Warren's Weekly: subdued protests, state budget, preservation tax credit

SALISBURY, NC (WBTV) - Each week NC House Representative Harry Warren, a Republican representing District 77 and Rowan County, provides WBTV with an update on what's happening in the General Assembly, with a particular eye towards issues having an impact in Rowan County.

As a public service, WBTV publishes that update unedited, each week:

This week in Raleigh was extremely busy and, at the same time, relatively quiet.  While both chambers, the Senate and the House, were in full attendance, each seemed to go about their business without much fanfare.

The Senate held several committee meetings, working on various House and Senate bills.  The House held few standing committee meetings, as more than half of the House members were serving on the various Appropriations Subcommittees, which were working on their portions of the House Budget proposal.

Even the Moral Monday protesters seemed more subdued with fewer in attendance than normal.

I received feedback from many constituents of District 77 and from some folks across the state in response to the Senate's budget proposal of last week. Much of the feedback was not supportive of certain portions of that proposal. Most of the emails from Rowan County and Salisbury concerned the Historic Preservation Tax Credit, which is due to sunset this year. Rowan County has been one of the state's most prolific users of the Tax Credit, which has been instrumental in restoring a good number of commercial and residential buildings in Salisbury and other locations within Rowan County. Although I did receive some emails critical of the Senate's proposal to raise teacher's pay, the negative comments were not about the amount of the raise (the Senate proposed an 11% increase), but the fact that the raise was tied to relinquishing tenure and eliminating Teacher Assistant positions to pay for it. There were also a number of pleas from folks seeking to retain the Film Tax Incentives program, in order to encourage North Carolina's budding film industry. Although it can be argued that film-making in North Carolina creates jobs within supporting local businesses (painters, suppliers, hotels, restaurants, etc.), there is also a very good argument that the expense to the state is greater than the benefits derived from it. Opponents of the Film Incentives argue that the state's 25% credit is too generous. It does appear to be, but there is some benefit to being competitive with other states in order to attract the industry, including the tourism bump we receive from folks who want to visit the sites where movies such as "Ironman" or "Hunger Games" were filmed. It is impossible to determine an exact amount of indirect value we receive, but there  is undeniably a return on investment there. Perhaps the best solution is to redesign our program to bring it more in line with others, yet remain competitive. This is the approach that the Senate has elected to take, as reflected in a provision of SB 743, NC Econ. Dev. Partnership Modifications, that provides for a grant program, rather than tax incentives.  North Carolina has such a diverse inventory of locales to offer (mountains, piedmont, beaches, metropolitan and rural settings) that incentives cannot be the deciding factor and we should not treat them as such.

Now that the House has presented its budget proposal, we will assess the feedback from the public, the Senate and the Governor. A summary of the House Budget's key provisions is included here for your review:

Budget Summary

The North Carolina House of Representatives today released its proposed $21.09 billion budget for 2014-2015.  The budget includes a previously announced starting salary increase for entry-level teachers to $33,000 annually as well as unfreezing the step salary schedule that will increase teacher salaries an average of five percent.

State employees will receive an annual $1000 salary increase, an average increase of 2.3 percent.  Highway Patrol Troopers, who are step-eligible will also receive an increase between five and six percent.

The House budget plan protects core services of government while setting priorities in education.  K-12 expansion includes allocating $18.7 million to restore Master's and other advanced degree supplements for teachers, preserving teaching assistants in early education classrooms and fully funding the new Career Pathways pilot program.

"When Republicans took over the legislature a few years ago, the state faced double-digit unemployment and a $2.5 billion budget deficit," said House Speaker Thom Tillis (R-Mecklenburg).  "Today, because of the hard work we have put into turning our economy around and efficiencies we have made in our state budget throughout the year, North Carolina is finally in a position to meaningfully address our priorities including increased teacher and state employee salaries."

The House budget also funds many core services and focuses on responsible stewardship of taxpayer dollars.  The proposed budget does not change Medicaid eligibility, cut provider rates or reduce school nurses.  It provides an additional $9 million in funding for Pre-K, an increase of nearly 13 percent, $5 million to expand crisis services for mental health and additional funding to the state medical examiner's office.

"The House budget proposal provides the services our citizens need and promotes North Carolina's ability to grow our economy and create more jobs," said Rep. Nelson Dollar (R-Wake), the Senior Chairman of the House Appropriations Committee.  "This plan reflects North Carolina's improving fiscal picture which has enabled us to make teacher and state employee raises a top priority."

