CONFIDENTIALwww.mcguirewoodsconsulting.com

Legislative Report: 2012 NC General

Assembly Charlotte Chamber of CommerceSeptember 28, 2012

Business Expansion | Federal Public Affairs | Strategic Communications & Grassroots Mobilization

State & Local Government Affairs | Emerging European Markets

Atlanta • Charlotte • Charlottesville • Chicago • Columbia • Norfolk • Raleigh

Springfield • Tyson’s Corner • Washington, D.C. | Bucharest, Romania

www.mcguirewoodsconsulting.com

2

2012 Short Session of the NC General Assembly

• “Short” May 16-July 3

• Bills: 203 Became Law

• Governor Vetos & Veto Overrides

3

2012 Short Session of the NC General Assembly

• State Budget– $20.2 Billion-FY 2013

• Increase of $475 million from FY 2012– Restoring education cuts and Medicaid hole.

• Significant differences between House and Senate proposals• Governor Veto and Veto Override• No tax increases

4

Charlotte Chamber 2011-2012 Agenda

“The Charlotte Chamber creates competitive advantage by growing the economy, advocating pro-business policies and

delivering innovative programs and services.”“With the current revenue and unemployment crises, it is more

critical than ever that job creation remains central to the work of public and private entities. For that reason the following

recommendations include limited requests for funding and only those we believe will speed North Carolina’s economic

recovery.”

5

Charlotte Chamber 2011-2012 AgendaTransportation

– Retain and secure funding for the completion of I-485, the widening of I-485 South, the Monroe Bypass, the Garden Parkway and Yadkin River Bridge replacement.

– Support completion of the Charlotte’s mass transit and light rail plan.

– Support alternative methods for additional funding for roads and transit such as tolls, public private partnerships and design-build financing.

– Support efforts to remove conflicts between NCDOT and local policies and regulations.

6

2012 Legislative Outcomes

Transportation

– Public/Private Partnerships• House Bill 1077: PASSED

– Authorizes DOT to enter into PPP’s.

– Light Rail-”Blue Line”• (2011 Budget) $28 million for a transportation fund that will

help pay to start extending the Blue Line from uptown to UNC Charlotte. Language removed that would have barred spending state money on the proposed commuter rail through North Mecklenburg.

• (2012 Budget) 25% reduction.

7

2012 Legislative Outcomes

Transportation

– Garden Parkway• (2011 Budget) Funding delayed but restored; taking $20

million for the current fiscal year and a $35 million appropriation for the next fiscal year. Appropriations are restored by half for the 2012-2013 fiscal year.

• (2012 Budget) Funding cut for next year. Funds appropriated for 2012-2013 transferred to the Mobility Fund; Eliminated Gap Funding.

– Gas Tax Cap• (2011 Budget) No Cap• (2012 Budget) Within the budget, the motor fuels tax is

capped at 37.5 cents until June 30, 2012.

8

Charlotte Chamber 2011-2012 AgendaJob Creation

– Support incentives and programs designed to attract jobs.

– Support funding for the arts, travel and tourism in North Carolina as it spurs economic development.

– Support actions to ensure adequate supply of energy and promote regulatory tools to manage cost and rate impact to customers.

– Support North Carolina’s Right to Work laws for private and public employees.

9

2012 Legislative Outcomes

Job Creation– One NC Fund

• Budget Provision-PASSED– $9 million in recurring funds; Changes to cash flow basis; $45

million to be transferred to General Fund; $15 million to remain ($5 million of which is not subject to the One NC Fund); $14 million cap for Governor’s commitments; Requires reporting of claw backs; Johnson $ Wales: $500,000; RTI: $500,000

– Jobs Development Investment Grants (JDIG)• Budget Provision-PASSED

– $6,500,000 in non-recurring funds$6.5 million in non-recurring funds in reserves; No legislative cap with preference given to Eco-Industrial Park projects. Reduces funding to only meet needs for 2012-2013 grant payments.

10

2012 Legislative Outcomes

Job Creation– Comprehensive Energy Plan

• Senate Bill 820-PASSED-Diversifies energy production in NC to help provide a secure, stable and predictable energy supply to facilitate economic growth, job creation and expansion of business and industry opportunities. -Establishes the regulatory infrastructure needed to support shale gas extraction operations.

