Bonner, Bowie, Brubaker, Carney, Church, Clary, Coates, Cole, Crawford, Culp, Daughtridge, Daughtry, Decker, Dickson, Earle, England, Fox, Frye, Gibson, Gillespie, Glazier, Goforth, Goodwin, Gorman, Hackney, Haire, Hall, Harrell, Hill, Hilton, Holiman, Hunter, Insko, Jeffus, C. Johnson, L. Johnson, Jones,  Justus,  LaRoque, Lucas, Luebke, McAllister, McCombs, McHenry, McLawhorn, McMahan,  Michaux, Miller, Mitchell, Munford, Nye, Owens,  Parmon, Preston, Rapp, Ray, Rayfield, Rhodes, Ross, Sauls, Saunders, Setzer, Sherrill, Stiller,  Sutton, Tolson, Wainwright, Walker, Warren,  Weiss, K. Williams, C. Wilson, Wright, Yongue.

Members opposing the legislation: Morgan, Allred, Capps, Creech, Dockham, Eddins, Ellis, Grady, Holmes, Howard, Justice, Kiser, Lewis, McComas, McGee, Moore, Nesbitt, Pate, Sexton, Stam, West, G. Wilson, Wood.

Members with excused absence: Bordsen, Cunningham, Gulley, Starnes, Walend, Warner

Members not voting: Culpepper, Farmer-Butterfield, Miner, A. Williams, Womble.

 Unwanted Telephone Solicitations (S. 872 – Thomas, D-Craven). The legislation prohibits intrastate telemarketers from soliciting calls to North Carolina consumers. It would allow local telephone or cellular phone customers who already are listed on the federal no-call registry to make complaints to the state attorney general's office when they receive an in-state telemarketing call. Attorney General Roy Cooper said the national list already has come under attack by telemarketers who have filed various suits in federal court. The telemarketers are challenging the federal government's jurisdiction of calls made from within a state's borders. At least 29 other states have enacted their own do-not-call laws. Under the state law, North Carolina will not need to create or operate a separate state do-not-call list. The state basically hooks on to the national list.

 Timely Environmental Permit Process (S. 945 – Hoyle, D-Gaston). This bill, which was advocated by NCCBI and the N.C. Manufacturers and Chemical Industry Council, allows a business to go forward and begin construction or modifications to an existing facility prior to obtaining an air quality permit. It does not change any air quality standard or allow a facility to operate without meeting all state and federal requirements and receiving all needed permits. It will give N.C. companies a competitive advantage when competing with other states in expansion of a manufacturing facility.

Studies Bill, appointments, technical corrections left undone
Legislators left town without passing three major bills that are typically voted on during the last hours of session. The Studies, Appointments and Technical Corrections bills were left undone after days of heated debate regarding some of the issues in the bills.

The Studies Bill allows legislators to include some issues that were not addressed in individual bills. NCCBI had advocated for several pieces that were included in early versions of the bill. The NCCBI-backed provisions included recommendations from the Governor’s Commission to Promote Government Efficiency and Savings in State Spending; a study of the size and scope of state boards and commissions; and a Blue Ribbon Task Force on Medical Malpractice. The task force was to consider the complex causes of and remedies for medical malpractice and the impact of medical malpractice issues on health care accessibility in North Carolina.

Although the Studies Bill did not pass, there are some ongoing studies that can be conducted without new legislation. For example, the Revenue Laws Study Committee is expected to move forward with studies on such issues as Conform Bank Expense Deduction (H. 1290), Subsidiary Dividend Taxes (H. 1291); and Simplified Business Entity Taxation (S. 860), and various other studies.

The Appointments Bill includes appointments to state boards and commissions by the Speakers of the House and Senate President Pro Tempore. Because the House and Senate did not pass the bill, many of the appointments will be left to Gov. Mike Easley. But he can only make appointments where terms have expired or where board members have resigned or died. He must consider only those names recommended by the two Speakers of the House and the President Pro Tempore of the Senate. He can reject a recommendation, but cannot name his own choice instead. He would have to request another recommendation from the legislature.

