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MVA Monitor – October 25

After a week off, the General Assembly was back in session this week to continue work on several issues as a possible end to the session draws closer. Several weeks ago, the Senate said it intended to finish business by the end of October, now just a week away.

Senate action on the motion to override the Governor’s veto of the budget bill was not one of the items on the agenda this week, but both chambers continued work on “mini budgets.”

Issue Insights

State and Legislative Issues

Finance bills

A trio of tax-related mini-budgets made their way through the General Assembly this week. For the most part, the bills contained provisions that were identical or nearly identical to provisions included in the state budget.

  • House Bill 399 received final approval in the House and Senate this week and will now move to the Governor. The bill passed with strong bipartisan support in both chambers. The Governor is expected to sign it. The bill includes several non-controversial tax provisions, including the extension of three provisions that were set to expire this year and some changes needed due to changes in federal law.
  • Senate Bill 557 cleared the Senate on Thursday. This bill would increase the standard deduction for personal income taxes, change the way income is apportioned for corporate tax purposes, and require marketplace facilitators (such as Amazon and eBay) to collect sales and use tax due on items sold on their platforms. Except for a few technical corrections, the bill mostly contained items previously included in the vetoed budget bill.
  • Senate Bill 578 also cleared the Senate on Thursday. This was the most controversial of the three bills as the primary provisions in the bill dealt with a significant reduction in the corporate franchise tax. This issue has been cited repeatedly by the Governor as one of the reasons for his veto of the budget bill.

North Carolina Republicans are working to cut this tax on businesses (Raleigh News & Observer)

Education
Several bills are moving through the legislature that would fund pay increases for employees of the university and community college systems and of public school principals, but public school teachers are still waiting to see what happens next with respect to their pay. The bills that have moved this week include pay raises for university and community college employees and for public school principals that were included in the budget bill. Public school teachers would receive a step increase, which is tied to the number of years a teacher has served, but would not receive any increase in base pay. The budget bill included both the step increase and an average raise for teachers of 3.8% over the next two years.
DOT Funding
A proposal advanced in the House to address a budget shortfall at the Department of Transportation. The budget shortfall was caused, in large part, by higher than usual expenses for storm clean-up and by settlements payments as the result of a lawsuit. The House Appropriations Subcommittee on Transportation approved HB 967 on Wednesday. The bill would transfer $360 million from the state’s General Fund to NCDOT to provide additional cash to the Department to address settlements from the lawsuit. In addition, the bill would loan $301 million from the state’s Rainy Day Fund to NCDOT to avoid delays in road construction and maintenance projects. These funds would be paid back over the next six years with federal reimbursements for disaster recovery costs. However, Rep. Chuck McGrady, one of the Appropriations Committee co-chairs, indicated unease with the proposal and suggested a different proposal may emerge soon.

DOT cash flow fix moves in House, but competing proposal coming (WRAL)

News Roundup