Governor receives Final Budget from Legislators

Following a weekend of negotiations, the House and Senate agreed upon a $20.2 billion budget compromise last week that adjusts the second year of the two-year budget. Both chambers passed the new budget Thursday, June 21 (House: 71-45; Senate 30-15). Five Democrats joined 66 Republicans in voting for the plan with the Senate vote going along party lines.

The budget now goes to the Governor for her consideration where she has 10 days to decide whether to veto the bill, sign it or let it become law without her signature. The budget plan was developed from competing House and Senate plans where conferees negotiated on several contentious items:

• Teacher Bonuses/Raises: 1.2 percent raise.
• Education Reform: Funding for parts of Senator Berger's education reform plan ($27 million).
• K-12: $251 million increase in recurring funds.
• Infrastructure Projects: Funding eliminated for the Garden Parkway and the Mid-Currituck Bridge but kept the funding for the Blue Line Extension.
• Eugenics Compensation: No appropriation for eugenics compensation.
• Medicaid: $100 million for the Medicaid rainy day fund.

Click here to review a comparison of budget provisions of high importance to the Charlotte Chamber.

ACTION ALERT: Business Contingency Fee Audits

• Issue: Many local government units use third-party auditors for personal property tax purposes and are increasingly engaging these auditors on a contingency fee basis. A contingency fee means that an auditor gets paid based on how much they assess as being owed. This causes an inherent conflict of interest because a larger audit assessment results in a larger payment to the auditor; therefore there is a financial incentive for the auditor to inflate their findings. The practice has been condemned by the American Institute of CPAs in their Code of Professional Conduct and the Securities & Exchange Commission, the National Conference of State Legislatures, seven state legislatures and other states have prohibited the practice through the court system.

Contingent fee arrangements are acceptable in other professional services (legal, sales, etc.) where the interests of the professional are aligned with the client. The nature of an audit imposed by the governmental unit on a taxpayers is distinctly different. The purpose of a tax audit should be to verify that the tax reports is correct - nothing more. Contingent-fee based auditing threatens a fair and impartial evaluation of tax, it is quite simply unfair and a distinct threat to the business community.

• Status: House Bill 462: Contingency Contracts for Audits Assessments would prohibit contingency fee audits. With bipartisan support, it passed the NC Senate by a vote of 45-2. Now the business community must urge HB 462 to be heard in the House Commerce and Job Development Committee.
• Action: Take action now to protect your business from predatory auditing practices. Contact Speaker Tillis and your representative asking them to schedule a committee hearing this week and pass HB 462.

Shale Gas Development Policy Off to the Governor

With a final concurrence vote of 29-15, the Senate officially sent legislation to the Governor that creates a regulatory framework that allows hydraulic fracturing. The bill only allows permits after an additional action from the General Assembly, creating a sub-commission under the Mining Energy Commission to oversee the creation of the regulatory framework. Senate Bill 820, the Clean Energy & Economic Security Act, which could dramatically reshape the state's energy landscape, now goes to the Governor for her consideration. The Governor has 10 days to act on the legislation.

Legislators Expect to Head Home Before July 4

Per an adjournment resolution passed out of the Senate, legislators will be leaving Raleigh on June 30. Speaker Tillis has indicated an expectation of adjournment by July 2. The adjournment schedule primarily centers around the timeline for a potential veto by Governor Perdue on the budget. The Governor has 10 days on any piece of legislation as long as the General Assembly is in session.

Chamber's Regulatory Reform Priorities Press Forward

• 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 (Ratified)
• Regulatory Reform: Senate Bill 810 includes several regulatory efficiency goals, including: changes to the Administrative Procedures Act; requires agencies to provide private business advanced notice on audits; clarifies that state air quality regulations cannot be superimposed with state water quality regulations; lengthens the term for a solid waste permit from five years to ten years. (Passed Senate 41-1; Passed House 77-34; Awaiting Senate Concurrence)

Chamber's Priorities Continue to Move Forward

The Charlotte Chamber adopted its 2011-2011 legislative agenda focused on job creation, advocating pro-business policies that deliver innovative programs and services. Several of the Chamber's priorities continue to progress during this legislative session. Click here to review those bills the chamber is tracking in the General Assembly.