Highlights
of the 2001 Legislative Session
NCCBI
scored a few successes despite several obstacles
NCCBI
fared well this legislative session as the sluggish economy
took its toll on businesses across North Carolina. NCCBI staff
worked to ensure that the state budget was not balanced on the
backs of the state’s business community that already was
struggling to keep North Carolina’s economic engine running.
A litany of so-called “loopholes” was presented near the
beginning of this session. But NCCBI lobbied hard to
demonstrate that these were economic tools that help keep our
businesses and industries strong and operational. Only three
of the tax policy issues – royalty income, limited liability
corporations and subsidiary dividends –ultimately were
impacted by legislation.
In a courageous move, the
NCCBI Executive Committee supported a sales tax increase to
raise revenue to help cover the state budget shortfall. This
step helped to preserve the state’s Triple A bond rating.
With all customers in the state bearing a part of the economic
burden, attention was shifted from measures aimed specifically
at businesses. Near the end of session, the William S. Lee Act
was expanded and the sunset on tax credits for businesses
using North Carolina ports was extended. The governor’s
industrial recruitment fund was also boosted to $15 million.
The General
Assembly also heeded NCCBI’s call for a study to discover
additional ways of improving government efficiency. A special
provision in the state’s two-year budget states that the
Appropriations Committees of the Senate and House may convene
at least once a month during the interim period between the
end of the long session and the beginning of next year’s
short session to study the structure, duties and functions of
the various agencies and programs of state government. NCCBI
is also working with the governor on this issue. The governor
has indicated his plans to put an efficiency study in place by
early next year.
Following are
NCCBI’s key policy areas and recaps of some of the
legislation relating to those issues adopted during the long
session:
Education
 Sixty percent of
the $14 billion state budget is dedicated to public education,
including enrollment funds and financial aid at universities
and community colleges; and ABC bonuses and enhanced
accountability in schools.
The General
Assembly passed a bill supported by NCCBI that eliminates a
requirement that a person must hold a college degree in
education and have classroom experience to be considered for a
job as superintendent in a local school system. S. 378 directs
the State Board of Education to establish minimum credentials,
education pre-requisites and relevant experience for local
superintendents. But that minimum qualification cannot include
an education degree or certification.
Legislation was adopted allowing public-private partnerships
between community colleges and businesses in order to
establish business incubators, product testing and other
economic development efforts.
A bill passed
providing greater flexibility by creating two additional
options in how public construction projects are bid – single
prime and construction manager at risk. It does not eliminate
separate multi-prime contracting. The new options will give
public owners the ability to use the contracting method best
suited for each individual project. The legislation also
provides a greater opportunity for small businesses and
historically underutilized businesses to participate in the
public construction arena.
Community
colleges received $6.9 million for salary increases for
faculty and professional staff in addition to the general $625
salary increase per employee that all state employees are
receiving.
Legislators
approved tuition increases at UNC campuses and the community
college system.
Environment
Few significant
(and potentially costly) bills were enacted in the area of
environmental regulations.
Legislation
passed expanding emissions inspections in order to retain
federal highway funds and attempts to improve air quality. The
cost for inspection fees was also increased.
Two bills
supported by NCCBI were kept alive for the 2002 short session.
H. 1009 Consistent Risk-Based Remedial Actions, expands and
makes consistent the circumstances under which the Department
of Environment and Natural Resources shall allow for
risk-based remedial actions. S. 1037 No Air Permit Required
Until Facility Operational, provides that any business may
begin construction of a facility before obtaining an air
quality permit as long as the prospective applicant submits a
notice of the construction to the state. This bill is aimed at
expediting construction projects.
Health
Care
Achieving one of
the major planks of his election campaign, Gov. Mike Easley
signed into law the Managed Care Patients’ Bill of Rights.
NCCBI lobbied hard against the HMO liability piece, which
allows patients to sue their HMOs and ultimately stayed in the
bill. Other changes were made to the bill to make it more
palatable for the business community.
H. 1048
Moratorium on Government Health Insurance Mandates, creates a
study of how state government mandates cause increases in
health insurance premiums. The House bill originally would
have initiated the moratorium on Jan. 1, 2002, but it accepted
a Senate amendment delaying the completion of the study and
the beginning of the moratorium until July 1, 2003. NCCBI has
a position to oppose in principle any efforts to mandate or
require employers to provide specific benefit coverage under
group health care plans. Employers are encouraged to offer
health care benefits consistent with their ability to afford
them.
