NC Chamber's Recap and Preview on the NC General Assembly

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  • Problem: -39.3% of NC third graders are reading below grade level -High cost of remedial education at university and community college: -Total remedial education funding in the 2011-2012 budget for Community Colleges is $135.7 million, for the University System $1.4 million was budgeted -29% of those under 22 years old require remediation -Growing skills gap: -Shortages in skilled production jobs – machinists, operators, craft workers, distributors, technicians, and more – are taking their toll on manufacturers’ ability to expand operations, drive innovation, and improve productivity. - The chart show national spending and achievement. Similar trends in North Carolina. When considering education reform, we must recognize North Carolina’s economic realities. While we understand that adequate resources are a concern, we need to reprioritize how currents funds are being used and focus them on the most important programs and initiatives. Solutions: -Excellent Public Schools Act: -Initiatives to ensure that every student read at or above grade level by the end of third grade and continue to progress in reading proficiency so that he or she can read, comprehend, integrate, and apply complex texts needed for secondary education and career success. -NC Teachers Corp: more streamlined lateral entry program to recruit and place recent graduates of colleges and universities and mid-career professionals as teachers in high-needs public schools. -Community Colleges: -$5 million for an NC Back-to-Work Program, which will focus on providing short-term training to the long-term unemployed -Reinvests $12.1 million into four critical areas: funding college-level math instruction at the Tier 1 level, forgoing the scheduled workforce continuing education registration fee increase, restoring and revising multi-campus college funding, and reducing the colleges' management flexibility cut. -North Carolina’s robust community college system plays a critical role in aligning businesses with education and research in order to reach the state’s current and future needs. The NC Chamber believes that great schools are good business, and these education initiatives make smart reforms that continue to strengthen our talent development system and prepare our students for future success. We look forward to continued discussions with state leaders around further addressing workforce needs for North Carolina. Specific Notes: Improve K-3 literacy to ensure that every student can read at or above grade level by end of 3 rd grade School performance grading will issue a letter grade of “A to F” to each school administrative unit that will serve as a report card for greater transparency on the success of school systems  Establish NC Teacher Corps to encourage laterally entry for mid-career professionals that have a desire to enter the classroom, without requiring a 2 year teacher license
  • Problem: -In the past 10 years, North Carolina’s population has jumped by 18.5% and is continuing to grow rapidly. North Carolina is projected to become the 7th most populous state in the US by 2030, with over 12.2 million residents. As the state’s demographics continue to evolve, energy will have an increasingly important role in our economy and the daily activities of those living and working in North Carolina. The growing population amplifies our energy needs and necessitates a comprehensive, all-inclusive energy supply strategy. -If we want to compete in the future, we need to take action on a comprehensive energy supply plan that is executed safely and responsibly. Solutions: At a time when North Carolina’s unemployment rate remains stagnant higher than the national average, we need to employ an “all of the above” energy strategy to explore and research every available source – renewable energy, solar, wind, geothermal, biomass, natural gas, oil, coal and nuclear. We need to be talking about American energy, North Carolina energy – energy that is pro-jobs. -SB820 will increase energy production in our state to develop a secure and predictable energy supply, helping facilitate the economic growth necessary for North Carolina to compete on both national and global levels Specific Notes: -Create the “Mining and Energy Commission” -Create the “Division of Energy, Mineral and Land Resources” -Create the “Joint Legislative Commission on Energy Policy” -Require DENR and Dept of Commerce to work collaboratively to develop necessary environmental and economic protections associated with Hydraulic Fracturing operations -Enhance landowner and public protections -Authorize Hydraulic Fracturing, pending approval by subsequent General Assembly action
  • H952: State Air Toxics Program Reform- -The NC Chamber-supported legislation would eliminate duplications in the state air toxics program and the federal Clean Air Act. -The redundancy of regulations is not only extremely time consuming and costly for our state’s manufacturers, but it also puts North Carolina at a competitive disadvantage with our neighboring states. HB952 brings our state’s air-toxics program in line with other southeastern states. SB810: Regulatory Reform Act of 2012- Includes clarifications to the Administrative Procedures Act, requirements for agencies to provide private businesses advanced notice on audits, clarification that state Air Quality regulations cannot be superimposed with state Water Quality regulations, and lengthening the term for a solid waste permit from five years to ten years – a provision strongly supported by the NC Chamber. Specific Notes: -Direct agencies to provide notice before performing an audit -Require Dept of Labor to provide notice before performing inspections -Clarify that Water Quality Act violations do not include/constitute Air Quality Act violations -Require DENR to track and report on amount of time taken to process permits -Extend solid waste permitting renewal requirement from 5 years to 10 years
  • S824: Requires the Secretary of the Department of Revenue to utilize the rule making process when adjusting corporate net income that results in a combined entity tax filing; and provides for an expedited process around the rule making process when deciding that a corporation should combine their filings as one entity. The Chamber supports the effort to continue developing guidelines around corporate tax filings and the streamlining of the process that tax professionals use when making that determination H462: Problem: 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. Solution: Prohibits contingency fee audits, amended to make the effective date for counties and cities July 1, 2013 with a sunset on July 1, 2015. Additionally, the issue will be comprehensively studied in a legislative committee.
