This is the finance committee and we begin on time, though with Senator Brown. Let's everybody get a seat. Senator Apodaca you have a seat? Okay, first thing first, this is the finance committee we have two bills before us today, House Bill 117 and Senate Bill 607 will go on but first thing first let's introduce our pages for this week. Now if I mispronounce them please excuse me that Roben Woods, Senator Sanderson, [xx] Senator Tuck, Conor Christian, Senator Pate, thank you Harris Green, Senator Stein. Patin Brainy[sp?], Senator Berger. Constance Woods, Senator Smith, and Parker Castleberry Senator Tillman. Very good, thank you and we appreciate you all helping us this week, and you rely make our job a lot very easier for what we do and we thank you and we hope you've enjoyed your stay here in Raleigh in the legislative building. Second portion of this we will introduce our Sergeant at Arms who help us make this meeting go: Canton Lewis, Charles Marsalis, Steve McKaig, Jim Hamilton, and Larry Hancock. Thank you very much. Mr. Chairman. Yes sir. Inquiry of the Chair. Yes sir. Are you always this cheerful before nine o'clock? Absolutely. I was up since four o'clock this morning waiting for you to text me. Follow up. That's why you turned crunky at 11, right? I know you did. OK I understand Senator Berger is supposed to be here, on Wade Avenue. OK. Well that was House Bill 117 and I see that's a PCS, I'm I correct? OK, great. Let's see now and let's begin on Senate Bill 607 Constitutional Amendment On Tax Legislation. Senator Rabin and I believe Senator Jackson will be involved with this. First of all Senate Bill 607 has a PCS, Senator Apodaca make the motion that we accept the PCS for discussion. All in favor please say aye? Opposed nay? Ayes have it. Senator Rabin would you be kind enough to begin this and then we can a staff to help us whenever you need to. Happy to do so and thank you Mr. Chairman. Members, Senate Bill 607 is a taxpayer bill of rights, I will discuss section one they short and size straightforward. Section one part one is the maximum rate on taxes income. And this bill and changes section two, article five of the North Carolina constitution to be re-written with the change of one word or one number. Currently the maximum income tax rate in our state in 10%, this lowers that to the maximum personal income tax rate to the number 5%. And I will remind the committee that still deductions will be made so that this tax is only on net income. Be happy to answer any questions that anyone has that we changing the number 10 to the number five. Let's take this first piece and then try to get this one understood and clarified. Thank you, Mr Chairman. Members of the committee, you hear the social amendment for reducing the maximum income tax rate in North Carolina from 10% to 5%. Any questions? Senator Stein has a question. Thank you. Has the state ever had an income tax above 10%? I don't know all the way back, I'm going to say no. Did you know? No. [xx] we'll double check, but I do not believe that. Follow up question. Follow up question. I mean it will be very helpful to have some historical data here, say over the last 25 years what number of years
in that period of time have we had an income tax above 5%? I think. Senator Apodaca. Memory serves me right 2008/2009 we were getting awful close to 10, I think we were over 8 in some categories headed towards 10, just thinking out loud. Actually that was the surcharge. was put on. It was actually moved up from 7, 7/5, to 8%. That doesn't answer my question. My question was over the last 25 years, of those years, how many years does North Carolina on the income tax above 5%? [xx] can you get that? Yes sir, Mr. Chairman, the income tax rate is currently over 5% and has been over 5% for all of the years that you have mentioned. Comment, that I'm all for having the lowest income tax rate we can, I think that states that have had these tax payer bill of rights and Colorado comes to mind having immediately regretted it, because circumstances arise that one can't anticipate, then those state legislatures harm strong is to have a deal with changing financial circumstances, and to lower this number to five, rate above which we are currently and have been for each of the last 25 years and put that into the constitution seems like really bad governors. Mr. Senator. Yes sir senator Rabin maybe you an respond to that? Thank you for your comment, I will take the other side of that comment from Senator Stan, it has been the intent and the desire of this legislature for the five years that I have been here to do our level best to lower the most honors tax that we have which is the personal income tax where we are taxing product rather than taxing sales and consumption. And we have lowered the tax as you know 2% already and we're heading in the direction to lower the personal income tax to 5%, and having said that, when we do get it to 5%, we don not want to be palm of this body rather than the will of the people to once again tax productivity and tax their hard earned income, we do have that our disposal, the ability to expand, and increase sales tax or consumption tax. So, I will argue with you that the hands of a legislature are not bound within the ability to raise tax in an emergency, and, if I may Yes Sir. [xx] a little? Continue Senator Raven. If you'll bare with us until Senator Jackson has his say we will also put forward an amendment to our constitution before the people that will give us a proper and physically possible savings reserve that to which this legislature can go when needed, so, that's my rebuttal to your comment. Okay, I Senator Brown. Thank you Mr. Chairman, Senator Raven also in section 2A, I think that gives you an emergency option, you may want to discuss that as well? Yes