Transportation
The General
Assembly approved a special provision in the budget bill that
allows the N.C. Department of Transportation to use a portion
of its cash balances to meet some of the state’s most
critical transportation needs, including highway maintenance.
This landmark action is the most significant legislation
passed since the 1989 Highway Trust Fund. The funds will
enable the DOT to invest about $420 million for pavement
preservation statewide during the next three years. The
special provision will also provide $45 million to install
high-end technologies such as closed loop traffic signal
systems, vehicle detection systems and incident management
systems.
The state budget
added additional funds for road maintenance, rural highway
construction, the rail program and public transportation. By
protecting the state’s Triple A bond rating, interest rates
were kept lower on bonds used to build roads.
Economic
Development
S. 748 expands
the William S. Lee Act and increases incentives to recruit and
retain quality business and industry into North Carolina. The
bill extends credits to companies that make substantial
investments in Tier 1 and 2 counties and expands the act to
include customer service centers and electronic mail order
houses located in enterprise Tier 3 counties. The bill also
creates additional exceptions that allow longer carry
forwards, including any unused portion of a credit with
respect to research and development activities. The expansion
of the bill also includes lower rates for industries that use
large amounts of electricity in their manufacturing processes.
An amendment was added to study the electricity piece of the
bill and to report findings to the legislature next year.
H. 1388 Remove
Sunset on the State Ports Tax Credit was passed to extend the
sunset to Jan. 1, 2003. The State Ports Tax Credit, in place
since 1992 and expired Feb. 28 of this year, provides
incentives to new and existing businesses to increase use of
the N.C. State Ports Authority. An economic impact model
clearly shows the huge benefits of this tax credit to not only
the ports authority but to the entire state.
The state budget
gives $15 million to Gov. Easley in industrial recruitment
funds to be used to “close the deal” with relocating or
expanding businesses.
NCCBI opposed H.
1231 Amend Apportionment Formula, which would eliminate the
double-weighted sales factor. There is no need to change the
current law because it is in line with other states and the
elimination of this provision would place North Carolina at a
competitive disadvantage. The provision is advantageous to
companies that expand their facilities and increase their
number of employees in North Carolina. The bill was
re-referred to House Rules after being reported favorably out
of House Finance.
Legal Issues and Workplace Policies
Session limits
offers voters an opportunity to approve an amendment to the
state constitution so that long sessions (in odd numbered
years) are limited to 135 calendar days and short sessions (in
even-numbered years) are 60 calendar days. Another amendment
would increase legislators’ terms from two years to four
years. Session limits legislation has passed the Senate five
times previously only to die in the House. The most recent
Senate-passed bill is eligible for consideration when the
legislature reconvenes in May. This will be NCCBI’s top
legislative priority during the 2002 short session.
Tax
and Fiscal Policy
NCCBI supported
a sales tax increase to raise revenue to help fill the state
budget shortfall. Reasons for supporting a tax increase were
to help preserve the state’s prized Triple A bond rating and
to prevent cuts to education, transportation and other
economic tools that draw business and industry to the state.
NCCBI was also concerned that tax increases in other areas
would hurt business and industry in the state and believes
that a sales tax hurts everyone a little bit instead of
singling out any particular segment of the population. As part
of the final budget/tax package, a 1/2-cent sales tax was
approved.
S144 puts North
Carolina businesses on a level playing field with out-of-state
competitors by streamlining the collection of state sales
taxes by authorizing the secretary of the Department of
Revenue to enter into agreements with other states to try to
collect the sales taxes from purchases made online. The
measure, which is supported by NCCBI and many other groups,
attempts to streamline the state’s sales tax code to make it
easily enforceable through the use of computer software that
would be made available to online merchants in other states.
The collection mechanism could bring in $450 million in new
revenue. Without this legislation, the state’s sales tax
collections could decline.
Other
Legislative Highlights
Here’s
a bullet list of other major items that moved through the
legislature this session. If applicable, each item is followed
by the number of the bill referenced:
Education
Alternative
learning pilot: Students suspended from school for fewer than
10 days will enter alternative learning programs to improve
school climate and provide troubled students with the
education and supervision they need. (S. 71)
Partnerships
between community colleges and businesses to establish
business incubators, product testing and other
economic-development efforts are now allowed. (S. 531)
Character
education is now required in every school system, and schools
will be allowed to display the Ten Commandments (H. 195)
Schools must
eliminate unnecessary, duplicative paperwork. (S. 708)
Test scores
cannot be the sole criterion for deciding whether to hold a
child back; parents must be involved in the discussion. (S.
