Chamber Blog

Editor’s Note:  This blog was written over the weekend and changes have already been made to the budget.  Negotiations have continued through the weekend and you can find the budget here with changes that will be considered today in the Senate Appropriations Committee.  Summaries below are based on the version that passed committee last week.

Senate Advances Budget Proposal & Prepares for Final Floor Votes

The Senate’s $19.4 billion budget proposal passed out of the Senate Appropriations Committee this week and is scheduled to receive the first of two required full floor votes Tuesday (5/31). The Senate’s proposal spends $129 million more than the House and $473 million less than Governor Perdue’s spending plan for the upcoming fiscal year.

While key differences exist between the Senate and House proposals, budget leaders are indicating that a compromise to the budget has been reached. In the potential compromise, the Senate would amend its budget plan to include $300 million more in spending primarily for public schools and would agree to some changes by the House budget writers, including significant transportation provisions. These provision changes came at the request of the five House Democrats who voted with the majority of the House and who are critical to override a veto by the Governor. If a compromise in fact is reached the budget would avoid going to conference committee and could potentially be passed by both the House and Senate in the next week.

House vs. Senate: Highlights of Spending Differences:

• Education
  The Senate budgeted $10.7 billion for education, over $62 million more than the House proposed, which would provide higher spending for public schools and the UNC system. The Senate cut the university system 12.5% versus the House cut of 15.5%. The Senate’s proposal seeks to begin reducing class size to the targeted ratio of 1 teacher for 15 students in early grades by hiring over 1,100 teachers. The plan would eliminate funding for teachers’ assistants in all grades except kindergarten, which accounts for 13,000 positions. The Senate budget also includes $1 million to research and develop a performance-based pay model for teachers and $115 million for district school construction.
• Transportation
  The Senate’s budget proposal focused on bridge repair and highway maintenance while reducing drastically spending on transit and turnpike projects. The Senate’s plan eliminates funding for the Mid-Currituck and Garden Parkway toll projects, along with the funding earmarked for urban transit projects over the next two years. The Senate’s proposal also requires the Department of Transportation (DOT) to gain legislative approval on any federal grant that costs the state more than $20 million in matching capital funds and in annual maintenance and operation costs. The DOT would also have to begin collecting tolls on the four state ferry routes under the Senate’s plan, while the House exempted two ferries from toll collections.
• Health & Human Services
  The Senate’s proposal cuts a wide array of services under Medicaid coverage, including physical occupational, speech, and respiratory therapy, and limits dental care to emergency cases unless the patient is pregnant. Additionally, the Senate plan dissolves the NC Partnership for Children, the central office for Smart Start, and moves supervision of Smart Start to the state Department of Health and Human Services.
• Tax Reform
  The Senate tax package reduces the rate for all individual income tax brackets by a quarter-percentage point, dropping the rates to 5.75, 6.75 and 7.5 percent. Additionally, the measure would exempt the first $50,000 of net business income of small and start-up companies whose gross receipts do not exceed $825,000. The plan also repeals the tax deduction for severance wages, the tax credit for recycling oyster shells, the sales tax holiday on energy-efficient appliances, among others.

Review all comparisons between the House and Senate budget proposals.

House Moves Health Benefit Exchange to the Senate

This past week the House approved HB115: North Carolina Health Benefit Exchange with a vote of 83-34. The bill creates an online marketplace for individuals and small employers to purchase qualified health care plans. The 2010 federal health care overhaul law requires all states to have an exchange and the federal government will create health exchanges in any states that have not implemented their own by 2014. Democratic opposition argues that the exchange plan does not offer enough consumer protection, favoring insurance companies. However, co-sponsor of the bill, Rep. Tom Murray (R-Wake) purports that the bill is pro-consumer and upholds the insurance market outside the exchange. The bill now heads to the Senate for their consideration.

House Passes Changes to School Leadership

The House has passed HB823: Governance of the Department of Public Instruction, a proposal that would allow the General Assembly to appoint members to the State Board of Education and give the superintendant of public instruction voting authority along with more power over day-to-day operations. While the original version of the bill would have made the superintendant the sole policymaker in education matters, the measure was amended in committee to establish a 15-member board with the superintendant serving as leader. Eight members would be appointed by the Governor (vs. current sole authority over all appointments), the House and Senate would each appoint two members, with the remaining seats to be filled by the state treasurers and lieutenant governor.