  • NC is part of a national UI system designed to be a: “safeguard for individuals against distress for a short period of time after they become unemployed.” Social Security Board in 1937 Fully funded by employers The FUTA imposes a 6.0% federal tax on contributing employers based on the first $7,000 of each employee’s wages Employers that participate in a federally-compliant state program receive a 5.4% tax credit resulting in a net federal unemployment insurance tax rate of 0.6% North Carolina also levies state unemployment insurance taxes (SUTA) on its employers to fund statewide unemployment compensation benefits and build reserves – this is based on an experience rating Approximately 3,000,000 covered employees in 2012
  • A Do-Nothing Approach is not an option The responsibility to repay this debt falls squarely on North Carolina employers, as they are the only ones paying into the fund. The additional tax burden with a status quo repayment approach could represent an unsustainable increase in total unemployment insurance taxes for North Carolina employers, threatening what is needed most, jobs for North Carolinians. With the fourth highest UI debt in the country, there is a lot at stake for North Carolina employers, who are solely responsible for paying into the fund. North Carolina needs to establish a reliable, predictable and stable UI Trust Fund for employees and employers.  North Carolina needs to establish a reliable, predictable and stable UI Trust Fund for employees and employers.  The North Carolina Chamber Foundation has commissioned a study to provide recommendations to return North Carolina’s UI Trust Fund to a position of solvency and strength in the future.  We aim to have the study completed prior to the start of the 2012 Legislative Session.
  • Specific Notes: I-95 Economic Assessment Advisory Council Member – the purpose council is to aid in the development of the study outlined by the NCGA and commissioned by the NCDOT. The study will quantify the direct and indirect economic impact upon businesses located in and around I-95, as well as those companies that depend heavily on I-95. NC Maritime Strategy Advisory Council Member - the State of North Carolina initiated the North Carolina Maritime Strategy to serve as an open evaluation of North Carolina’s position, opportunities and challenges as a portal for global maritime commerce. The study examined the role that North Carolina ports play in sustaining and strengthening the State’s economy, and identified specific strategies to optimize benefits received from the State’s investments in port and associated transportation infrastructure. NC Logistics Task Force Member - The Task Force’s purpose was to study the transportation and logistics needs of North Carolina currently and in the future to allow it to compete aggressively in the 21st Century economy. Also, the Task Force was directed to study North Carolina’s transportation infrastructure and determine how best to move people and goods in and throughout the state to engage in the national and global marketplace.