– Regional Economic Development Commissions• Budget Provision: Funding Secured-PASSED

– Increase of $1,339,500 in non-recurring funds. (In addition to $2.25 million in recurring funds)

11

Charlotte Chamber 2011-2012 AgendaTaxes

– Support the 2011 expiration of the corporate and personal income tax surcharges.

– Oppose targeted taxes, fees, policies and rules that would impede business growth.

12

2012 Legislative Outcomes

Taxes– Expedited Rulemaking for Forced Combination

• Senate Bill 824: PASSED– Tax reform creating a predictable and fair tax system by

clarifying combined tax returns for multi-state businesses

– Tax Credit Extensions• Budget Provisions: PASSED

– Extension of tax credits scheduled to expire on January 1, 2013 for one year.

– Investments in certain business property.– Earned income tax credit.– Film Tax Credit (*2 Year Extension)

13

2012 Legislative Outcomes

Taxes– Prohibit Unfair Contingency Fee Audits

• House Bill 462: PASSED– Prohibits impartial and unfair contingency fee audits on

companies, effective July 1, 2013 through July 1, 2015.

– Economic Development/Finance Changes• House Bill 1015: PASSED

– Technical changes to finance laws, including a 20-year carry forward for Article 3J credits; clarification of the sales tax refund for aviation fuel; one year sales tax refund for purchases of specialized equipment used at state ports.

14

Charlotte Chamber 2011-2012 AgendaRegulatory Reform

– Support efforts to reform NC’s Workers’ Compensation Act.– Support efforts to reform NC’s environmental laws and

regulations to encourage growth.– Support efforts to pass an assessment model for funding

Medicaid.– Support efforts to reform NC’s medical malpractice system.– Support the maintenance of a balanced civil liability

system in North Carolina including the elimination of joint and several liability and the elimination of the collateral source rule.

– Support the preservation of current annexation laws.– Support efforts to increase the efficiency of Mecklenburg

County’s Board of Equalization and Review.

15

2012 Legislative OutcomesRegulatory Reform

– State Air Toxics Program• House Bill 952: PASSED

– Elimination of duplicative regulations in the state’s air toxics program and implements identical requirements of the federal Clean Air Act.

– Regulatory Reform of 2012• Senate Bill 810: PASSED

– General reforms including clarifications to the APA; requirements for agencies to provide businesses advanced notice on audits; clarification that the state Air Quality regulations cannot be superimposed with state Water Quality regulations; and lengthening the terms for a solid waste permit.

– Annexation Reform• House Bills 005 & 925: PASSED

– Prevention of ongoing annexations in nine cities and places new restrictions on future involuntary annexations.

16

2012 Legislative Outcomes

Regulatory Reform

– Banking Modernization• Senate Bill 816: PASSED

– Reforms the state’s banking laws: requires holding companies of banks to be registered with the Commissioner of Banks; amends laws regarding liquidations and dissolution of banks.

– Boards & Commissions Reform: DID NOT PASS• Identifies numerous boards and commissions that are being

considered for elimination or downsized.

17

Charlotte Chamber 2011-2012 AgendaEducation

– Support efforts to improve Charlotte-Mecklenburg Schools, Central Piedmont Community Colleges and UNC Charlotte including:

• Support the funding of enrollment increases.• Support the completion of the state’s financial commitment

to Johnson &Wales.• Support funding for operations of UNC Charlotte’s Energy

Production Infrastructure Center (EPIC) and Center City Building.

– Support efforts to reform K-12, community colleges and universities to allow for flexibility in managing budget cuts with minimal impact on students.

18

2012 Legislative Outcomes

Education– Education Reform

• Budget Provisions: PASSED– Performance Pay Plans– Reading Improvement– 3rd Grade Reading Level– NC Teacher Corps & Grading System

– K-12 Spending• Budget Provisions: PASSED

– Restoration of flex cuts– 1.2% raise and additional PTO days– Pilot program for innovative high schools

19

2012 Legislative Outcomes

Education– UNC Charlotte

• Budget Provisions: PASSED– Enrollment Increase Funding: Approximately $1.5 million– Need-Based Financial Aid: Addition of $24 million– Management Flex Cuts: Decreased to $244,000

20

What is Next?......

• 2012 Elections– Freshman Legislators– Gubernatorial Race– Supreme Court

• 2013 General Assembly Session– Tax Reform– Energy Reform– Education Reform