we do in special events, National disasters, disasters if we are, we can, well we can go back and revisit them. Okay, Senator Hise just for clarification real quick, and maybe from the comments, the amendment says the rate of tax on incomes, I'm assuming that will apply both to incomes and to personal incomes as a ceiling, is that correct? Corporate and Personals, Senator Raven. I do not believe that applies to corporate income, Senator Hise will have staff clarify that, I believe that this section it does apply. Stand corrected thank you Senetor [xx]. Any income tax? Alright members of the committee any additional questions, or we'll go on to the next portion of this Senate Bill 607. Thank you Mr. Chairman and members. Thank you Senator Raven. Senator Jackson. Thank you Mr. Chairman good morning members, you know we've been [xx] fortunate in some years to have a huge surplus here in our state I think six or seven year we had over a billion dollar surplus, and the we're fortunate this year to have 447 plus million surplus and it's been my experience in business over the years that it's not necessarily what you make, but it what you save by what you do make and we have a general statute in place that says we're supposed
to contribute 8 percent to our reserves and that is never been withheld as always for some reason, or another we've never been able to accomplish that over the years that it has been in place, and what section two of this bill will do is actually it establishes what is called the emergency save and preserve fund and it will be established in the state treasury interest on the money in this account will stay withing that account, and no money from this fund shall be withdraw unless their is a thirds vote which in my thinking means that you got to have bi partisan support, and that it would certainly be in the case of a disaster whether it will be financial or natural disasters you get everybody together, and the intend, or my intend on this was to make us be able to sit down talk and work together to get our state out of the economic financial or natural disaster that is occurring. This would also be put on the ballot in March of 2016. I'll be glad to answer any questions concerning section two. Alright members of the committee any additional questions? And this is just section two right now, Senator Jackson. Yes Sir. Sistine Thank you Mr. Chairman. Senator Jackson does it dictate in the constitution how at what level the Emergency Savings Reserve Fund is to be funded or is that at the discretion of the legislature? Currently the way this Bill is written Senator Stan it is at the discretion of legislature. Thank you. Question. Would you? Yes [xx] understand this term. Repeat your question again, but I think I answered it correctly the first time, but we'll try it again. Thank you. I asked whether the provision dictates at what level the legislature has to fund the Emergency Savings Reserve Fund, or is it at the legislature's discretion? And I answered correctly but I want to add to that, the way the Bill is currently written, there will be an 8% Cap as we have in general statute now, that when it reaches at 8% Cap it, the many refer back to the General Fund, but to answer your question, it is at the discretion of the legislature currently as this Bill is written to [xx] and how they spend it. Okay, I've got Senator Newton. Thank you Mr. Chairman, thank you Senator Jackson I want to congratulate you and others that have worked on this and the effort that you made to bring this forward, I was just on the early this morning and we were talking about government spending and what we need to be doing in the future about controlling governments spending for the eventuality that you just described. The down towns and their economy, the natural disasters and so forth, and this is an excellent idea and what Senator Stan just asked you about the funding, would you, and I think this is a great place to start and and I think we need to continue to think about it, work and see if we can continue to improve it, would you be amenable to any kind of amendment or changes that would set up how this will be funded and requiring a certain amount go there or and under those kinds of conditions? Senator needn't know, I absolutely would be amenable too it and would suggest a simple and time we have we do change it some way of stating how this fund would be funded if not, we'll end up, sort of, in the same situation if we're not careful except in this case it will be in a constitution and we are sort of, required to do what the constitution says. Okay, Senator Jackson, presently the Rainy-day fund that we have in the General Assembly that we're trying to abide by is not part of the constitution, am I correct? Yes, sir that is correct Mr. Chairman. Okay, thank you. Senator Mackysic. Senator Jackson I coundn't understand the need for a Rainy-day fund and I think that we need to always establish one to have adequate resources regardless of what crisis may call natural disasters, economic downturns you name it, but in this particular provision, says the only way you can access is with a two-thirds vote from other house and the senate and he can really handcuff you in the need of very dire circumstances to get a super majority vote, what is the logic behind that? Mr. Chairman and Senator Macysick that's what I was explaining in my opening comments. My intentions in this was to make it so that whomever's in charge would have to work with the other party to make sure they get their simple