The Technical Corrections bill is meant to fix problems with legislation passed during the session. This year, in addition to routine corrections, the Senate used the Technical Corrections bill as a vehicle for the much-debated $180 million cancer research center, while the House’s version included planning money only for the cancer center and for other projects. The cancer center and other economic development initiatives are expected to be discussed by the Senate in September during a special session.

Note: Also left at the end of the session, was an economic development incentives bill requested by the Department of Commerce. The bill authorized sales tax refunds for construction materials for aircraft and motor vehicle manufacturing facilities, pharmaceutical and bioprocessing facilities, and semiconductor manufacturing facilities. Facilities eligible for the refund would have to invest at least $100 million in constructing the facility in North Carolina. The Senate approved the measure, but the House left it undone in the final hours.

Adjournment resolution contains differing dates for reconvening
For the first time in North Carolina’s history, the House and Senate passed an adjournment resolution that calls for the two chambers to reconvene on different dates. The joint resolution calls for the Senate to return from Sept. 15-19, 2003, to consider economic development legislation and medical malpractice reform, and calls for both the House and Senate to reconvene on May 10, 2004. Because the House will not be in session at the same time as the Senate in September, no bills can be passed at that time.

The adjournment resolution also states that the Speaker of the House and the President Pro Tempore of the Senate may authorize committees or subcommittees to meet during the interim between sessions to review matters related to the state budget, prepare reports (including revised budgets) and “consider any other matters as the Speaker of the House of Representatives or the President Pro Tempore of the Senate deems appropriate,” as long as the issue originated in that particular chamber.

Although it was not a part of the adjournment resolution, the question remains whether all legislators will have to return to Raleigh this fall to consider new legislative district maps. A court decision handed down last week mandates lawmakers to redraw House and Senate district boundaries before the next elections. A special session will probably be called to address this issue. 


Session adjourns without action on medical malpractice reform
The General Assembly recessed without taking any action on the medical malpractice issue, much to the surprise of some observers. "Since both the Senate and the House had comprehensive bills introduced on this important subject during the first days of the General Assembly six months ago, it is disappointing that no action has yet been taken," NCCBI President Phil Kirk said.

He gave credit to Senate President Pro Tem Marc Basnight for appointing a special committee to deal with the issue four months ago. Numerous public hearings were held, but no bill came from the discussions. The Senate will return in mid-September to work on medical malpractice and economic development. The House has no plans to do so. However, both bodies are expected to have a special session on legislative redistricting, probably this fall. "There is no reason I know of that the special session could not handle three issues -- redistricting, medical malpractice and economic development," Kirk said. "Where there is a will, there is a way."

On July 15, four business leaders -- First Citizens Vice Chairman Jim Hyler, Media Research Planning and Placement President Shelia Ogle, NFIB N.C. State Director Perri Morgan, and Kirk held a news conference to push for action on medical malpractice this session. They highlighted studies showing that medical liability reforms can reduce healthcare costs in North Carolina by more than $1 billion per year. They told the legislators that the rising cost of healthcare is among the greatest challenges facing business today.

Kirk said, "The General Assembly has few opportunities to assert its influence over the cost of healthcare. It should not pass up this opportunity to enact medical liability reforms that will significantly reduce healthcare expenses. The collection of reforms being considered by the House and the Senate have been studied and endorsed by the U.S. Chamber of Commerce and the Employment Policy Foundation."

In separate action, NCCBI also wrote to Senate President Pro Tem Basnight and urged that the Senate take specific steps to solve the problem before recessing. "The strategists pushing this bill had apparently decided to try to get favorable Senate action first since the House had done nothing on the issue. Hopefully the Senate will be successful in getting the ball of true reform moving again in September," Kirk said.