Upon passage by the Senate, the measure would be included on the statewide referendum vote in May 2012.

North Carolina Remains a Pivotal Battleground State for 2012

It's looking like North Carolina will yet again be a "purple state" come the 2012 presidential election.  With the 2012 Democratic National Convention coming to Charlotte, President Obama's administration seems to be gearing up for visits in the state.  The President will be in North Carolina in two weeks, to discuss how the government can promote economic growth in the private sector.  Republicans are also are showing their strength in NC, with Reince Priebus, Chairman of the Republican National Committee speaking this week at state Republican headquarters in Raleigh for a "Take Back NC" grass-roots fundraising event. 

Workers Comp Passes Major Hurdle – see May 26 Legislative Blog post.

The House Select Committee on Tort Reform voted earlier today to pass HB709: Protect and Put NC Back to Work. The North Carolina Chamber, along with key business allies, has spent countless hours this session seeking balanced legislation on workers’ comp reform to ensure our state’s business climate is competitive. After extensive negotiations between parties on both sides of the issue, a consensus bill has been approved by the committee that preserves the main objectives of the NC Chamber, and our broad business coalition, to create fair and balanced reform for the state’s workers’ compensation system.  HB709 will now be voted on by the full House as early as next week. The Chamber will send a follow up of the updated version of the bill once it becomes available.

Costs, Key Concerns Addressed in Consensus Bill

One of the primary objectives of this legislation was to bring North Carolina’s indemnity costs in line with surrounding states by limiting the duration of temporary total disability (TTD) benefits. A key part of the negotiations was creating an opportunity for an injured worker to make the case to the Industrial Commission that they are unable to go back to work and that their benefits should be extended beyond the 500 week cap. Other states that limit these benefits provide such an opportunity.  We were successful in crafting this potential exception in a balanced way that will ensure that the exception does not become the rule.

The NC Chamber applauds the primary bill sponsors Rep. Dale Folwell (R-Forsyth), Rep. Nelson Dollar (R-Wake), Rep. Mike Hager (R-Cleveland), and Rep. Jim Crawford (D-Vance) for their effort in making our workers’ comp system sound and balanced. There has been no meaningful reform of our workers’ comp system since 1994 by the General Assembly, and this legislation would not be possible without their hard work. The NC Chamber also appreciates the support of Sen. Harry Brown (R-Jones), Sen. Tom Apodaca (R-Buncombe), and Sen. Jim Davis (R-Macon) for their sponsorship of S544, the companion bill to HB709, and for their support of the efforts to reach a consensus.

Overview of HB709

 > Improves the Structure, Operation and Accountability of the Industrial Commission

• Reduce from seven to six commissioners and require legislative confirmation of appointments
• Bring the Industrial Commission under the Administrative Procedures Act like other state agencies

 > Bring back medical treatment to original statutory intent where the employer directs medical care

• Provide equal access to medical information for both sides
• Improve the rehabilitation process of the injured worker through better communication so they can return to work

 > Common Sense Requirements for Claims and Benefits

• Define the term “suitable employment” to provide clarity and improve the ability to return the employee to work
• Set a cap of 500 weeks (ten years) on Temporary Total Disability (TTD) bringing us in line with surrounding states
• Increase Temporary Partial Disability (TPD) from 300 to 500 weeks bringing us to the highest level of surrounding states
• Increases the death benefit from 400 weeks to 500 weeks

Bill Heads to House – Take Action! Contact your House members today to ask for their support on HB 709!

Charlotte Chamber Senior Vice President of Public Policy Natalie English has more on why this bill is so crucial to local businesses.

The Charlotte Chamber GreenWorks Committee is excited to announce it is accepting nominations for the annual Green Award. This award recognizes a chamber member company (in good standing) that has implemented a green product, service or process; has created an environment that fosters and encourages creative green thinking; and whose experience has been shared with, and can benefit, other businesses or the greater community.

Winners will be presented at the Charlotte Chamber’s Northwest Chapter’s Green Conference in September.