majority and I feel like that as a whole, the general, members of the general then it going to be this General Assembly or future General Assemblies, they have the best interest of the state at heart and if there is an actual or economic disaster in this state as we've just gone through recession, that they walk across party house and they would get a simple majority Follow-up, if I can, Follow-up. But it doesn't say there needs to be bipartisan [xx] simple majority and in the today, democrats will still be out of luck in having a voice. So it does not say bipartisan Senator Jackson. I guess my greatest concern is, either one would see because the democratic in charge of a public counting in charge, independent body among these to handcuff you when there is a dire emergency that needs to be addressed because you don't have a super majority vote, I'm having a hard time dealing with the large congregation here, it should available either of simple majority not a supermajority or either just space the need for there to be appropriations made in some way that could be established to ensure appropriate public input as well. Senator Jackson. Thank you Mr. Chairman. Senator McKissick I understand what you're saying but I totally disagree with what you're saying, I think these needs, it doesn't have to say bipartisan I think we understand that it would normally be a bipartisan support to get a super majority, and I think this forces the members to work together. I don't agree with everything Senator Brown always says and nor does he agree with I, but we work together for the good of the state and I think that is what this bill would be doing with the two-thirds vote. Senator Bill Rabon. One last follow up. OK, go ahead Senator Mckissick. Would you be open to an amendment just to make it a simple majority rather than two-thirds super majority because I think in the long run everybody will be better served. Mr. Chairman and Senator McKissick absolutely not. OK, Senator Bill Rabon. Thank you I believe Senator Jackson just answered or just said what I wanted to say, I will go back to my statements earlier and the idea. I'm not trying to put words into senator Jackson, but the idea here is that this money is sitting there and in a true emergency in a disaster situation this money is available at all times, but it can not be used simply we are on "a tight " situation and we don't have the political will to expand sales to actual consumption tax or to raise consumption tax. We just want to take the easy way we want this money sitting there so that when we need it by Gosh it will be there and we can go there and use it. When those situations arise, political ideology will not triumph good judgement and take care of the state and I believe that I firmly believe that regardless of which child the [xx] is in the majority at that time. Thank you for for standing firm Senator Jackson. Members of the committee. Members of the committee, additional questions? I get Senator Rabin and then Senator Brock is next. Just a quick comment on the question of dire, if we can't act together and get something done with the super majority, if we we have truly dire circumstances and the people have elected the wrong representatives period. OK, and then Senator Brock. Thank you Mr. Chairman I was just going to point out that in the 2006/2007 fiscal year that the State on North Carolina had a $2 billion surplus, and how much better off with the state would have been if we would have implemented that back then to put money into reserves that during the good times you prepare for the bad times, and didn't do that and it was tough on the state and we've had to make a lot of changes to get North Carolina on the right path, but if we had this back then the State of North Carolina would be on a lot more better shape today. So I commend you on your bill. Thank you. Just one second is because we had third part to this. Senator Jackson question to you may be to step who presently has the authority to take money from the rainy day fund? Well, I would prefer staff to answer that question but I think I know but [xx] Miss [xx] will you help us? It's our opinion and I can have appropriation sir correct me if I'm wrong but the general assembly must appropriate that money to be spend, the governor doesn't have the authority to take that money that it must be story to appropriation by the general assembly Just a
follow up to that has this been tested in the sense that the governor has actually taken, some governors have taken money from the Rainy day fund without general assembly approval? It is my understanding that in every instance with that has happened the general assembly has affirmed that action and has later appropriated the money. Last question and that being will this bill help clarify that issue so although there would be misunderstanding? It will go on to help further on to help clarify this is subject to the civil majority in general assembly. Okay senator Bryant on section two, correct? I didn't know I was limited to this section. Discussing at this point ant then will go to the third section in a moment Combination of one and two but you can see where you want to put it can I just ask the question? Go ahead. And you can I will tell you where you're going to put it. Okay, I go ahead Senator Bryant, have at it. Not quite, maybe I'm not awake but anyway, I hope I'm missing the point but anyway, to the staff and perhaps to Senator Jackson, I'm curious if this were to have already been enacted, if we were implement remaining that this year, I'm trying to get a scale in my mind, in terms of impact, that's where I'm going. How much money would be removed when we to remove from our general fund availability this year for example, if we were to implement these limits? Senator Jackson? would you like Income tax. Would you like to spanish amendment? You can file a follow-up. Is it a different question than what you just presented? I was just trying to make my question clear about Senator Jackson. Thank you Mr Chairman. Senator Bryant, the way this