Business bills still moving in legislature
April 28, 2013By Jenny Callison and J. Elias O'Neal
Though this year’s legislative session recently hit its halfway mark, the General Assembly still is considering an ambitious agenda that could alter North Carolina’s business climate, educational priorities and tax structure. Numerous issues on which legislators hope to act are of concern to the Cape Fear area’s business community. Here are a few of them:
Legislators are working to change many aspects of the state tax code as part of a strategy to boost the economy. Senate Bill 677, whose primary sponsors include Sen. Bill Rabon (R-Brunswick), would eliminate some taxable aspects of a company’s business so that the sales tax ultimately would be applied only on a company’s sales in North Carolina.
The bill would also reduce the corporate tax rate from its current 6.9 percent to 6 percent by the beginning of 2016.
In early April, the bill was referred to the Senate finance committee, which as of press time had not voted on it. And details, as well as ways to make up for the decreased tax revenue, had not been determined.
Saying they want to eliminate excessive regulations that make it difficult to do business in the state, some Republican legislators have introduced bills aimed at streamlining or jettisoning those regulations.
As of April, versions of Senate Bill 10, which would eliminate some boards and commissions and allow the governor to replace the members of others with his own appointees, passed in the Senate and House and were in a conference committee to hammer out the differences.
House Bill 74 also would create a process of eliminating obsolete rules. The bill, introduced Feb. 5, was referred to the House regulatory reform committee, where it has remained.
Housing and development
Wilmington-based Business Alliance for a Sound Economy (BASE), which advocates and lobbies on behalf of regional builders and developers, has been busy monitoring industry bills in the General Assembly.
One of the group’s top priorities has been tracking the progress of House Bill 279, or the Transfer Environmental Permits bill. The bill received a favorable recommendation April 18 during a House committee hearing.
Sponsored by Rep. Chris Millis (R-Pender), the bill would authorize the N.C. Department of Environment and Natural Resources to transfer environmental permits of defunct developments abandoned by the original owner to new developers or builders seeking to jumpstart development on the abandoned or foreclosed parcel.
Donna Girardot, BASE’s CEO, said many developers across the state looking to take over defunct developments were being hindered because it took too long to track down the original holder of stormwater and erosion permits.
She said addition of the new provision could bring a wave of new development to the region.
Home insurance rates has also been discussed this session.
After coastal residents experienced a 17 percent-plus surge in their home insurance rates, several bills have been introduced about the rate-making process. Proposals would force the N.C. Rate Bureau to look at actual insurance data and not module data for the computation of insurance rates across the state.
House Bill 785 would create a statewide pilot program in greater Wilmington that would facilitate a cost-sharing, finance-reimbursement mechanism that the N.C. Department of Transportation could use for large-scale roadway improvements.
The measure would also force builders that tie into a roadway constructed by another developer to reimburse them for the costs.
Rep. Frank Iler (R-Brunswick) is sponsoring the bill, which is currently a placeholder until the bill is fully researched by NCDOT and state officials.
Until recently, the state’s film incentive program had been left untouched amid other tax reform proposals, but two recent developments may spell trouble.
In early April, the Senate released a memo generated by the Fiscal Research Division of the Legislative Services Office that charged that the film production credit in 2011 created “290 to 350 fewer jobs than would have been created through an across-the-board tax reduction of the same magnitude.” The memo did not include data for 2012, by all estimates a record year for film spending in North Carolina.
Then, on April 17, several House members, including Reps. Rick Catlin (R-New Hanover) and Millis, filed House Bill 994, “An Act to Make the Film Production Credit Nonrefundable.”
If passed in its current form, the legislation would prohibit film productions from getting a refund on their unused tax credit. Such refunds are currently the means by which movie and TV projects receive their payment of 25 percent of the money they spend in North Carolina on a project.
Catlin told the Business Journal that he does not expect HB 994 to reach the floor of the House, but explained that he co-sponsored the bill “to try to bring attention to the present situation.”
Other incentives, he said, “use tax credits for actual tax liabilities. This bill would put the film industry under a similar standard and take away the cash payments.”
If no action is taken on the film incentives during this session, the film production credit program would likely continue until its scheduled expiration date at the beginning of 2015.
Gov. Pat McCrory’s budget proposal, now under consideration by the General Assembly, calls for a 2 percent cut to the University of North Carolina system as a whole and cuts in half the appropriation for Cape Fear Community College’s marine technology program – the only one in the state.
Officials at University of North Carolina Wilmington say that the size of the proposed budget cut is really more like 5.7 percent for the first year it would take effect.
“The UNC campuses have taken over $400 million in cuts already, and we have done our absolute best to protect core academic needs and programs,” said Mark Lanier, assistant to UNCW chancellor Gary Miller. “What we really have to do now is to reduce the size of the new cuts. Any further cuts really impact our academic programs and the quality of the education students receive.”
CFCC is looking at a budget reduction of about $1.2 million, including the cut to its marine technology program, if the General Assembly upholds McCrory’s
Rep. Ted Davis (R-New Hanover) has introduced a bill in the House to protect the marine technology budget, but the college will try to find ways to align with a reduced budget, said college spokesman David Hardin.
Senate and House bills seeking to change the state’s energy policies got off to a fast start in this year’s legislative session but have slowed.
The Affordable and Reliable Energy Act, a proposal to roll back the state’s Renewable Energy and Energy Efficiency Portfolio Standard, passed its first reading in both the House (HB 298) and Senate (SB 365), and both bills now sit in committees.
The measures prompted an outcry from environmental and clean energy groups who say the proposals would stall investments in renewable energy projects in North Carolina.
The proposed Skyway Bridge, which would have provided a third bridge linking southern New Hanover County to south Leland, appears to be dead in the water.
Rabon introduced legislation that would kill the multi-billion dollar turnpike project, along with two other similar transportation projects in Charlotte and the Raleigh.
Sen. Thom Goolsby (R-New Hanover) also introduced legislation that would allow Wilmington not to charge Monkey Junction residents for city taxes for the six months the area was part of the Wilmington city limits.
Roughly 1,000 acres of the Monkey Junction area were annexed into the city in January
2012 after a court found that changes the General Assembly made to annexation laws were unconstitutional.
That ruling was overturned in July 2012, forcing the area out of the city limits. Senate Bill 97 passed unanimously in the House and Senate, and McCrory signed the local legislation into law April 3.