The House budget increases spending by 2.3 percent from the current year's budget, keeping pace with inflation and:

Salaries and Benefits

·         As announced in February by the Governor, Lt. Governor, Senate Leader and House Speaker, starting teacher salaries will begin at $33,000 per year

·         Provides an average five percent increase for teachers

·         Gives a $1000 salary increase to most state employees (includes UNC faculty and Community College employees)

·         Increases step-eligible Highway Patrol Troopers between five and six percent

·         Maintains existing premiums and benefits to the State Health Plan


·         Follows through on the promise made in February to provide $18.7 million to restore the Master's supplements for a graduate program if coursework was started as of July 1, 2013 and reestablishes the program for all teachers if the degree is in their subject field

·         Fully funds the Career Pathways pilot program at $9.8 million to provide differentiated pay to teachers demonstrating effectiveness or assuming additional responsibilities

·         Maintains full funding for K-3 teaching assistant positions statewide

·         Provides $15.4 million for the Closing the Skills Gap initiative in our Community Colleges

·         Slates $5.9 million to offer veterans and dependents in-state tuition rates via the Yellow Ribbon matching fund program at UNC and the Community Colleges beginning Fall 2014

Health and Human Services

·         Does not change Medicaid eligibility

·         Establishes a $117.8 million State Risk Reserve for Medicaid Program

·         Includes $9 million of additional funding for Pre-K, an increase of 13 percent

·         Provides $9.3 million in state and federal block grant funds for mental health crisis services

·         Includes an 18 percent funding increase of $5 million for Foster Care Assistance Payments to address a sharp increase in caseloads

·         Increases by 101% to $27 million state funding to expand and enhance Child Protective Services including funding to reduce county department of social services caseloads

·         Provides $1 million (23% increase) to the Medical Examiner to address operational issues

Natural and Economic Resources

·         Provides $1.8 million and 25 positions to implement long-term coal ash management and clean up statewide

·         Allocates $3.6 million in additional funding for the North Carolina Biotechnology Center

·         Appropriates $1 million to The Support Center, which provides loans and advisory services to start-ups in low and moderate income communities

·         Provides $2.5 million to the One North Carolina Small Business Program for early-stage support of high-tech and high-growth small businesses

·         Increases Rural Economic Development Division grants by $2.3 million and utilizes $1 million to support downtown economic development and job creation through the Main Street Solutions Program

·         Provides $1 million to match federal dollars that will be used to preserve farmland around military bases, thus reducing the potential for encroachment that threatens national security

Justice and Public Safety

·         Transfers the State Bureau of Investigation (SBI) to the Department of Public Safety (DPS), streamlining all law enforcement agencies under one department and saving the state approximately $1 million

·         Establishes the Computer Crimes Unit within SBI which will investigate Internet-based crimes against children

·         Moves the Domestic Violence Center and Rape Crisis Grant program to DPS streamlining public safety measures

General Government

·         Funds three new positions within the State Board of Elections (SBOE) to investigate fraud in elections, discrepancies in voter registration information and to pursue prosecution for violations of election law

·         Appropriates $10 million to the Housing Finance Agency to create a loan program for the construction of qualified low-income housing units

·         Establishes a Taxpayer Assistance Call Center in Guilford County to provide better customer service to individuals with tax-related questions

Information Technology

·         Maintains the Information Technology Internal Service Fund at $190 million, supported by agency receipts

·         Extends the state Chief Information Officer's authority to approve unmanned aircraft systems to December 31, 2015

·         Designates $21 million to the Information Technology Reserve to support infrastructure and security


·         Increases appropriations from the Highway Fund and the Highway Trust Fund by 3.9 percent

·         Funds resurfacing contracts by $12 million and provides $62.8 million for pavement preservation

·         Repeals tolls and prohibits future tolling of the North Carolina Ferry System routes and fully funds a new system-wide reserve for vessel and facility improvements


The budget proposal will be heard by subcommittees today, Tuesday, and the full House Appropriations Committee on Wednesday.  The House budget proposal can be found on the North Carolina General Assembly website at www.ncleg.net.

Next week, the various Appropriations Subcommittees from the House and the Senate will work together to produce a Conference Report, a jointly produced budget for the General Assembly, and upon approval by both chambers, it will be presented it to the Governor. In the meantime, work will continue on other issues eligible for consideration during the short session. I expect the session to adjourn by the end of June.

Here is a recap of the recent activities of the General Assembly for June 1 through the 9.  My added comments are in bold face italics.

(Certain items of this report provided by and reprinted with the permission of MVA Public Affairs.)


On Wednesday, the Governor signed SB 786, the Energy Modernization Act, into law.


This week the Senate passed:

SB 812, Maintain State Authority Over Academic Standards. (This is the Senate's bill to replace Common Core School Standards.)

SB 743, NC Economic Development Partnership Modifications.  (This bill establishes the Governor's plan for public-private partnership that will redesign the way the NC Department of Commerce promotes the State and builds our brand nationally/internationally.)

SB 793, Charter School Modifications, seeks to clarify the process for review for charter applications by the NC Charter Schools Advisory Board, to raise the application fee for charter applications and to require adoption of rules for the charter application process.  It also seeks to clarify the appeals process for denials of charter applications and make charter schedules subject to requirement to open meetings and public records laws.  This bill passed the Senate on June 9.

The House passed:

HB 230, Clarify Read to Achieve/School Performance Grades.

HB 1032, the Patent Abuse Bill.  (This bill seeks to stop "patent trolling" and nuisance predatory lawsuits.)