Visit http://charlottechamber.com/forms/green-product-service-or-process/ to nominate your company online today!

Senate Gearing Up for Full Week of Budget Debate

All indications from Senate leadership signal all eyes and ears will be on the Senate’s spending plan next week. Rumors began swirling late this week that the Senate is preparing to roll out their full budget proposal on Tuesday morning (5/24) in appropriations subcommittees. The measure will then go through the full finance and appropriations committees later in the week, with the first floor vote scheduled for May 31.

While it is all speculation at this point as to what will be included in the final budget package, Senate leadership is expected to include an education reform plan as part of its budget proposal in an effort to improve early grade reading skills. Late this week Senator Berger indicated that the Senate has reexamined their original goal to cut an additional $106 million in public school spending from the amount outlined in the House budget and will instead actually spend more than the House’s proposal.  Provisions of the education plan include:

• K-3 class size reductions setting one teacher to every 15 students (compared to the current 1-18 ratio).
• Five teacher workdays would be turned into additional instructional days.
• Base teacher salaries on performance instead of tenure.
• Cut expenses by eliminating teacher assistants in lower graded.

Governor & Lawmakers Reach Compromise on State Health Care Plan

The General Assembly this week wrapped up a final compromise with the Governor on cost-cutting measures to the state’s health plan, which will close the $515 million gap by using extra year-end cash reserves of $40 million to $50 million to cover the premiums for state employees using the basic coverage plan. This follows a month-long stalemate between legislators and the Governor whether the state would require workers to pay a monthly premium for the first time. The compromised version offers a no-cost health plan option for employees, while raising the premiums on dependents and increase co-pays and deductibles for employees, dependents and retirees.

The reworked compromise passed the Senate 33-16 and the House 90-24 this week. The Governor has already indicated that she will sign it.

Legislative Leaders Discuss Tax Reform Part 1

The generation-old effort to pass comprehensive tax reform may be getting some action this session with a tax package addressing not just rates, but also filing and credits. Legislative leaders said this week that they are not only working on a tax package to cut corporate and individual tax rates, but are also looking at a larger proposal to include simplifying tax returns. Some of the proposals in discussion are reducing the calculations needed to determine taxable income and eliminating some current individual income tax credits.

Senator Rucho (R-Mecklenburg), a leader behind the tax reform efforts stated this week that this year’s package would be considered the first of about three installments toward the goal of comprehensive tax reform. “This year’s edition is about lowering tax burdens, which could create up to 70,000 private-sector jobs. We’re going to put money back into the hand of the working families and small businesses.”

Debate Begins on E-Verify Requirements for Employers

House Bill 36: Government Contractors Must Use E-Verify, which will require contractors and subcontractors that do business with state governmental units to use the federal E-Verify system, passed the House Government Committee this week. E-Verify is an online system that allows employers to determine whether someone is eligible to work in the United States by matching them against databases maintained by the Social Security Administration and the Department of Homeland Security. Within committee discussions this week the bill was amended to require all cities and counties to use the system as well to verify the work eligibility of new employees.

The bill now moves to House Judiciary A Committee for consideration. There is some talk among lawmakers to further expand the bill to require all employers to use the E-Verify system with stipulations. As conversations ensue, we will keep you updated.

Billboard Proposal Moves Forward for Final Senate Vote

This week the Senate Finance Committee approved the bill establishing new rules for removal of vegetation around billboards on interstate highways and federally assisted roads, sending the bill to the full Senate for a floor vote. The bill expands the cut zone around billboards on state highways from 250 feet to 380 feet and allows clear cutting versus just trimming, affecting a total of 8,000 billboards statewide. Current law defers to local ordinances when approving cutting or trimming around billboards.

Several amendments are anticipated to be introduced on the Senate floor, including one from Senator Clodfelter (D-Mecklenburg) to ensure that the new provisions do not inadvertently affect any federal highway funds Charlotte currently receives for highway US74. The bill is expected to be scheduled on the Senate floor next week.

Below is the list of bills we are monitoring with changes in statue highlighted.  Please contact Natalie English, nenglish@charlottechamber.com, with questions or comments.>

Bill Tracking