bill is currently written, does it mean I'm not exactly sure how to answer your question because there is no direct direction on how this account is funded, but to expand upon that answer, in today's, as of today we would not have to re-gender this account, because of where we are with our surplus on the budget Okay, you do have a follow-up question? Okay. If we were to have a 5% tax level and with that effect, this year what our availability is and how much would that be? What? Income tax level. Section one Mr. Chairman? Yes sir. I'm going to ask staff to jump in on this, but it is my opinion that it would affect the total availability not necessarily for this firm but the entire State, are a far a legend I think we got Mrs Phinell will try and help with that question. Again and I have this search scratch me if am wrong right but right now our personal income tax is 5.75% if they are absorbed to go into effect immediately absent any other changes to the tax code that would be fiscal, impact of 1.7 to $2 billion. I think I have the same question of part three when I get to it I'll just let you know after a cued explanation Okay, very good. Alright, any additional questions on part two. Thank you, if you teacher in North Carolina waiting for your all ready to get back to the national average, or if you're a student waiting to get access to a textbook, or if you're a parent and struggling to paper choker, I am waiting this for a choker subsidy. You might think we're still in an emergency situation and are we going to find those programmes that we have legislated and we have responsibility for before we start putting, what I would say is limitations in our constitution is to how we can address our serious problems? Senator Jackson, do you have an answer to that question? Is there a question in that, what is the direct question? The direct question is, are we going to take care business before we start messing with the constitution? Mr. Chairman, Senator Van Duyn, I think we've been taking care of business for the most part, I mean I think when we mentioned teachers we give them one of the largest tax rate, I mean salary increases they've ever had in the history of the state, so I feel like we're all doing that. But I want to also take just a moment and let you know if we cap this at 8%. 8% cap is only about one month's savings reserve for this state, it would cover for about one more maybe just a few days over. So we're not talking about
a huge amount of many going into this thing if we're only talking about a 30 day surplus, and I think that is only the prudent thing to do at the very least. OK. I think that, Senator Waddell. Thank you Mr. Chair. As I was reading this and you talk about emergency, that emergency fund and it will remain part of the unappropriated general fund balance until appropriated by the General Assembly. We've talked about the kinds of emergency disasters, unforeseeable things. Is there anything that would be exempted from us tapping into this emergency fund? Mr. Chairman. Senator Waddell, I do not see anything being exempted as long as two-thirds of the members of this General Assembly agree to spend this many I don't see anything being exempted if they were deemed to be an emergency. And I go back to that. Follow up? Follow up. In relation to where we are now and where school systems are waiting for funds, so that would have to come as an act, or as a request. What constitutes an emergency, that's where I'm going with this from this body. Senator Jackson. Thank you Mr. Chairman and Senator Waddell what you're referring to I think is two different things. I think you're comparing apples and oranges, and the reason I say that is what you're referring to in the school system waiting, they're waiting for us to make a decision on a budget for this year. This is not to do a budget this is actually, we're going to do a budget and get out of here as soon as possible I hope, but this would be in the cases if what we just went through, there's great reccession, or God forbid we have a hurricane that wipes out Charlotte again, or Eastern North Carolina and they need an extra billion dollars to help us get through that situation. That's what these emergencies would be but it's not limited to those things because if you got three thirds of a vote as Senator McKissick said, has mention on at least three occasions in this conversation, that is a super majority and for the super majority I'm comfortable with the super majority voting on this to remove some of these funds, and I have the confidence in the two--thirds majority vote that they wouldn't only vote on it when it was an emergency. Thank you. You're welcome. Thank you, OK. Senator Apodaca you have a comment? Yes Miss Chairman, thank you. One reason we're looking at this is the continuation of re-doing our income tax system, and where we get our monies from. As we've learned throughout the past 10, 15, 20 years our society and everything has changed in the way tax revenues come in, we're not a manufacturing society anymore, we're service society. So along with this you're going to see a continuation of the expansion of the base when it's sales taxes. And this will help facilitate our move towards that, so we will not have the [xx] ability going forward that we have now with the personal income tax. This will move more to the sales tax and gave us some more reliable bases we go forward that's the ultimate goal and that's what we've got to do, so we will have money to fund our schools and all the other things we are responsible for, we are not trying to get away from there we are just trying to continue the fundamental change we have started since 2011. Okay, let's go on to part three. Okay, thank you Mr. Chairman. Part three basically, the last section of this bill would require referendum on the constitution as well that would limit the growth of spending to the percent change and inflation and population growth, and this is a physically proven measure of the tape whether it will be in this budget or whether it will be in future budgets that we only limit are spending to the table number and it also would require a two thirds vote to change that as well. Senator Jackson got a question comment whatever Just a question please And it is on the next page line one ask to how we compile the information for a population, it says that the information is based on Decennial census figures or as estimated annually by the State's data center and the United State's census baural so I guess my question is, when would we use the Decennial census vigorous, when would we use the State's data center figures, I