Economic Development
J-DIG attracts two new industries to North Carolina
North Carolina’s new economic development incentives program has attracted two more industries to the state, a sure sign that the Job Development Investment Grant (J-DIG) program is working. General Dynamics Armament and Technical Products Inc. said last week that it will relocate its headquarters and a light manufacturing operation to the Charlotte area, a move that will create 405 jobs with a $30 million investment. That announcement came shortly after R.H. Donnelley Corp., the largest U.S. stand-alone publisher of yellow pages directories, said it would relocate its corporate headquarters to the Triangle, a move that will create 275 jobs over three years. In May, German semiconductor maker Infineon Technologies North America Corp. became the first J-DIG recipient when it announced it would build an $8 million facility in Cary and create as many as 400 new jobs over five years.

All three companies said receiving J-DIG tax rebates was a key factor in their decision to move to North Carolina. Under the legislation adopted by the General Assembly last year, qualifying companies can receive up to 75 percent of the state income taxes paid by workers in new jobs they create. The program is targeted at industrial projects whose benefits exceed their costs to the state and which would not locate in North Carolina without the grant. No more than 15 such grants may be made in one year and the total rebate of state income taxes is capped at $10 million per year.

General Dynamics Armament and Technical Products Inc., which employs more than 2,500 people in eight locations, said it would begin moving its headquarters from Burlington, Vt., to Charlotte in September and have the operation running by the fall of 2004. The company will pay salaries averaging more than $70,000 a year. The company produces various weapons and armaments for the military, including Gatling guns, grenade machine guns and some rockets. Officials said the company’s J-DIG grant would be worth as much as $5.9 million in tax relief over 10 years if it creates all the jobs it promises.

R.H. Donnelley, which currently has a publishing operation in Morrisville that employs 240 as well as six sales offices throughout the state, will consolidate operations in Purchase, N.Y., and Overland Park, Kan., in a new headquarters in the Raleigh-Durham area. The company employs more than 1,400 people in 19 states. They expect to move to North Carolina at the beginning of 2004 and be fully operational by April. They will initially employ 140 workers with estimated salaries for the positions averaging $63,000 and will add another 135 jobs by 2006. R.H. Donnelley, founded 116 years ago in Chicago, Illinois, became an independent public company in 1998 when it spun off from Dun & Bradstreet Corp.

“To be able to announce the move of two first-rate companies like General Dynamics and R.H. Donnelly, in just one week, demonstrates North Carolina’s ability to compete in the global economy,” Gov. Easley said.

“I have had good conversations with their president, Linda Hudson, and I am confident that General Dynamics will be a good corporate citizen. I am pleased to welcome them to North Carolina. Attracting quality military industries is part of our economic development strategy. It is important that these corporations are able to interface with military personnel who will be using the systems that they build. This interaction is important in producing a quality product. North Carolina, the most military friendly state in the nation, is an ideal location.”
 
“We were very impressed with Governor Easley’s and (Commerce Department) Secretary Jim Fain’s strong support of General Dynamics’ efforts to bring new jobs to Mecklenburg County,” said Linda Hudson, president of General Dynamics Armament and Technical Products. “We received remarkable cooperation from North Carolina state and local officials. The central location on the eastern seaboard, access to a major airport, the affordable cost of living and competitive business incentives were major factors in the decision to move our company headquarters and light manufacturing to the Charlotte area.”

"This is exciting news for Charlotte. General Dynamics is a great company and will bring excellent jobs,” said Carroll Gray, president of the Charlotte Chamber of Commerce. “We want to thank Secretary Fain and his colleagues at the Department of Commerce for their hard work in making this project happen."

Fain said over 10 years the General Dynamics project would generate a cumulative gross state product increase of about $617 million, produce a cumulative net state fiscal impact of $9.7 million and contribute about $2 million to the state’s Industrial Development Fund for infrastructure improvements in rural North Carolina required of grant recipients who located in a Tier 5 urban county.

For each year in which General Dynamics meets the required performance targets, the state will provide a grant equal to 65 percent of the personal state withholding taxes derived from the creation of new jobs. If the company creates all of 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 $5.9 million over the life of the grant.

