2010 Legislative Session Summary

What They Did

The 2010 North Carolina Legislative Session has come to an abrupt close, leaving behind a mixed bag of new laws and a slew of serious problems that have yet to be resolved by our government. The major themes of this legislative session were tax incentives and ethics bills, although there were other notable laws in the areas of education, fees and regulation.

This tableau played out against the backdrop of the economic stagnation that has plagued our state in recent years, prompting the state government to focus on job creation policies and economic stimulus programs.

Following is a list of notable bills passed in North Carolina’s 2010 legislative session:

Economic Incentives:

In the midst of a serious recession, it is no surprise that cutting taxes would be a strong recourse to spur the recovery effort. However, instead of lowering taxes for all North Carolinians, the NC House and Senate opted for targeted tax breaks for the industries they hand-picked. This lengthy series of economic incentives legislation include such bills as:

• Renewable Energy Incentives – HB 1829: A renewable energy incentives bill. This bill gives tax credits for the construction of renewable fuel facilities, for biodiesel producers, and various other renewable energy credits.
• Economic Incentives Alignments & Changes – SB 1215: A bill that extends economic incentives to motor sports teams, major recycling centers, and a variety of random industries.
• No Add-Back for Film Credit/Apportionment – HB 713: A bill which exempts tax credits awarded to film companies in North Carolina from state taxation.
• Various Economic Incentives – HB 1973: This bill expands the film tax credit for Hollywood production studios and extends tax credits on recycling oyster shells, incentives for eco-parks, sales tax exemptions for wood chippers, and creation of the NC Green Business Fund.

Ethics Reform:

Ethics reform was the second most prominent theme of this past legislative session. The General Assembly passed a variety of bills ranging from modernizing the Alcoholic Beverage Control (ABC) System to criminalizing video poker machines, with several bills passed that sought to further regulate political campaigns.

• Modernization of the State ABC System – HB 1717: This bill came on the heels of a number of controversies regarding conflicts of interests between ABC staff and alcoholic beverage proprietors. As a result, this legislation seeks to prevent such instances from occurring again.
• Gov’t Ethics and Campaign Reform Act of 2010 – HB 961 acts to increase penalties for accepting campaign contributions in the name of another, increasing the accessibility to campaign finance information and various other initiatives.
• Citizens United Response – HB 748: This bill focuses on increasing disclosure requirements for candidates’ campaigns, and prevents corporations from directly endorsing any particular candidate or political committee.
• Ban Electronic Sweepstakes – HB 80: This bill outlaws electronic machines used for sweepstakes purposes. This law ironically outlaws a form of gambling due to the immoral behavior it encourages, but does not outlaw the state’s very own gambling program, the North Carolina Education Lottery.

Taxes, Fees, and Regulation:

Due to the adverse economic weather, no notable tax increases passed through the General Assembly during the 2010 Legislative Session. There were, however, many instances of fee increases.

• Increase Licensure Fees/Athletic Trainers – SB 1210 is a law that doubles the license fees for athletic trainers from $100 to $200, and also substantially increases other ancillary fees associated with the practice of athletic training.
• Extend Emergency Foreclosure Program – SB 1216 extends an emergency foreclosure program to help troubled home owners, it also raises a substantial amount of fees. For example, mortgage brokers and lenders are required to pay a $625 license fee and an annual license renewal fee of $300.
• Local Energy Efficiency/Renewable: While not necessarily in the same vein of taxes and fees, SB 1114 could be classified as a regulation law, or rather, a lack thereof. Regulations such as those circumvented in SB 1114 act to ensure the integrity of government through competitive bidding and public disclosure. This law permits a number of cities to forgo competitive bidding before entering into contracts with companies for “pilot programs” aimed at energy efficiency. Competitive bidding keeps the government’s business decisions objective and mitigates the possibility of a conflict of interest. Additionally, “pilot programs” are not defined in this bill, leaving the applications of this legislation open to wide interpretation. Furthermore, there is no sunset on this bill, so behind the scenes dealings will be allowed in perpetuity.