could see in argument for when to use which set. But I'm wondering do we need any clarifications because those numbers are going to produce very different outcomes and to me it's unclear when we would use one set versus the other set. Senator Jackson would you want Doctor Bodman to help with that or do you want to handle that? No I don't want call an economist that I will at this point [xx]. Doctor Bodman can you help us as to how the General Assembly and the executive branch agree on [xx]. The decennial census would be use each and every 10 years so when you have the actual accounting of the population, that would be the number you use once you move away from that every 10 year county in 2000, 2010 the next one will be 2020 then the year [xx] along with the state demographer with the state data center produce yearly projections on what the growth is until you get to the next Decennial census, so you will have that one time snapshot and then going forward you would use those projections to make that estimate. Senator Jackson follow up. I thought that was the answer, that should be answer that makes good sense. I think we should clarify that so we don't give every single income taxpayer potential cause of action because it is clear that that is how we are going to do it. That's the way we've always done it and that makes sense to me but I think we would benefit from just including some that language, can I follow up with another question please. [xx] other Senator Jackson any comments sir? All I would say is Dr. Bodman thank you for that explanation and to the younger more here Senator Jackson I would say that as we work through this process we would be glad to sit and talk with you. Okay [xx] Senator Jackson, one of the most frequent calls I get from constituents are people who are waiting list for services in particular in mental services. I understand theoretically wanting to keep expenses and even kill or are we going to make sure that we've eliminated the waiting list that we already have before we cap how we're going to fund this programs, programs that we have legislated. Senator Jackson. Thank you Mr. Chairman and Senator Van Duyn I think we will always probably have a waiting list when it comes to mental health. I think that is an area that we've got to start working on next to reform but that is not the intention that this would be have any detrimental effect on any of the programs that we've actually acted whether it would be our general assemblies or the previous general assemblies. Follow up. Follow up But how does this not hamstring our ability to respond to those problems in an economy that may actually be growing? Well if Senator Jackson. I will attempt to answer that question the best I can. With an economy that we hope is growing as we have seen the numbers that it has grown and we hope it continues to grow. There will be excess funds to do things with and this amendment would basically just is not necessarily in my opinion hand-stringing us to not spending on the programs we deem that is important and of course certainly one of those programs that I personally think is important. Senator Jackson, wouldn't this just put it in the legislature to set the priority knowing what you're spending as to how that money should be spent based on the wishes of the General Assembly and whatever priority list it is is that which you pay for. Absolutely. you have additional question? I'd just like to comment that in Buncombe county that the waiting list for example for child care vouchers is as long as a number of people already have talked [xx] we are not funding the services adequately now if this seems exactly after years of cutting that were prudent, those cuts were prudent because we were in a disastrous economics but when we find ourselves in a position to start restoring that fund to where it should have been, this is not the time to put on the breaks and leave too many people behind who through no fault of their own, working people. Senator Jackson, Senator Hayes might be able to assist with that specifically [xx] Okay, before Senator Hise starts to speak Mr. Chairman, Senator Van Duyn, I appreciate your comments. Right, Senator Hise, you have something to add to that? Comments about two areas that