“The economic incentive grant from North Carolina’s JDIG program was pivotal to our decision to relocate to Raleigh-Durham.,” said R. H. Donnelly Chairman and CEO David C. Swanson.

R.H. Donnelley employs more than 1,400 people in 19 states. The company expects to move to North Carolina at the beginning of 2004 and be fully operational by April. They will initially employ 140 workers with estimated salaries for the positions averaging $63,000 and will add another 135 jobs by 2006. R.H. Donnelley became an independent public company in 1998 when it spun off from The Dun & Bradstreet Corporation.

“With our acquisition of Sprint Publishing and Advertising earlier this year, R.H. Donnelley became a significantly larger organization, and consolidating corporate functions is the logical next step in the evolution of the combined organization, as we build for our company’s future,” said Swanson. “We are very excited that the Raleigh-Durham area will be our new headquarters location.”

Using a methodology developed by Dr. Michael Walden of N.C. State University, the N.C. Department of Commerce estimates the R.H. Donnelley project will generate a cumulative gross state product increase of about $325 million and a cumulative net state fiscal impact of $6.4 million over the life of the grant, as well as 515 jobs from all sources when the company reaches anticipated employment targets. If the company creates all of 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 $4.3 million over the life of the grant. Because the grant will be awarded for a project in a Tier 5 urban county, a portion of the total grant amounting to as much as $1.4 million will be set aside in the state’s Industrial Development Fund for infrastructure improvements in rural North Carolina.

Tractor maker to locate headquarters in Wake County
Kioti Tractor, a division of Daedong-USA Inc., said it would locate its U.S. headquarters and an assembly/distribution center in the northern Wake County community of Wendell. The company will build a 180,000-square-foot facility near the intersection of U.S. 64 and the new U.S. 64 bypass to house the operation and plans to initially create about 75 jobs, with expected growth to 150 employees. The expected investment in the facility is $7.75 million.

"We are pleased with the cooperation we received from the local community and the State of North Carolina during our decision-making process," said Marion Wilkins, Kioti Tractor's director of business operations, who coordinated the site selection decision. "The support we received from the N.C. Department of Transportation for construction of the access road and from the Town of Wendell for the construction of the water line to serve the site were important to our decision to locate in Wendell. We also appreciate the support we received from Progress Energy, the State Department of Commerce, and the Wake County Economic Development Program during our site selection process."

Ken Atkins, executive director of Wake County Economic Development (WCED), a program of the Greater Raleigh Chamber of Commerce, says WCED is proud to have been a part of this effort. "This is a perfect example of the cooperation necessary to bring a location project to fruition," Atkins said. "The Chamber's Economic Development Program is but one partner in state and local efforts to enhance our community's economic environment and quality of life."

Regional economic summits scheduled
Businesses across North Carolina will have the opportunity this fall to learn how to better use their resources for more effective business-education partnerships. The N.C. Business Committee for Education and the Department of Public Instruction have planned regional economic summits in each of the seven economic development regions of the state.

Entitled “New Tools for Better Schools,” the summits will teach local business and government leaders how to use the N.C. Report Card, ABCs data, and No Child Left Behind information to identify strengths and weaknesses in their local school systems.  By learning how to use these tools, businesses can identify areas of need and make informed decisions on the best ways to become involved in the school system.

“The business community in North Carolina is overwhelmingly supportive of our public schools,” said NCCBI President Phil Kirk. “These seminars will give business leaders more information, and therefore more tools, to better understand how they can make the most impact in their school districts.”

Each seminar begins at 11:00am and will end by 1:30pm. Lunch will be provided. To register for the Regional Economic Summit: New Tools for Better Schools, call NCBCE at (919) 715-3535 or register on-line at www.ncpublicschools.org/summit/ . There is no cost to attend this event.

