House Passes Budget Adjustments…Now Senate’s Turn for Consideration
The House approved a $20.3 billion state spending plan for FY 2012-2013 with the required two separate votes late Wednesday (5/30) evening. . Five Democrats joined Republicans in passing the budget; Reps. Bill Brisson, Bill Owens, Dewey Hill, Jim Crawford, and Tim Spear. Their support will give House leaders the three-fifths majority needed to override any veto by Gov. Beverly Perdue. After seven-and-a-half hours of debate, the bill passed in two votes (both 73 to 46). The Senate will now have its turn in making revisions.

Review the final House budget proposal.

Senate’s Education Reform Plan Moves Forward
On Monday night, the Senate approved a school reform plan backed by Senate leader Phil Berger (R-Rockingham). The reform package passed with a 31-17 vote and will now move to the House for consideration. The package overall replaces teacher tenure with one-to four-year contracts for teacher; puts additional focus on teaching children to read by third grade; provides merit pay for teachers; and creates a lateral entry program for the teaching profession.

The reform plan was amended in the Senate Education Committee this week with highlighted changes including:

• Teacher Tenure: Allowing school systems to give educators with more than three years of experience a contract of up to four years (compared to the original version eliminating teacher tenure).
• School Calendar: Giving districts the flexibility to meet a minimum of hours of instruction-1,025 hours (compared to the original version of 185 days).

The reform package is scheduled to have its last vote in the Senate Monday (5/4) night before moving to the House for consideration.

Changes to Corporate Tax Reporting Requirements
The Senate has passed legislation preventing the Department of Revenue (DOR) from interpreting the law on forced combinations by issuing directives. Under the proposed law revising the corporate combined reporting requirements, the DOR would be required to develop formal rules that could then be challenged and taken to an administrative law judge to determine. At the committee hearing, Senator Rucho (R-Mecklenburg) testified that the bill will serve as a pilot project for other Department of Revenue issues.

The bill (S824/H1027) now goes to the House for consideration.

Gas Tax Cap Approved in House Finance Package
The House has approved an ominous finance package (H142), which includes a cap to the state’s current gas tax. The gas tax provisions would prevent the gas tax from going above 37.5 cents per gallon through June 2013. The current gas tax is 39.9 cents, which is recalculated twice annually based on wholesale gas prices and was expected to decrease in July.

The finance package, which was passed separate from the budget in the House now goes to the House for consideration.

UPDATE: Legislators Take Aim at Regulatory Reform
In efforts to make the state’s regulatory framework more efficient and cost-effective, lawmakers have filed several regulatory reform bills.

• State Air Toxics Program Reforms
  House Bill 952 would exempt some emission control sources from regulation under the state Air Toxics Program if those sources are subject to regulation under the federal Clean Air Act. (Passed House 70-46)
• Regulatory Reform Act of 2012
  Senate Bill 810 includes several regulatory efficiency goals, including: changes to the Administrative Procedures Act; requires agencies to provide private businesses advanced notice on audits; clarifies that state air quality regulations cannot be superimposed with state water quality regulations; lengthens the term for a sold waste permit from five years to 10 years. (Passed Senate 41-1)
• Boards & Commissions Efficiency Act of 2012
  Senate Bill 851 identifies numerous boards and commissions that are being considered for elimination and others that should be downsized. (Referred to Senate Program Evaluation Committee)

Revisions to Incentives in House Budget Proposal
A provision included in the House budget plan eliminates a cap that currently disallows no more than 25 grants per year to be awarded from the Jobs Development Investment Grants Program (JDIG). The JDIG program began in 2004 after a push from the state’s Commerce Department and economic developers asserting the state’s existing business tax credits were no longer competitive in luring companies to North Carolina. The changes would not change the money available to the Department of Commerce, only the number of firms eligible to receive them. The grants are awarded to businesses based on payroll withholdings, limited to no more than $15 million in a single year with a 12-year limit on the term of the payouts.

Unemployment Insurance Debt
A House budget subcommittee has approved a measure that would appropriate all of the money from the state’s Employment Security Reserve fund to pay interest and principal on the NC’s unemployment debt, which nears $2.7 billion. The state’s debt to the federal government began accumulating in early 2009 when the state ran out of money to pay benefits and had to borrow funds.