you had mentioned, number one for the Childcare vouchers, those are predominantly federal pass-through funds, they come through the state so if the federal government increases a the amount of funds available for those that would be outside of this operation and if they chose to finally fully fund that operation for all the children in North Carolina, if they did, then that would not be included in any of our budget as than a pass-through and doesn't show in the limited areas of the budget. I would also say on the slots in the IDD slots. That has always been a slotted program and has never been an entitlement program, the original waiver that was put in to provide service for a number of slots and I would say, since its inception, has not grown as the rate of population growth that has occurred as our revenue has in another years. Those slots have not been increased at that rate. But under this section they could as population grows and as revenue grows, they could grow at the same rate as they currently do under the same amount of available funds. Right, now let me say this. We're going to be voting on this because I got to get this other Bill through today and Health Care Committee will be done in about 10 minutes after this meeting ends. So I got Senator McKissick to talk on section 3 here. Mr. Chairman, the question I told you I would have. Yes Ma'am I was counting on that. First, I understand what you're trying to do limiting the spending. The thing that gives me most concern are unforeseen circumstances, as well as those things that can be thrust upon the state's as unfunded. Things that are not on our radar screen today, that will inevitably pop-up in years to come none of us can foresee and none of us can envision, and once this is constitutionally enacted, it really, once again it can [xx] and a set of handcuffs financially to deal with things. Was there thought given to these unforeseen circumstances I mean I understand that what comes with this if it passes is a broadening of the base, and will probably end up taxing about 140, 160 different services, but if we're also saying that you can't increase spending, unless it's consumer price index, and population profit, it handicaps you again when it comes to these unforeseen circumstances in federal mandates that may come along, what are your thoughts about that sir, or what leeway or wiggle room would there be Because this pretty tight language? Mr. Chairman. Senator Jackson. Hank you sir. Senator McKissick you're exactly right in one of your statements is very tight language. It brings us back to that with no intention of making Tat, but I think 2 and 3 of this Bill go hand in hand and if we were to get to the situations and there will comment things we're not expecting, I agree with that. That allows the general assembly to come in and with 2/3rd's of the vote they can take many are the rainy day farm, to farm those things that we were not expecting Okey Senator Brian question on section three here now just to ask the same question to staff, if we were, wait a minute maybe I don't have the question. Yes I do, wait a minute, if we were to have the limits in funding that are in section 3, the consumer price index and population growth, how would that affect us this year? Could somebody give me some monetary rate numbers. Okay, Senator Bodman will help you with that. Senator Bodman will you, excuse me Senator I'll elevate you. I'm going to leave that one alone. Now I just want to know what county he lives in as long it's Wake or [xx] we can be friends. If we've applied to the 15, 16 budgeted amount which is a little bit broader consumption, your spending would be constrained to 21 billion 650 and that would be a 2.7% growth with the combined population and inflation follow up versus what would it be without the constraint? Revenues are projected and again and I'm talking revenues as opposed to sum spending amount. Revenues are projected to commence for 15, 16, at 21 billion 900 and 65 million. Okay, help me Follow-up.
Follow-up thank you, so that difference is about, because I didn't get the, I didn't realise where your differences was going to come in, I didn't get that point. Billion on the first figure? Tell me what that difference is approximately. Mr Chair is that fine? The difference is approximately in about 315 million, 320 million. Okay, Thank you. Okay, Senator Jackson. Presently the senate, I think Senator Berger and senate members have put a limit as to what they felt spending should be for this year, and I guess along with the governor. What was that said at yesterday when it was discussed at the meeting? It was said at the table rate which I believe is 21.625 or 565. Alright. That is more than the senate budget. Alright. Alright I've got a quick one Senator Jackson and a quick one Senator Stein and then we are going to take a motion. Thank you Mr Chair. Is is possible to go negative? So far our population growth is +1% but we're in a recession and CPI is -2%, do we then have to be be -1% on spending. That is possible. If your money is down, you better be negative Okay, senator Stam quick and then we can take a motion from senator Apodaca. What happens when revenues exceed this inflation and population growth index and there is in two thirds to appropriate it. It doesn't specify where it goes. Mr. Chairman and Senator Stan that's a good question, and that's why I hope as we move through this process we could fit in to this bill where that excess would go. Currently the excess or appropriated balance or I think is what is called and I might be wrong about terminology is for us. It's supposed to be given now the rainy day fund, but as I said that is not been done just that legislation was enacted years ago. Senator Jackson that about a 21 day dollar budget and 2.75 table. How much additional spending is going to be done under that level? But you have a 21 billion dollars budget roughly, and you have a 2.75 table under the proposal at least for this year. Yes. Six yap. Approximately 300 million give a time. Okay alright senator Apodaca makes the motion that we have a favorable report for senate bill 607 PCS and unfavorable to the original bill. Any additional questions? Seeing non all in favor please say aye "aye" oppose nei ayes have it thank you. Thank you Mr. Chairman. Thank you senator Jackson. Thank you. Alright now we bring up house bill 117 North Carolina compete act and I believe yeah we have a PCS senator Rabon makes the motion that we have a house bills 117 PCS brought