Transcript

  • 1. Chapel Hill-Carrboro Chamber Presentation Title Government Affairs Report Gary Salamido Month 00 > 2007 November 1, 2012
  • 2. 2012 Session Recap> Education Reforms> Unemployment Insurance Fund> Infrastructure – Transportation> Energy Production> Regulatory Reform> Business Climate Reforms >2
  • 3. 2012 Session Recap Education & Talent Development Problem Solution>Inflation-adjusted cost of a complete K-12 public >Excellent Public Schools Acteducation and percent change in achievement of17-year-olds, since 1970 (included in H950): >Aligns with several priorities of the North Carolina Chamber’s Education Vision Plan > Promotes public-private partnership through streamlined lateral entry program > Reading-intensive instruction ensures solid learning foundation by third grade >State Budget (H950): > Strengthens community college system by reinvesting $12.1 million in critical areas > NC Back-to-Work ProgramPrepared by Andrew J. Coulson, CATO Institute (cost): Digest of Education Statistics 2009, Table 182, CPI adjusted to constant 2010 $.Missing values linearly interpolated or extrapolated. Running 13 yr total (i.e., K-12) spending per pupil. (scores); NAEP, Long Term Trends report. >3
  • 4. 2012 Session RecapEnergy Security Problem >Growing population amplifies energy needs >NC sitting on the sidelines- competitive disadvantage 75% NC voters support Solution increased access >“All of the Above” Energy Strategy to domestic oil and natural gas >SB820: Clean Energy and Economic Security resources, Act including energy > Begins establishing the regulatory infrastructure from shale needed to support shale gas extraction operations > Provides additional safeguard by requiring the General Assembly to authorize hydraulic fracturing in a future session >4
  • 5. 2012 Session RecapRegulatory Reform $1.7 trillionProblem annual> Over 15,000 state agency regulations created in price tag of regulations past decade – more than all SE states combined! onSolution Americans> H952: State Air Toxics Program Reform > Exempts emission control sources from regulation under the state Air Toxics Program if subject to regulation under the federal Clean Air Act > Brings NC’s air-toxics program in line with other southeastern states > Makes state air-toxics program more efficient and cost effective> S810: Regulatory Reform Act of 2012 > Includes requirements for agencies to provide private businesses advanced notice on audits > Lengthens solid waste permit from 5 years to 10 years >5
  • 6. 2012 Session RecapWater Resource Planning > Eased restrictions on use of reclaimed water and treatment storage facilities > Promoted creation of new water supply through funding for additional reservoirs >6
  • 7. 2012 Session RecapBusiness Climate Problem > Open-ended enforcement – lacked certainty > Contingent fee-based auditing threatens a fair and impartial evaluation of tax Solution > S824: Expedite Rule Making for Forced Combination > Develops guidelines around corporate tax filings and streamlines the process that tax professionals use when making that determination > Promotes a more competitive tax climate by providing greater certainty in state tax laws on the issue of combined tax returns > H1025: Extend Tax Provisions > Extends tax credits scheduled to expire on January 1, 2013 for one year > H462: Contingency Contracts for Audits/Assesments > Prohibits unfair contingency audits; effective for counties and cities July 2013-2015 > Authorizes comprehensive legislative study on issue >7
  • 8. 2013 OpportunitiesTo Create Jobs and Promote aPro-Business Agenda> Strengthen Talent and Workforce Development System> Modernize State Tax Code> Restore Solvency, Integrity and Affordability to the Unemployment Insurance Trust Fund> Protect NC’s Growth and Water Needs> Encourage Adequate Support for State Transportation Network> Continue Updating Workers’ Compensation System> Provide Greater Protection through Tort Reform> Protect and Attract Jobs through Continued Regulatory Reform> Strengthen “All of the Above” Energy Production Strategy> Promote Business Voice in Health Care Exchange Set Up >8
  • 9. 2013 OpportunitiesEducation Reform > Support digital learning through Virtual Education initiatives > Promote early learning and pre-k programs > Literacy and early childhood development > Promote performance based expectations > High performance standards > Continue supporting STEM initiatives > Promote School Governance changes >9
  • 10. 2013 OpportunitiesTax Modernization > 10