1005)
Local school
boards must develop policies addressing sexual harassment of
employees, including the consequences and reporting of
incidents (H. 1149)
Financial aid
policies for community college students must make sure
financial assistance will reach students with the greatest
need, including students enrolled in training programs for
high-demand jobs (H. 431)
It’s now a
crime for public school employees or job applicants to provide
false information on employment applications (S. 778)
Gov. Easley’s “More at Four” pre-kindergarten program
for at-risk 4-year-olds received initial funding.
Health Care
The
new Patients’ Bill of Rights will make managed-care
companies more responsive to consumers and more responsible
for their decisions. Among the reforms: Children will gain
direct access to pediatricians, while those with serious
illnesses will be able to see specialists directly. Patients
will be able to obtain necessary medications, even if they are
not normally covered by their health plan. Families will have
better information about coverage options and care providers.
Managed-care providers can no longer give doctors financial
incentives to limit treatment. External reviews of coverage
decisions will help hold managed-care providers accountable
for their actions. A new Patients Assistance Program will help
North Carolinians understand their new rights as consumers.
(S199)
People applying for jobs as nurses must undergo criminal
record checks. (S. 195)
u Health insurance must cover colorectal cancer screening, in
accordance with American Cancer Society guidelines (S. 132)
Insurance companies must use uniform credentials for care
providers, in order to make sure applicants meet set standards
(H. 1160)
Group homes for developmentally disabled adults must meet
specific standards, including smoke detectors and other
building-code requirements (H. 387).
Emergency Medical Services personnel must be credentialed by
the Department of Health and Human Services. (H. 453)
Improved organization and administration of mental health
services – including community-based treatment and locally
based management, better training, stronger accountability,
and patient advocacy. (H. 381)
A special trust fund will help the state begin to meet its
most urgent needs in mental health, developmental disabilities
and substance abuse services. (S. 1005)
To help control health-care costs, until 2005 health benefit
plans cannot mandate additional coverage unless it’s a
cost-efficient expansion of coverage. Between now and then, a
state study commission will examine cost-benefit issues
regarding health coverage and make recommendations to the
legislature. (H. 1048)
An online health-care registry will allow North Carolinians to
file power-of-attorney documents, care instructions, Do Not
Resuscitate orders and organ donation declarations via the
Internet. (H. 1362)
The
N.C. Medical Board may require any person treating a patient
over the Internet or the telephone to obtain a state license.
(S. 118)
Protecting Privacy
Insurance companies cannot sell personal information about
customers for profit without permission; medical records must
stay confidential unless patients allow it to be shared. (S.
461)
The State Privacy Act will stop government agencies from
forcing people into disclosing their Social Security numbers.
Now, if you don’t want to give your number to the
government, you don’t have to. (H. 998)
Consumer Protections
Customers
who take their cars in for repairs have the right to inspect
the parts removed from their vehicles and ask for a written
estimate of repair costs. (H. 1067)
Auto insurance providers cannot recommend that customers have
their cars repaired by particular businesses unless those
customers are notified of all their options. (H. 13)
Mortgage bankers, brokers and loan officers must meet tougher
standards for experience, ethics and training before they can
be licensed in North Carolina. Standards include a code of
conduct, a ban on loans with prepayment penalties on loans
under $150,000, and at least three years of experience in
residential lending. Brokers who violate the law could lose
their license and face legal action from consumers. (S. 904)
Lenders cannot secure a loan by giving a consumer an
unsolicited check that, upon cashing, requires the consumer to
repay the amount of the check plus interest – unless the
check is clearly marked as a loan solicitation and informs the
customer of the terms of the loan and the repayment
obligations. (S. 723)
Environment
$40 million for the Clean Water Management Trust Fund, the
state’s only dedicated source of funding used to improve
water quality and preserve sensitive lands. (S. 1005)
The state’s auto emissions and vehicle inspection program
was expanded into more counties and the fees were raises. (H.
969)
Farmland preservation trust fund to protect open space. (S.
1005)
The moratorium on construction and expansion of swine lagoons
was extended. (H. 1312).