forth for discussion all in favor please say aye "aye" oppose nei. Ayes have it. Alright we have before us House Bill 117 to be discussed. Senator Barger good to have you today, how was 8th Avenue. Senator Brown also I guess you are going to be insisting that Good morning Mr. Chairman, members of the committee you have before you a committee substitute on House Bill 1117 and I just want to make a few comments about it, Senator Brown I think is going to talk about other parts. The comments I'm going to make primarily directed to the the Jedec provisions, the one North Carolina provisions and the provisions that deal with certain modifications to some some particular taxing provisions. Yesterday members we announced that the senate is taking steps to address a number of key concerns the House and the governor have about the Senate budget so that we can quickly agree to a final budget in as soon as possible. It's clear that including major policy items within the Senate budget particularly on economic development and Medicaid it's going to major sticking point with our friends on the other side of the legislative building, and with our friends at the Blonk[sp?] Street. So we have committed to compromising on policy, passing those policy items and stand alone legislation so we can move the budget forward. I think we all agree that
encouraging job growth and providing tax relief are top priorities, we just sometimes differ on the details about how to go about that. We are pleased to be here today presenting new Senate Economic Development Plan that includes major compromises on efforts to recruit new jobs and businesses, delivering meaningful tax relief to existing businesses, and reforming outdated none fair tax laws. Believe this a plan that everyone should be able to embrace. The Bill answer Governor McCrory's call for additional job recruitment dollars and moves to the middle of the original House and Senate proposals. It extends the State job development investment grant program for an additional three years while increasing the fund for grant awards to a maximum for $20 million per year, the Bill also encompasses additional provisions found in earlier House and Senate proposals including, first creating a new economic development tool for attracting major manufacturing projects like automobile and air space manufacturers that are commit to investing at least $750 million and creating at least 2000 new North Carolina jobs. We had adopts additional safeguards and reporting requirements to ensure job recruitment dollars are administered responsibly and available throughout the entire year. It encourages economic growth in every part of the State by establing more genders grants to companies that locate in poor counties, which have historically received this proportion low levels of support from State and Senate programs. And it incorporates a number of ideas included in the original House proposal including the data centre infrastructure act and exempting passenger air carriers from business to business sales tax calls. The plan also moves the calculating corporate income tax on the basis of the single sales factor over three years for moving the existing penalty on businesses that hire, North Carolina workers will invest in local property and infrastructure currently neighboring state like South Carolina, Virginia and Georgia have a competitive advantage over North Carolina because they use the single sales tax factor singles sales factor formula while there're several more tax issues to tackle this session, I'm pleased that this compromised bill should settle a number of key issues put us on a path to adjourn sooner and hopefully put North Carolina in the best possible pasture for recruiting, and keeping jobs with that trying to turn to Senator Brown trying to discuss the sales tax provision and be happy to respond any question about the details of the bill Senator Brown Thank you Mr. Chairman, thank you senator Berger. As all of you know I have been focused on reforming an unfair system for allocating sales tax pretty much all session I guess I've been working on this thing. This bill compromises by returning to the fair season in place for a quarter of a century prior to 2007, a quarter of a century. In my opinion the leadership that year 2007, led efforts that robbed and redistributed money from poorer rural counties to rich urban counties. Under this system 50% percent of sales tax revenues are located based on where people live but the remaining 50%allocated based on the county where sale took place and what this bill does also it eliminates outdated and unfair adjustment factors that redistributes sells tax revenues to handful of counties. Giving an example Columbus county only gets 81 cents for every dollar at this point Columbus county, Jones county 90 cents, that gives you an idea fair that peace to those particular counties. The cooperate buyers addresses the concern of abern areas by insuring significant support for palls associated by providing services and infrastructure in large commercial centers, but still enabling citizens from all across the state to be benefit from the sales tax dollar they spend. We simply believe that when someone spends their hard on tax dollars those dollars ship provide more benefit to their family and their own community. The current system posses North Carolinian's from 80 three counties to subsidize as a select few and this compromise will help all parts of the state. Again we are try to answer any questions. Alright members of the committee you have the bill laid out before you a good bid of it has already been discussed in the budget in elsewhere, but let's have any questions senator Ford did I see your end up. Yes I did Mr. Chairman, can we get staff to go through the bill? Yes sir, we can.
