PENC Legislative Update
Betsy Bailey, Executive Director, PENC – August 13, 2007
Session Adjourns: The North Carolina General Assembly concluded the 2007 legislative session late Thursday evening, August 2nd, following more than a week of long, busy days in which a $20.7 billion dollar budget and several significant pieces of legislation were passed. Topping the list of controversial legislation that was passed in the final hours was the Solid Waste Management bill, which despite efforts to reach consensus through a drawn out public stakeholders process, still received strong opposition from local governments and waste companies. Another contentious bill that received final approval during the waning hours of the session was a measure that would tighten regulations on how communities can transfer water from neighboring river basins. The Interbasin Transfer bill does not affect the Concord/Kannapolis plan to draw water from the Catawba river basin, even though this request was the reason the legislation was created.
Another major piece of legislation, SB3 – the energy bill - requires a 12.5 percent renewable-efficiency standard by 2017. This would make North Carolina one of the first Southeastern states to require its utilities to provide a set amount of retail electricity from renewable fuel and conservation methods. Lawmakers also passed a bill (SB 668) requiring that state buildings meet new energy efficiency standards. (The Associated Press, 8/3/07 as reported in The Insider).
Budget: Democratic Leaders and the Governor praised a budget that they say was needed to relieve Counties of their Medicaid burden and address critical education needs and the increasing cost of services. Republicans, who largely voted against the budget in both chambers, contend that spending is out of control and that this budget exceeds inflationary cost increases and spending necessary to address North Carolina’s population growth.
According to both state and national budget figures, North Carolina’s spending during the past three decades has increased slightly faster than the national average. However fiscal analysts cite several reasons: NC is one of the fastest-growing states, and that means increasing numbers of kids in school, more state employees and a greater demand for services. Costs are also rising, particularly health insurance. But even with its budgets on the rise, North Carolina spends less than most other states per person. According to the most recent data available from the Tax Foundation in 2005, North Carolina spent an average of $7,006 for every person compared to the national average of $8,000 (The Insider, 8/9/07). However, the legislature has also raised the income tax on the wealthy and the sales tax. As a result, North Carolina’s tax burden has risen to 19th in the nation compared to 36th in the nation back in 2000. The state’s standing could change after action taken during this legislative session to reduce the income tax on wealthy residents. (Rob Christensen, The News and Observer, 8/4/07.
The Partnership for North Carolina’s Future, a broad coalition of organizations supporting increased funding for infrastructure, was successful in focusing the legislature’s attention on providing tax options for local governments to address their ever increasing needs. After much negotiation between the leadership in the House and Senate, an agreement was reached that allows counties to hold a local referendum to increase the land transfer tax by .4 percent or increase the sales tax by half a percent. Fast growing counties, in particular, are likely to put this option before their local constituency as soon as possible but, interests representing the realtors and home builders, who strongly opposed the local option authority, are poised to renew their campaign at the local level.
Although the final budget included additional funding to address some of the state’s infrastructure needs by providing local option taxing authority, $100 million in bonds for water and sewer facilities and appropriations for UNC capital projects, it failed to provide much needed funding for a transportation system facing a 65 billion shortfall over the next 25 years. The lack of transportation funding is forcing the NC Turnpike Authority, which had sought at least $20 million in gap funding to support its first project in Wake County, to consider a public-private partnership as its only alternative – or face a project delay of up to two years. The discontent among transportation stakeholders and legislative leaders such as Representative Nelson Cole and Senator Clark Jenkins over the neglected transportation budget may spur support for a fall special session to address transportation problems.
Additional information including a complete, comprehensive summary of the 2007 Session of the General Assembly will be provided in the PENC newsletter later in August.
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