Sessions are scheduled for:

State Government

Broad region identified as failing to meet air quality standards
Responding to an EPA requirement, North Carolina has recommended that 11 counties and parts of 24 others be designated by the federal government as not meeting air pollution control standards for ozone. The EPA uses the designation of so-called non-attainment areas as a key step in the development of strategies for reducing ground-level ozone pollution, which is North Carolina’s most widespread air quality problem. The EPA is expected to make a final decision on the designations by April 15, 2004.

Non-attainment areas are regions that do not meet federal air quality standards for pollutants such as ozone or areas that significantly contribute to such air quality violations. The EPA sets non-attainment boundaries based on recommendations from the states, and the designations can have important implications for air pollution control and public health protection as well as for growth and development.

The key factor in North Carolina’s recommendations on non-attainment boundaries was air quality monitoring data from across the state. Monitoring by the state Division of Air Quality shows that ozone levels exceed the 8-hour ozone standard in parts of North Carolina during the warmer months. The DAQ evaluated data on air monitoring, motor vehicle use, population density, air quality modeling and other factors in helping to develop the recommendations.

The recommendations also took into account comments received at a series of public meetings around the state in May as well as input from staff in the departments of Commerce, Transportation, and Environment and Natural Resources.

Counties that were recommended for non-attainment in their entirety include: Alamance, Buncombe, Cumberland, Davidson, Durham, Forsyth, Gaston, Guilford, Mecklenburg, Orange and Wake. Partial county designations were recommended for: Alexander, Burke, Cabarrus, Caldwell, Caswell, Catawba, Chatham, Davie, Edgecombe, Franklin, Granville, Haywood, Iredell, Jackson, Johnston, Lincoln, McDowell, Person, Randolph, Rockingham, Rowan, Swain, Union and Yancey.

Non-attainment areas will be the focus of air quality plans for controlling ozone. These plans would include specific proposals for curbing ozone, such as measures to reduce emissions from cars, trucks, industries and power plants. The designations also give EPA the authority to review proposed highway projects and long-range transportation plans.

Pension funds post first gains in three years
North Carolina's pension fund investments gained 7.6 percent in value last fiscal year, a profit that was enough to wipe out three years of losses, State Treasurer Richard Moore said. The gain during the year ended June 30 compares with a 4.3 percent drop in 2002 and 2.4 percent decline in 2001. The state had predicted a 6.8 percent gain for its portfolio, which include seven retirement funds with assets totaling $55.7 billion. Moore attributed the result to his asset allocation strategy, which moved monies from large cap to mid and small cap growth stocks—a shift that helped to position the fund to take advantage of recent market up ticks. The fund topped its benchmark by nearly one full percentage point and has regained an estimated $6 billion since the market’s lowest point last year. Because North Carolina is ahead of most public retirement systems in the release of data, comparative data from other states will not be available until August or September. For the period ending in March, North Carolina was among the top 25 percent of all public funds for 1, 3 and 5 years. Stocks, which comprise 51 percent of the funds' portfolio, had a return of 0.5 percent this past year. Bonds, at 45 percent of the portfolio, recorded a 15.7 percent return. Real estate (2 percent return) and alternative investments such as hedge funds (5.8 percent loss) make up the remaining 4 percent of the portfolio.

State agencies launch initiative to expedite environmental permitting
Officials with the state departments of Transportation and Environment and Natural Resources have entered into an agreement with the U.S. Army Corps of Engineers to create a new multi-agency environmental initiative designed to enhance habitat, stream and water quality protection while reducing road construction delays. The Ecosystem Enhancement Program will reshape the way the state offsets or alleviates the unavoidable impacts of highway construction on streams and wetlands. The participating agencies have created and started implementing a transition plan to manage compensatory mitigation during the next two years. Beginning July 2005, the EEP will handle transportation mitigation efforts. State transportation and environmental officials joined representatives from the Corps of Engineers in calling the new mitigation approach a significant improvement over existing inefficient and ineffective approaches. “Instead of performing ‘foot-by-foot’ stream mitigation and acre-by-acre wetland mitigation as we have done in the past, we’ll be working with other agencies to develop comprehensive plans to improve water quality, habitat protection for entire river basins,” DENR Secretary Bill Ross said. “Our objective will be to produce larger scale and accelerated ecosystem enhancement programs.”

