Chamber Blog

**The delay in this legislative update comes due to weekend activity regarding the House budget**

Early last Saturday morning the NC House of Representatives passed their version of the 2009-2011 continuation budget in a third vote shortly after the second vote on late Friday evening.  After House leaders said they wanted the budget approved by the end of last week, the decision was made to hold this late night session because the state constitution requires that two budget votes be taken on two separate calendar days.

The House's $18.6 billion budget includes both spending cuts and various tax increases which are supposedly designed to make the cuts less harsh.  As the House worked to create this budget, they had to grapple with a $4.6 billion budget hole.  This estimate is more current and therefore far greater than the budget hole the Senate dealt with when they passed their budget in April.

This budget would raise $870 million in additional taxes and fees, some of which include:

• Personal Income Tax Increase: Creates two additional upper-income tax brackets at 8.25% for those earning between $200,000 and $500,000, and 8.5% for those earning over $500,000 (married, filing jointly). The Charlotte Chamber has consistently opposed increases in corporate and personal income tax rates and, in fact, has lobbied for a reduction in those rates.
• Subjects income not attributable to North Carolina to state taxes (combined reporting) for multi-state employers. The Chamber is likewise opposed to mandatory combined reporting for NC businesses. Please read the position statement for details of why we're opposed. **ACTION ALERT** Please contact our Mecklenburg Delegation and let them know why this would be a burden for the Charlotte and North Carolina business community.
• Increases sales tax rate by a quarter-cent and expands the sales tax to: 
  • Warranties, Installations and repairs (including maintenance)
  • Digital products
  • Amusements/movies
• Expands the franchise tax to LLCs (Limited Liability Corporations)
• Changes a bank interest deduction
• Increases tax on liquor by 1.5%

After the unusual late night/early morning session, the budget now is passed back to the Senate, where it will likely be rejected.  Consequently, a joint conference committee of Senate and House members must be formed to deliberate and compromise the details of the final budget, which must then be approved and signed by the Governor.

In other legislative news, the Senate approved the "No Texting While Driving" bill, which was already approved by the House, and will now be sent to the Governor to sign.  This legislation, which becomes effective December 1, 2009, makes it unlawful to operate a vehicle while using a mobile phone to "manually enter multiple letters or text in the device as a means of communicating with another person," or to use an electronic device to access digital media, including a camera, music, the Internet or games.  Violation of this provision will result in a fine of $100, including court costs. 

The bill that would put a floor on the current gas tax was approved in a final vote in the House this week.  The revenue from the gas tax is used to fund roads in our state, and has been declared by numerous experts as a declining source of revenue.  While a relatively small step, putting a floor on this tax helps ensure that funds for roads do not decrease until the state looks for new or creative sources of revenue for roads in the future.

As I continue to represent the Charlotte business community in Raleigh, please feel free to contact me if you have any questions or concerns at 704-957-3728 or awaller@charlottechamber.com.  I would recommend following the Chamber's "Voice for Business" team on http://www.twitter.com/ to stay posted for up-to-the-minute updates regarding state and local government: (Natalie English: cltlobbyist, Allison Waller: Voice4BizCLT).   

• Demand for office space has been decreasing for the past two years and will probably become weaker. Probably won’t see an improvement until 2010. Normal vacancy is around 10% - now seeing 20-25% vacancies.
• Little if any new construction, lack of available capital. Rental rates have dropped and expect to drop more over next 12-18 months.
• What does that mean for the business community? Credit worthy tenants, have more negotiation, with greater flexibility with terms and improvements.

1. amenities offered by existing offices
2. parking
3. What is the cost and disruption if you relocate?
4. Engage an experienced commercial real estate broker to assess your lease.

