Pardon Our Dust
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With snow blanketing most of the state this week, the North Carolina legislature found their selves cancelling a majority of their meetings for the week. Before going home for the week, however, the North Carolina Senate debated several bills on the floor and House leaders filed an economic development bill.
SNOWY WEEK AT THE CAPITAL
Snow in the Triangle region on Tuesday and Thursday had its way with the General Assembly. What was set to be a jam-packed week of legislative business, ended up in committee cancellations and shortened floor time for legislators. On Tuesday afternoon, the House announced that they would be suspending business until next Tuesday, March 3. For its part, the Senate conducted committee work despite the snow on Tuesday and Wednesday, but adjourned Wednesday afternoon until next week.
ECONOMIC INCENTIVES LEGISLATION
Republican state House leaders filed an economic development bill on Tuesday that would significantly expand the money available for Governor Pat McCrory (R-NC) to offer jobs incentives. House Bill 117 – NC Competes Act, would raise the cap on the Job Development Investment Grant (JDIG) program, which McCrory has said is nearly out of money. The cap would double from $22.5 million for the current two-year period to $45 million. McCrory has said the bill needs to be passed within “weeks, not months.” House Bill 117 also extends the jet fuel tax cap, doubles the state’s job-growth grant program and works to accelerate site development — but the bill doesn’t touch crowdfunding, historic preservation tax credits or film grants, tools that some lawmakers argue are important to the state’s growth.
North Carolina Competes is not the only proposed incentives package in the pipeline. House Democrats filed a bill earlier this month to reinstate the state’s film tax credit, historic preservation credit and earned income tax credit, as well as extend the jet fuel tax cap. It would also, among numerous other measures, establish a new markets tax credit and a “job catalyst fund” — the business-hooking concept that didn’t find enough support in 2014 session. House Bill 89 – Omnibus Economic Development Improvements, currently awaits attention from the chamber’s committee on Commerce and Job Development.
CORPORATE TAXES
The state isn’t likely to meet tax revenue collection thresholds that would trigger further reductions in the state’s corporate income tax rate in the coming years, Cindy Avrette of the General Assembly Research Division told the House Finance committee earlier this week. In the tax reform legislation passed in 2013, lawmakers reduced the rate from 6.9 percent to 6 percent in 2014, then from 6 percent to 5 percent for 2015. Also, the bill allowed for further reductions of 1 percent in 2016 and again in 2017, if General Fund tax revenues meet certain thresholds. “We don’t anticipate that either of those triggers will be met at this time,” Avrette said.
For the corporate tax rate to decline in 2016, General Fund tax revenue — not total revenue — for the current fiscal year would have to exceed $20.2 billion, but projections show the state will bring in $19 billion-plus, according to Avrette. For the rate to go down by 1 percent in 2017, tax collections would have to exceed almost $21billion for the 2015-16 fiscal year, but projections show the state bringing in about $20.4 billion. Without any additional General Assembly action, the corporate income tax rate is likely to remain at 5 percent, Avrette added.
LOTTERY BILL
Three House members on Tuesday morning filed an “honest lottery” bill, House Bill 109 – Lottery Act Clarified, for the second straight year, emphasizing truth in advertising, after last year’s unsuccessful attempt. Rep. Paul “Skip” Stam, a Republican from Apex who opposes legalized gambling, worked with state lottery officials to tighten language in the law. It is similar to, but not as expansive as the legislation he filed last year that failed to pass the Senate. The bill would make minor changes, such as calling it “gambling” instead of “gaming,” and would have more substantial consequences: requiring more detailed disclosure of odds and prizes in advertising. Some of the proposed changes are already in effect, such as prohibiting high school sports events from being advertisers or sponsors, and disclosing odds and prizes. Under the bill, only scratch-off and drawings would be permitted.
Sponsoring HB 109 along with Rep. Stam are Rep. Rick Glazier, a Democrat from Fayetteville, and Rep. Jon Hardister, a Republican from Greensboro.
GAY MARRIAGE
The State Senate voted 32-16 on Wednesday to exempt North Carolina magistrates from performing wedding duties, highlighting the bitter divide that remains in the Legislature four months after the state’s first same-sex weddings. The tension played out in a heated debate Wednesday on the Senate floor that stretched for nearly two hours. Two Republicans crossed party lines to vote against Senate Bill 2 – Magistrates Recusal for Civil Ceremonies, Sens. Jeff Tarte (R-Mecklenburg) and John Alexander (R-Wake).
Two Democrats also crossed party lines to vote for the measure, Sens. Ben Clark (D-Hoke) and Joel Ford (D-Mecklenburg), both in their second terms. Clark spoke on the floor after the vote to explain his position, calling the bill a “fair and reasonable compromise.” “I have experienced discrimination over the course of my life,” said Clark, who is black. “I know discrimination when I see it. This is not discrimination.”
Supporters of the bill say the legislation doesn’t allow discrimination because employees seeking the exemption can’t perform any wedding duties for at least six months. In an interview on Tuesday, Senate Leader Phil Berger (R-Guilford) said magistrates will have to decide once the bill is passed whether they’ll perform marriages. If they decide not to recuse themselves within a certain time frame, the Eden Republican said, magistrates would have to perform ceremonies for couples with licenses.
Please contact the Raleigh McGuireWoods Consulting team if you have any questions or comments:
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Jeff Barnhart, Senior Vice President
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Franklin Freeman, Senior Vice President
ffreeman@mwcllc.com
Bo Heath, Senior Vice President
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John Merritt, Senior Vice President
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Johnny Tillett, Senior Vice President
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Kerri Burke, Vice President
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Jillian Totman, Assistant Vice President
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Sarah Wolfe, Assistant Vice President
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Phillip Barefoot, Research Assistant
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