NCCBI News

Kirk praises Wayne County for advances
Wayne County was praised for its commitment to education, economic development, public service, and quality of life in remarks made by NCCBI President Phil Kirk on July 10 at Wilbur's in Goldsboro as he officially unveiled the 20-page community profile which appears in the July edition of the North Carolina magazine which NCCBI publishes.

"You have a lot going for you in Wayne County," Kirk said. "A great geographical location, near the ports, good interstate highways, proximity to Raleigh, and not far from the coast -- what more could you want?" Kirk said he had always been impressed with the "can do" attitude of the citizens of Wayne County.

He urged the audience not to take for granted the tremendous contributions that agribusiness, tourism, and the military provide in Wayne County. "We also look for areas to spotlight which put an emphasis on their history and their roots, and you have done that through the Aycock Birthplace, the old Waynesborough Historic Village, and Goldsboro's historic district.”

Joanna Thompson, president of the Wayne County Economic Development Commission, introduced Kirk. Others attending included Steve Wissink, sales and marketing director for the North Carolina magazine and Lawrence Bivins, who wrote the profile. Michelle Blackwell, marketing director for the Wayne County EDC, was in charge of the arrangements.

Members urged to participate in Big Sweep
NCCBI’s Environmental Concerns Committee is joining with North Carolina Big Sweep to help keep our state’s waterways clean. Volunteers are needed. Big Sweep is the North Carolina component of the International Coastal Cleanup program. Last year more than 15,000 volunteers retrieved almost 300 tons of trash. Since its beginning in 1987, almost 200,000 NC volunteers have retrieved more than 3,000 tons of trash as a part of Big Sweep.

Saturday, Sept. 20, has been designated this year as the day for volunteers all across North Carolina to come together to help make our watersheds litter-free. County coordinators have been designated in all 100 counties and corporate sponsors have already signed on to co-sponsor the event. There are additional opportunities for individuals and companies to contribute financially to this important effort. (See list of sponsors at the end of this article).

NCCBI Environmental Concerns Committee Chair Ed Scott, is encouraging NCCBI members to get involved.  “This is a great opportunity for NCCBI members to volunteer,” Scott said. “Litter in our waterways can entangle boat motors, hurt animals and tarnish nature’s beauty. It can hurt our economy, especially our tourism industry. It’s great to see the number of NCCBI members who are helping to sponsor this effort. In addition to financial assistance, as responsible business leaders interested in our state’s environment, this is our opportunity to get involved in hands-on clean-up activity and demonstrate our commitment to improving the environment.”   

To volunteer, just go on-line to the Big Sweep website (www.ncbigsweep.org). The county coordinator for your county is listed under “Getting Involved”. Call your county coordinator and get information about the time and place for the clean-up in your area or call the Big Sweep Hotline at 1-800-277-9337.

2003 North Carolina Big Sweep sponsors include: GlaxoSmithKline; The Ocean Conservancy; National Oceanic and Atmospheric Administration; NCDENR, Division of Coastal Management; N.C. Soft Drink Association; the Slick Family Foundation; StarBucks Coffee; Alcoa; Cargill; Fidelity Bank; N.C. Beer & Wine Wholesalers Association; NCCBI; Phillip Morris, USA; Miller Brewing Co.; R. J. Reynolds Tobacco Co.; Duke Energy; First Citizens Bank; Progress Energy; Mt. Olive Pickle Co.; Yadkin, Inc.; Glen Raven Mills; International Paper; Grady-White; NAPCOR; PCS Phosphate; Boys & Girls Club; Mallinckrodt; N.C. Power; Wal-Mart, the Lankmark Project; WGHP, FOX 8; WITN-TV 7; WLOS-TV 13; and WRAL-TV 5. 