1. SALARIES –
   • REDUCING PAY INCREASES (HOURLY) – 23.3%
   • REDUCING PAY INCREASES (SALARIED) – 22.5%
   • REDUCING BONUSES 21.1%
   • ELIMINATING BONUSES – 19.5%
   • SALARY REDUCTIONS MINIMAL
2. MERIT INCREASES –
   • LOWERING % OF INCREASE
   • PROJECTIONS OF 3.8% NOW 2.5%
   • LENGTHENING CYCLE FOR REVIEWS
3. INCENTIVE PLANS –
   • PROJECTED 12.1% BUDGET IN 7/08
   • NOW 11.1%
4. BENEFITS & RECOGNITION –
   • HARDER TO MODIFY MIDSTREAM
   • EXCEPTION – 401(K) PLAN MATCHES
     TEA SURVEY – 4.9% REDUCING/14.1% ELIMINATING
   • INCREASING EMPLOYEE CONTRIBUTIONS TO HEALTH PREMIUMS – 25.2%
   • REDUCING OR ELIMINATING BENEFITS OTHER THAN RETIREMENT – 4.9%
   • RECOGNITION PLANS – FUNDING UP
   • EMPLOYEE ASSISTANCE PLANS – STAYING IN PLACE
5. PAY FOR PERFORMANCE –
   • INCREASED EMPHASIS
   • REWARD TOP PERFORMERS

*ACTION ALERTS*

• In a conference call today regarding the House budget and revenue, Rep. Tricia Cotham, (D - Mecklenburg) discussed raising taxes on the "wealthy" to help balance our state's budget. An increased tax on those who make more than $250,000 a year is a tax on small business owners. Most small businesses are not registered as corporations, and therefore do not pay corporate income tax. The revenue from their business is thus required to be reported as personal income tax. Particularly in this economic climate, struggling small business owners should not be overburdened with a tax increase. What the public perceives to be a tax on the wealthy is actually a tax on one of the most vulnerable sectors of our economy. Please contact Rep. Cotham and other members of the Mecklenburg delegation and let them know that you do not support a tax increase on small business.
• Next week, SB 534, the Mandatory Sick Leave bill, is currently scheduled to be heard in Senate Commerce. This bill would require employers to provide up to seven days of paid sick time per year. The Charlotte Chamber opposes this legislation as it would limit flexibility and potentially increase the cost of doing business. Employers in North Carolina know that in order to attract the highest quality workers they need to provide competitive benefits. Employers should be free to decide what those benefits are. Please contact Senate Commerce committee chairs and members to urge them to support North Carolina business, especially in these hard economic times, by opposing this legislation.

In other Raleigh news, SB 200 was approved in a second reading on the House floor on Thursday.  This bill, which has already passed the Senate, would put a floor on the current gas tax so the revenue from the gas tax, which ultimately is used to fund roads, will not see a decrease.  As it stands, the gas tax has been declared by many experts as a declining source of revenue.  At a time when our state's road funding needs are increasingly dire, putting a floor on the gas tax is a step in the right direction.

The bill that would eliminate the waiting period for private clubs, SB 6, passed the House ABC Committee this week.  It was re-referred to House Commerce and has already passed the Senate.  If approved, this legislation would eliminate the language from the existing statute that requires an establishment that receives 30% or less of its revenue from food, or a "private club," that requires a waiting period for membership.  This bill is good for tourism and business in North Carolina.

I will keep you posted as the General Assembly works toward finalizing a budget this session.  Please contact me if you have any questions or concerns at 704-957-3728 or at awaller@charlottechamber.com.  Keep yourself updated on the Chamber's public policy activities in the most timely manner by following Natalie English and me on http://www.twitter.com/ under the names cltlobbyist and Voice4BizCLT, respectively. 

One of the best things about the month of June in Charlotte are Sunday evenings at Pops in the Park at SouthPark. This is a great time for young professionals to gather and enjoy the Charlotte Symphony.

If you’re new to Charlotte or have never been to Pops in the Park, here are a few suggestions:

• For a prime spot on the lawn, send someone in your group out early on Sunday morning. Blankets will save your space. By 11 a.m., the grass is usually covered in blankets.
• Bring your favorite beverage. Picnic baskets are welcome.
• Support the Charlotte Symphony. Yes, Pops in the Park is a free event, but like many organizations in the community, the Symphony is facing an unprecedented challenge in this time of economic downturn. Donations during the concert are appreciated.
• Preludes at 7 p.m.; Orchestra at 8:15 p.m.

This Sunday the Symphony goes country. The Symphony starts the summer season in the Wild West. Enjoy music from the American frontier, including John Williams’ The Cowboys, Aaron Copland’s “Hoedown” from Rodeo, and Rodgers and Hammerstein’s Oklahoma!

Hope to see you there.

Unrelated News: Join the Engage Charlotte Facebook group. Click here to join. We’re also hosting our first Engage Charlotte After Hours event on July 15 from 5:30 to 8 p.m. at The Attic Bar in uptown. Mark your calendars and RSVP on Facebook here.