NCGA Week in Review – March 25 – March 29

April 2, 2013

Pardon Our Dust

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Senate Votes to Throw Out Dorothea Dix Lease

The Senate passed Senate Bill 334 on Tuesday, throwing out a lease that would have allowed the city of Raleigh to build a large park on the old Dorothea Dix mental hospital campus. Raleigh Mayor Nancy McFarland signed the deal with former Governor Beverly Perdue last December, leasing the property to the city for 99 years. Under the terms of the deal, Raleigh would pay $500,000 a year, plus annual escalators. The city planned to turn the 325 acre site into a major urban park. SB 334 calls for the lease to be renegotiated at a fair-market price, with proceeds designated for mental health programs. Numerous business leaders and members of the public had their opinions heard on the issue at a public hearing on Monday afternoon. Members of the Dix Visionaries, a group of park boosters, and people from several other organizations spoke at the event. Supporters of the legislation argued that the lease did not provide the state with a fair return and that it would cost taxpayers money because the state Department of Health and Human Services offices on the Dix property would have to be moved. Those against the legislation argued that voiding the contract would reflect poorly on the state and make businesses wary of dealing with the state.
House Agrees to Help Panthers with Stadium Upgrades
The House passed legislation on Wednesday that would allow the city of Charlotte to use its share of certain revenues appropriated for paying for the Charlotte Convention Center to help with renovations to Bank of America Stadium. Charlotte officials called for a tax increase on prepared food and beverages, but that provision was not included in this bill. HB 193 generates $34 million less than the amount the Panthers asked Charlotte to give them. The Panthers hope to begin stadium renovations of up to $300 million after the 2013-2014 season. Many of the bill’s supporters approve of the bill because it includes no new taxes on any level, and only gives the city more options for spending its funds. Many against the bill argue that it bails out a business that earns tens of millions in profit each year. The bill now heads to the Senate, and has been referred to the Committee on State and Local Government, with a serial referral to finance.
Tax Reform Bill Reaches Senate Committee
The Senate Finance Committee debated SB 363 for over an hour on Wednesday. SB 363 would repeal the existing corporate franchise tax and replace it with a broader tax on businesses. This bill is expected to be the first of several tax reform efforts undertaken this session. Many municipalities are against the bill, claiming that it could lead to a loss of $75 million in annual revenue after the local privilege tax is eliminated. The bill would also create a new tax on limited liability companies. Many small businesses are concerned that this new tax will hurt them, but Senate leaders claimed that other measures, such as lowering income taxes on businesses, will mitigate these concerns. Supporters of the bill claim that the legislation creates a more simple tax structure. Currently, the franchise tax can be applied through three separate means, while the new bill would tie the franchise tax to a business’s adjusted net worth. Some of the bill’s dissenters questioned how larger tax reform would balance out what appeared to be an unbalanced result under a single bill.
Program Evaluation Division Provides Options for Medicaid Reform
The General Assembly’s Program Evaluation Division released a report this week outlining options for major changes to the Medicaid program’s organizational structure. One of the proposals includes creating a standalone Medicaid department in the state government. Currently there is not sufficient interest from lawmakers in making a change of that magnitude. Other proposed options include creating a Medicaid program authority. The Medicaid program is currently a under the state Department of Health and Human Services. Many lawmakers believe that it is the wrong time to make such drastic changes, as the new administration is working with DHHS to overhaul and improve the Medicaid system. The Medicaid budget is second only to the overall budget for primary and secondary education. In the 2011-2012 fiscal year, the Medicaid program cost $14.8 billion, approximately 37 percent of the general fund appropriations.
State Treasurer’s Office Warns Legislature about Charlotte Airport Authority
Deputy Treasure T. Vance Holloway warned lawmakers of potential issues with creating the Charlotte Regional Airport Authority. Senate Bill 81 would take control of Charlotte Douglas International Airport from the city of Charlotte and create a regional authority with members from Charlotte, the surrounding area, and appointees. Holloway warned legislators that the bill could lead to litigation and increase the state’s cost of borrowing by hurting its bond rating. Legislative leaders claimed that they knew of these possible problems and intend to continue with the initiative.
House Education Committee Approves Board of Education Nominees
The House Education Committee approved Governor McCrory’s nominees for the state Board of Education. The nominees include former congressman and state GOP chairman Bill Cobey along with Gregory Alcorn, A.L. Collins, Olivia Oxendine, Marcella Ramirez Savage and Rebecca Taylor. The nominees will have to be confirmed by a joint session of the legislature before their six year terms would begin.

Please contact the Raleigh McGuireWoods Consulting team if you have any questions or comments:

Harry Kaplan, Senior Vice-President
Jeff Barnhart, Senior Vice-President
Franklin Freeman, Senior Vice-President
John Merritt, Senior Vice-President
Johnny Tillett, Senior Vice-President
Rita Harris, Vice-President
Bo Heath, Vice-President
Kerri Burke, Assistant Vice-President
Sarah Wolfe, Research Assistant
Katy Feinberg, Strategic Communications