Bevacqua speaks to education leaders
Leslie Bevacqua, NCCBI vice president of governmental affairs was the featured speaker at the Higher Education Association of the Rockies (HEAR) annual conference held in Winter Park, Colorado. The focus for the July conference was on engaging public support for higher education.  Bevacqua told the group of the success North Carolina had with passage of the university and community college bond issue and the close working relationship that the business community in North Carolina has with the education community at every level. She encouraged the education leaders to build alliances with the business community and to become more engaged in working with their natural allies to promote higher education.     

Kirk speaks to Cary chamber retreat
NCCBI President Phil Kirk told the participants in the Cary Chamber of Commerce planning retreat at Grandover in Greensboro on July 17 that the economy is beginning to improve. “Our unemployment rate has been higher than the national average for nearly three years,” Kirk said. “We have lost more manufacturing jobs than any other state except one.”

Kirk pointed out that agribusiness, tourism, and the military bases pumped $56 billion, $12 billion, and $7 billion respectively into the North Carolina economy last year. He said the state needs to address the tax structure and economic development incentives because “both are making us non-competitive especially with our neighbors.”

Steve Zaytoun, NCCBI’s treasurer, introduced Kirk. NCCBI board member Howard Johnson, president of the Cary Chamber, presided. On July 15, Kirk spoke to the government affairs committee at the Durham Chamber of Commerce. He discussed the budget that the legislature adopted and commended the members for enacting the budget just before the start of the new fiscal year.

He told the committee that there are not enough votes in the House to pass either a limit on the length of legislative sessions or the appointment of the State Superintendent of Public Instruction. He predicted that a proposal to allow the public to vote on the lottery would not pass, but that an amendment to allow local option project development financing would.

Names in the News

Kirk elected to U.S. Chamber panel
NCCBI President Phil Kirk has been named to the U.S. Chamber of Commerce committee by the committee chairman, Jim Kollaer, who is president and CEO of the Greater Houston Partnership. The group is composed of 14 CEOs of state chambers and about 60 heads of large local chambers. Other members of the group from North Carolina are Carroll Gray of the Charlotte Chamber, David Jameson of the Greensboro Chamber and Harvey Schmidt of the Raleigh Chamber. The committee meets twice a year, usually in January and July to discuss national issues of interest to local and state chambers of commerce. In addition, Susanne Sartelle, president of the Greenville-Pitt County Chamber of Commerce, attended the Chamber Executive’s Leadership Forum, which followed the Chamber committee session. Sartelle is a member of the NCCBI Board of Directors.

 Ferrell Blount of Pitt County is the lone remaining candidate as the new chairman of the N.C. Republican Party. Blount’s only opponent, freshman state Rep. David Lewis of Hartnett County, said he was withdrawing his name from consideration and endorsed his Blount.

 Richard "Stick" Williams of Charlotte, Duke Energy Co.’s vice president of diversity, ethics and compliance, was elected chairman of UNC-Chapel Hill’s Board of Trustees, becoming the first African-American to lead the university's governing board. Williams, a 1975 graduate of the university, joined the UNC-CH board in 1999. He was elected to a one-year term, along with Vice Chairman Nelson Schwab III of Charlotte, managing director of Carousel Capital, and Secretary Jean Almand Kitchin of Scotland Neck, president and CEO of Almand's Drug Stores in Rocky Mount.

Federal Issues

National Broadband Policy: The U.S. Chamber of Commerce and other leading trade associations in the energy, banking, health care, transportation, education, travel and tourism and other sectors are communicating with members of Congress to highlight the benefits of adopting a national broadband policy. Broadband technologies are helping to boost efficiency and productivity and improve communication between all segments of the U.S. economy. Private investment in high-speed networks will generate high-paying jobs, provide new growth and productivity in all sectors of the nation's economy.