HB 1031, NC Economic Development Partnership Modifications. (This is the House's version of the Governor's plan for the Department of Commerce redesign.)

HB 1061, Replace Common Core with NC's Higher Academic Standards. (This is the House's bill to replace Common Core School Standards.)

HB 1062, Schematic Diagrams and Keys for Schools, which would require local school administrative units to provide diagrams and emergency access to school buildings to local law enforcement agencies and emergency response information to the Emergency Management Division of the Department of Public Safety.  HB 1062 received a favorable report in the Education Committee and passed the House unanimously.

SB 370, Respect for Student Prayer/Religious Activity, would clarify student rights to engage in prayer and religious activity in school, create an administrative process for dealing with complaints and clarify religious activity for school personnel.   The bill received a favorable report in the Education Committee and passed unanimously on the House floor.


House Appropriations Subcommittees:

All of the House Appropriations Subcommittees met on Tuesday, June 3.  Each Subcommittee reviewed the differences between the Senate passed budget and the Governor's budget.  State agency officials also were able to give remarks about the Governor's budget request.  The House budget process will continue this week.

House Finance Committee:

The Committee met on Wednesday, June 4, and approved these bills:

HB 1067, Murphy Deannexation, and HB 1080, Watha Deannexation, are local bills dealing with removing areas from the respective municipalities.  Both of these bills have been placed on the House calendar for consideration on June 10.

HB 1069, Unemployment Insurance Law Changes, would make various changes to the law regarding unemployment insurance benefits, including requiring claimants to present photo identification and contact at least five prospective employers a week rather than two in order to be eligible for benefits.  H 1069 has now passed second reading in the House and awaits final approval by the House.

HB 1201, Exempt Admission to Agricultural Fairs, would exempt admission charges to county fairs from the sales tax.  H 1201 has now passed second reading in the House and is on the June 10th calendar for final approval by the House.

Senate Commerce Committee:

The Committee met on Wednesday, June 4, and approved SB 743, NC Econ. Dev. Partnership Modifications. SB 743 would establish the statutory framework that would allow the Department of Commerce to contract with a private, nonprofit entity for business development and recruitment activities.  The bill was referred to the Senate Appropriations Committee where additional provisions were added in a Committee substitute approved by that Committee on Thursday, June 5.  These provisions would establish a new Film and Entertainment Grant Fund to replace tax credits for qualifying production companies that expire at the end of this year.  The bill passed a second reading in the Senate and awaits final approval by the Senate.

Senate Education/Higher Education Committee:

The Committee debated and passed SB 815, Ensuring Privacy of Student Records. This bill passed out of that committee on June 4 and was assigned to the Senate Judiciary I committee for further consideration.

Senate Agriculture/Environment/Natural Resources Committee:

The Committee met Thursday, June 5, to hear a presentation from DENR regarding Governor McCrory's Coal Ash Action Plan (SB 729); Senator Stan Bingham presided. The meeting was for discussion purposes only, and public comment was allowed. The Committee heard remarks from DENR Secretary John Skvarla; Tracy Davis, Director of Mineral and Land Resources; Linda Culpepper, Director of Solid Waste; and Tom Reeder, Director of Water Resources regarding proposed regulations for dam operators, coal ash remediation efforts and future solutions for combustion byproducts, such as consumption by industry, to protect the State's natural resources.

Senate Appropriations Committee:

The committee took up SB 743, NC Econ. Dev. Partnership Modifications, which would establish the statutory framework that would allow the Department of Commerce to contract with a private, nonprofit entity for business development and recruitment activities.  Additional provisions were added in a committee substitute approved by that Committee on Thursday, June 5.  These provisions would establish a new Film and Entertainment Grant Fund to replace tax credits for qualifying production companies that expire at the end of this year.  The bill went on to pass second reading in the Senate on June 9.

SB 3, JMAC Modifications, which modifies the job maintenance and capital development fund provisions.  SB 3 received a favorable report in committee and was approved unanimously by the Senate.


Raleigh News & Observer: Senate proposes replacing film tax incentives with grants

Raleigh News & Observer: NC to start test drilling for natural gas to lure energy industry

Charlotte Observer: Superintendents to N.C. Senate: Don't hurt schools to raise teacher pay


As the "short session" proceeds, there will continue to be standing committee meetings, which are also open to the public, so if you would like to attend one that is focusing on a subject of interest to you, feel welcome to attend. Meeting schedules are subject to change (sometimes at the last minute), so be sure to confirm the schedule on the General Assembly website or by contacting the office of the Committee Chair, before you make the two-hour drive to Raleigh.

If you would like to attend a meeting, but can't make it to Raleigh, you can still "attend" many of the meetings by listening online, just as you may have for the Interim Committee meetings.  You must first determine in what room the committee is meeting.  If the committee meets in either room 544 or 643, you can listen online.  To access the audio version of a meeting, go to: www.ncleg.net, click on "audio" on the bar near the top, then select either "Finance Committee Room (Rm 544)" or "Appropriations Committee Room (Rm 643)" to listen