  • 11. 2013 OpportunitiesUnemployment Insurance Reform > Part of a national UI system: “safeguard for individuals against distress for a short period of time after they become unemployed.” > Fully funded by employers > 6.0% FUTA federal tax, 5.4% tax credit in a federally-compliant state program > Net federal unemployment insurance tax rate = 0.6% > State unemployment insurance taxes (SUTA) fund statewide unemployment compensation benefits and build reserves > Approximately 3,000,000 covered employees in 2012 > 11
  • 12. Unemployment Insurance SolvencyNC Employers Bear Weight of DEBT & JOBS TAX > Great Recession leads to prolonged unemployment > Insolvency – 4th highest federal UITF debt in the country $2.8 billion $395 Million > Increasing tax on jobs – fully funded by employers Price Tag for > Broken UI system – focus is on paying benefits verse Employers in who receives benefits 2012 with > System focus is on unemployment verse reemployment “Do-Nothing” > Benefit system that pays out more than it takes in Approach > #1 Impediment to Job Creation > 12
  • 13. UI Solvency: Do-Nothing Approach FUTA Tax Cost Per Employee > 13
  • 14. Unemployment Insurance ReformBottom Line – Doing Nothing in 2012 Cost Employers $395 Million Statewide > REAL SOLUTIONS for 2013 from the Chamber Study > Solvency Reinvigoration – enact legislation to provide special tax financing - will return to solvency quicker and less expensively > Improve Program Integrity – establish a program and enforce new requirements based on being able, available and actively seeking work, require work registration, and 21 other measures outlined in the NC Chamber Foundation’s UI study > Unemployment to Reemployment – improve alignment or workforce training and education programs, streamline, enhance accountability and increase use of technology in agencies, as well as 8 other measures in the NC Chamber Foundation’s UI study > Affordability Solutions – enact common-sense reforms to align tax revenues with benefits and to be competitive with other states – proposed benefit changes would NOT affect existing benefits being paid to unemployed individuals and make adjustments in 28 other ways outlined in the NC Chamber Foundation’s UI study > 14
  • 15. 2013 OpportunitiesWater Resource Planning> Facilitate permitting and operation of Aquifer Storage and Recovery Systems to allow usage of treated potable water, raw water and finished water> Align groundwater and drinking water standards for Aquifer Storage purposes> Create additional statewide storage opportunities > Identify and permit abandoned quarries> New reservoir construction > Identify permitting hurdles for those facilities> Simplify permitting process for reclaimed water projects > 15
  • 16. 2013 OpportunitiesTransportation and Infrastructure2013 Bridge to a Stronger FuturePowering North Carolina’s Economy, Transportation Paves the Way(updated document)Priorities –> NC has identified more needs than available transportation dollars –maintenance not free> Integrated system of transportation and commerce assets that enables goods tomove effectively and efficiently into and out of the state > Vital to NC’s ability to create jobs and to recruit and retain business> Maintenance and construction of surface road and highway infrastructure,continued improvements to NC Ports System and freight rail optimization > 16
  • 17. Transportation & InfrastructureThree Focus Areas > System Needs > Highway Connectivity > Integrating Freight Needs into Statewide Planning > Maritime Improvements and Clarification of Needs > Rail Efficiencies > Diversification of Revenues > In light of increased efficiencies in vehicles, use of alternative vehicles, political pressures and strain on global oil demand, the current revenue stream is unreliable and unsustainable. > Local/Regional Options Needed > Transportation Improvement Use Fee Study – detailed study of strengths and weaknesses of vehicle miles fee and other user fee opportunities > Transportation Funding Reform – should be included in any tax modernization discussion > “All of the Above” Energy Strategy with certain percentage of state royalties directed to freight modes of the transportation system > Organizational Enhancements > Coordination of Foreign Trade Zones and Transportation Planning > Improved Project Delivery and Streamlined Regulations > Economic Development Regions – review of the benefits and risks of aligning funding divisions to economic development regions > Expansion of NC Mobility Fund to leverage federal dollars > Transparency – continue and expand prioritization process > 17
  • 18. Transportation & InfrastructureCurrent Involvement> I-95 Economic Assessment Advisory Council Member> NC Maritime Strategy Advisory Council Member> NC Logistics Task Force Member > 18