Medicare Bill Conferees Meet: The House-Senate conference committee to resolve differences between Medicare reform and prescription drug bills (S-1 and HR-1) met for the first time and selected House Ways and Means Committee Chairman Bill Thomas (R-California) as chairman. However, with the Congressional Research Service still preparing official conference documents, no real work on issues can begin. Chairman Thomas suggested that the 17 conferees break up into working groups "to proceed on different issues simultaneously" but his call was met by a lack of enthusiasm. In a related development, a bipartisan group of House Members who were promised a floor vote (probably next week) on provisions to make it easier to "reimport" US drugs from Canada and other nations where price controls make them cheaper, attacked what they called 'scare tactics" being used by the drug industry against their legislation. The US Chamber is strongly urging the conferees to come up with the best possible Medicare reform and drug bill that can pass Congress this year.

Medicare - Drug Imports Legislation Latest: AARP which has 35.5 million members, sent an 8-page letter to Congress detailing its objections to Medicare reform and prescription drug legislation (S-1 & HR-1) now before a House-Senate conference committee to resolve differences. The letter said a central concern was a drug benefit that would require substantially higher payments by seniors. AARP is also demanding that the final bill guarantee that the government will provide a drug benefit if no private insurer steps in. The group also wants Congress to address concerns that employers will drop their drug coverage for their retired workers if Congress approves this new benefit. AARP opposes the House-passed bill (HR-1). But, an influential group of House conservatives are demanding that the conference stick with the House bill's creation of a "premium support system" whereby traditional fee-for-service Medicare would be forced to compete with private managed care plans after 2010. Senator John Breaux (D-Louisiana) said yesterday that Congressional negotiators will try to address AARP's concerns so that the huge seniors group does not oppose the final bill.

U.S.-Chile and U.S.-Singapore Free Trade Agreements: Legislation (S-1416, S-1417, HR-2738 and HR-2739) implementing the U.S.-Chile and U.S.-Singapore free trade agreements was approved by the House Ways and Means Committee and the Senate Finance and Judiciary Committees, although some Senators on the latter committee expressed serious concerns about immigration provisions allowing routine visa renewals for temporary professional and business visitors from both nations while millions of US workers remain unemployed. The U.S. Chamber strongly supports these agreements and implementing bills. The chamber is working hard to build support for passage in both houses of Congress this month. The identical Senate versions of this legislation are S-1416 & S-1417. The House Ways and Means, Senate Finance and Senate Judiciary Committees are expected to approve their appropriate versions. Both houses of Congress will hopefully be able to approve these bills by the end of July. The Chamber is working hard to make this happen.

TEA-21 Reauthorization Delayed In Senate Committee: Senate Environment and Public Works Committee Chairman James Inhofe (R-Oklahoma) announced that he has been forced to again postpone a committee markup of legislation reauthorizing the TEA-21 transportation funding law until after the August recess (Aug. 4-Sept. 1). Chairman Inhofe said he now hopes to complete committee action and floor debate within the first few weeks of September. The committee is reportedly still deadlocked over policy reforms and how to pay for the reauthorization. The House Transportation Committee will not mark up its version until after the August recess. The scheduled House recess (July 28-Sept. 1) is one week longer than the scheduled Senate recess. The TEA-21 law expires on Sept. 30. The U.S. Chamber and the Americans for Transportation Mobility (ATM) coalition led by the chamber are working hard building support in Congress and the nation for the largest possible funding levels in reauthorization legislation to improve the nation's transportation infrastructure, one of our top priorities.       

House GOP Task Forces: House Speaker Dennis Hastert (R-Illinois) has appointed GOP task forces to work on technology issues and the growing natural gas crisis. Heading the technology task force will be Rep. Bob Goodlatte (R-Virginia). Heading the natural gas task force are House Energy Committee Chairman Billy Tauzin (R-Louisiana) and House Resources Committee Chairman Richard Pombo (R-CAL). The U.S. Chamber will be working with both task forces.

END OF NEWSLETTER