Healthcare:

Healthcare was not necessarily the hot topic of this year’s legislative session, but nevertheless considerable legislation was passed. Two of these bills increase the already crushing costs of the state employee health insurance plan.

• SHP/ Age-Out Dependents; Tobacco Use Testing – HB 1707 allows dependent children of state employees and teachers up to the age of twenty-six to remain on their parents’ state health insurance plan.
• Ins. & St. Hlth Plan Cover/Hearing Aids/Autism – HB 589 is a bill that expands the state healthcare coverage to provide for hearing aids and hearing aid replacements.
• Improve Childcare Nutrition/Activity Stnds. – HB 1726. This bill requires the Child Care Commission to investigate different ways of affecting children’s nutrition at daycare, primarily by implementing a strict dietary regiment, which outlaws chocolate milk, kool-aid, and limits fruit juice intake.

What They Didn’t Do

A large amount of legislation was presented and deliberated in the General Assembly during this past session. Many important bills, however, were unsuccessful in even being granted an honest debate, most of them dying in committee. Several of these bills would have made important strides in meeting the impending challenges facing our state.

Following is a compilation of a number of the many unsuccessful bills that would have made considerable progress in our state, but was found to be unfavorable by the powers that be in the legislature and denied a vote.

Tax Relief:

Given the troubling state of our economy, the best “stimulus package” that government could possibly give to the people would be to let them keep more of their own money, i.e. reducing taxes. Unfortunately nothing, apart from hand-picked incentives, was promulgated during this past session in the form of tax relief. The legislation that did seek to cap or lower our taxes died in committee.

• Reduce Tax Burden on Small Businesses – HB 1989: This bill would create a 6.8 percent top marginal tax rate on small businesses in North Carolina. Currently, most small businesses pay individual income tax rates on their income, with a top marginal rate of 7.75 percent.
• Lower Corporate Income Tax –SB 1426: An act to reduce the corporate income tax rate to a flat 5 percent, compared to the current 6.9 percent rate.
• Tax Fairness in Education –HB 1988: This is an important education bill that would have given income tax credits for those individuals who have children in private schools. These taxpayers are required to pay taxes to public education institutions, even though they do not participate in public schools.

Immigration:

Although it was featured more conspicuously on the national stage, immigration reform initiatives were also attempted in our state this year. Two bills seeking to tackle illegal immigration problems never saw the light of day, as they were sent to committee to die.

• Failure to Complete or Carry Alien Reg. Docs. – SJR 1349: A bill to consider illegalizing the failure to complete or carry alien registration documents.
• Disapprove Comm. College Rule/Illegal Aliens – HB 1672: This bill would have ensured that only legal residents may enroll in North Carolina’s community colleges.

Healthcare:

Another notable, albeit unsuccessful, bill arose as a backlash to the national healthcare overhaul. This bill was presented in the form of a joint resolution to circumvent short session laws.

• Protect Healthcare Freedom – HJR 1674: This motion would resolve the North Carolina General Assembly to consider legislation intended to protect the freedom to choose healthcare and healthcare insurance.

Conclusion:

This was a remarkable legislative session due to both the legislation that was passed, as well as what was not passed. In order to defibrillate our flat lining economy, the General Assembly passed numerous pieces of economic incentives and targeted tax breaks legislation. Unfortunately, many bills that could have been more influential in economic stimulation, such as reducing small business and corporate income tax rates, did not muster the support needed.

Ethics was the other key catchphrase of the 2010 Legislative Session, with numerous bills ranging from reforming the ABC system to banning electronic gambling being passed.

In regards to the notably unaddressed issues during this past session, healthcare and immigration stand out from the crowd. On the heels of a rising national and state consensus of the importance of tackling illegal immigration problems, two bills were drafted and quickly blocked in the General Assembly, leaving this problem to go another year without resolution. Furthermore, as the General Assembly broadened the state healthcare coverage to include other treatments on its plan, it ignored legislation to protest against the infamous “Obamacare” health reform.

While so many issues remain to be addressed in our state, we can only hope that proactive legislators will be up to the task next year.