Economy/Infrastructure
Funds were increased for road maintenance and rural highway
construction. (S.1005)
Additional funds for rail programs and public transportation
were approved. (S. 1005)
Water and sewer bond funds were turned into grants for rural
communities, which make up 40 percent of total water/sewer
needs. (S. 247)
Employers who stop paying for health insurance without
notifying workers could face felony charges. Self-insured
companies must notify employees of the risks associated with
such insurance plans. (S. 241)
Streamlined and improved job-training programs to make sure
that workers can learn the skills they need to get new jobs or
keep the ones they have. (S. 1005)
Put N.C. businesses on a level playing field with out-of-state
competitors by streamlining the collection of taxes on
out-of-state transactions. (S. 144)
The governor was given $15 million in industrial recruitment
funds to recruit new employers to N.C., which has suffered the
nation’s highest job losses. (S. 1005)
Expand business opportunities by directing the Department of
Commerce to encourage businesses to seek federal contracts
with the Department of Defense and to collaborate with other
government and nonprofit entities to promote and market the
Department of Defense as an industry in this state. (S. 85)
Justice/Public Safety
A ban on imposing the death penalty on mentally retarded
inmates was adopted (S. 173), and judges and attorneys in
capital punishment cases are now required to have certain
training and experience (S.109).
The new Innocence Protection Act allows defendants to use DNA
samples and evidence before a trial to help ensure that
innocent people are not wrongly punished. (H. 884)
Infant Homicide Prevention Act saves unwanted babies from
being left to die. Parents who take unwanted newborns to
hospitals and other authorized locations will not face
criminal punishment. (H. 275)
Bike helmets are now required for kids 16 and under riding on
state roads. (H. 63)
Testimonial privilege in domestic abuse or sexual assault
cases: Victims’ conversations with counselors, rape crisis
centers, etc. are kept confidential in court. (H. 643)
Tougher penalties for drug sales and drug use in or near
public parks (H. 1174) and child care centers. (S. 571)
A person wrongly charged with a crime perpetrated by someone
else using ID fraud may have his or her record expunged. (S.
262)
Protect the state from foot & mouth disease by broadening
the authority of the State Veterinarian if North Carolina is
threatened by an outbreak. (S. 779)
Clarify how drivers should pass parked and standing emergency
vehicles, and require rental car companies to provide renters
with written notice of the law forbidding motorists from
passing a stopped school bus. (H. 774)
Drivers who leave a gas station pump without paying will face
criminal penalties and may have their license revoked after
the second offense within seven years. (S. 278)
It is now a crime to harm a law enforcement animal or an
assistance animal, to harass such animals in a way that
obstructs their duties. (S. 646)
The stalking laws were strengthened to include harassment and
fear for safety of the victim’s immediate family or close
personal associates. (S 346)
Protection from terrorist attacks. Stiff criminal penalties
were adopted for making or delivering biological, nuclear or
chemical weapons. Those who manufacture, possess, store, sell
or transport weapons of mass destruction would could serve 20
years to life in prison. Using the U.S. Postal Service to
deliver such weapons is punishable by 20 years to life. Those
who injure someone with poison gas, radioactive material or a
biological agent could serve life in prison without parole.
Murdering someone with such weapons could result in the death
penalty or life in prison without parole.
People who stage a hoax or make false reports about attacks of
this type would be charged with a felony and could serve from
five to 15 years. (H. 1468)
Require research laboratories to keep an inventory of
potentially dangerous biological agents, such as anthrax, and
report those agents to the state to be included on a new
registry. (H. 1472)
Good Government/Election Reform
District court elections were made nonpartisan. (S. 119)
Tougher penalties were adopted for violating campaign finance
laws. (S. 1002)
Requirements for labeling campaign ads in newspapers, radio
ads and commercial billboards have been clarified. (H. 57)
Require ballot instructions in English and Spanish in counties
with large growth in Hispanic population. (H. 1041)
State employees cannot be involved in or influence a contract
on behalf of a public agency, or solicit and receive gifts in
exchange for a commitment to influence the contract, if the
contract personally benefits the employee or the employee’s
spouse. (H. 115)
Require state reports to be double-sided to save money and
paper. (S. 264)
Taxes
Eliminate corporate tax breaks regarding royalty income,
limited liability corporations and subsidiary dividends. (H.
1157)
Give the Department of Revenue new tools to collect delinquent
taxes, including a 20 percent collection fee charged to those
in tax debt. (S. 353)
New Bill Lee Act tax incentives for businesses to encourage
them to locate or expand in North Carolina’s economically
distressed communities. (S. 748)
Penalties are waived for late tax returns, reports or payments
in areas of the state that have been affected by a
presidentially declared disaster. (H. 150)
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