Who would like to have that opportunity JDIG first okay, we all just identify yourself and the portion you are going to cover for the staff who can roll in the bill My name is [xx] I will be covering the JDIG in one North Carolina portions. JDIG is changed in the following ways regarding to male that can be committed the bill would add $5 million of the additional capacity for the current period. It will increase the calendar you will start straight cat from 15 million to 20 million on an ongoing basis and it will extend the period for three years allowing JDIG commitments through one 119. The one a business for sees via JDIG will be changed in two primary ways the the JDIG award calculations change from a flat 10 to 75% calculation on the personal income tax withholdings generated by eligible created part a positions that becomes a tear maximum 80% for tear one 75% for all remaining areas. The portion of this the ward that is diverted to the utility account is funded by the Jedec[sp?] program in tier 2 areas only is changed from 15 % of the award diverted to the utility account to 10% of the award. The minimum criteria for participation of the program is increased the minimum job creation requirements is increased from 20 jobs to 50 jobs for tear[sp?] 3 areas. The bill [xx] things in unchanged forms the senate provision for the mega site recruitment, you've heard those before I can go those individually if again you would like but they are unchanged. Senator Ford, does that help you on that part? Alright, please staff? This Cindy Averate[sp?] and I will briefly go over the remaining parts of the bill. Part three is senator Burger[sp?] mentioned just phases in single cells, [xx] apportionment, and that's what's used by multi-state corporations to determine how much of their income will be taxable in this state. Factors faces again over three years although the senate budget had many other changes to the corporate and franchise tax law whilst this section does not include any of those changes. It is simple the three year phase in of the single sales factor. The House, a part four of the data center infrastructure act, the house included a sales tax exemption for data centers that invested at least $75 million over five years, there's currently a sales tax exception about their income their threshold to realize that is much higher 250 million. Part four adopts the house position on that and grants that sales tax exception. On part five make several changes relative to the sales tax on aviation there is currently a sales tax refund available for inner state passenger air carriers that have a hub in North Carolina, that refund will expire January 1st, 2016. The House extended that refund provision for four years, this bill instead of extending that refund provision gives an exemption for the fuels sols not only to inner state passenger air carriers with a harbor but there are in the state on air business. Another issue that is not been addressed in either chamber but has been discussed much is the FAA policy that requires state to use the revenues from taxes on fuel dispnsed at the airport for aviation purposes, the state must be compliance with that federal law by 2017, it must have a plan in place by this December that sales tax exemption takes care of part of that for those air carriers that do not qualify for the exemption that sales tax rate will be the combined general rate which is 7.25% all the income not only the inclome not only the [xx] grandfather and could be used for other public purposes but all the revenue generated from the sales tax on that fuel will be credited and transferred to the highway fund appropriated to the division of aviation for airport related uses to comply with that federal law. Both the senate and the house budgets included a sales tax exemption from service contracts on qualified aircraft, and qualified jet engines this bill also complain that as well as creating us sales tax exemption for parts and accessories for use and repair or maintenance was qualified, aircraft and qualified jet engines. Lastly, the senate budget increased the sales tax rates on boats and aircrafts from 3% to 4 3/4%, this bill does that. It also increases the cap on aircrafts which is currently 1500 to 2500 and lastly it also provides a qualified jet engines will be allowed that same cap of 2500.
And the last section of the bill concerns the sales tax distribution of the local 2% sales tax revenue currently three quarters of it is distributed back to the tax and counties based on where it is collected. 25% goes back on a [xx] this makes it a 5 50 distribution. Senator Ford, you satisfied with the explanation? Thank you Mr. Chairman, I have another question for staff as it relates to, if you're prepared Mr. Chairman to go over the fiscal note. If I could Mr. Chairman before we get there there was one thing I may have missed it but the one North Carolina modifications were not discussed basically it changes the local match one North Carolina on a glance, presently there's a $1 local to $1 state on one North Carolina, the bill changes that to $1 of local for $3 state onto tier one counties $2 local fpr $2 on tier two counties no change for [xx] counties. Okay, then senator I'm assuming you're asking the fiscal nod ethat we have before us basically the one page describing the dollars and then the explanation. That's correct, you've got some attachments in here. A I think it's through D and I'm looking at D and there's a total max impact basement program experience that's 640 million. Is that just for D or is that a combination of A through D? I'm going to ask staff to explain that one. Is that right? Excuse me, identify yourself please. Aubrey Incorvaia with fiscal research, yes so for the jaded program specifically, the maximum liability is $780 million through FY31, that is reflected in one of the appendices, appendix B. However potential liability based on program experience ranges between 243.7 million to 640.5 million, low range for 247 million per year is an attachment C, whereas the maximum range is in attachment D. Thank you Mr. Chair, Okay, I've got senator Bryan. In the explanation of the airlines, I got a little bit lost, in that there was some fuel that got an exemption and some fuel that doesn't get an exemption and I'm sure was just going so fast, I couldn't catch. Would you just review the issue on sales tax on aviation fuel commercial aviation fuel? What this fuel would do would be to exempt aviation gasoline and jet fuel that is sold to an interstate air business for using a commercial aircraft from the tax. All other fuel sold for aircraft use would be taxable. The receipts from that would be used by the division of aviation for aviation projects. Okay. Follow up Mr Chair. I'm sorry. Yes, just to say that is an important because point what that does, is it allows every commercial airport in the entire state to benefit from lower cost and hopefully that will incentivise the ability of more jet service or air service in North Carolina. And just with the risk of trying your patience. To stay off no, give me some range dollar amounts of what is in each bucket. How much money we're talking about in each bucket the exemption versus what will go into aviation, go towards airport infrastructure. Do we have any knowledge of that? Mr. Chairman Rodney can correct me if I'm wrong. I think the total amount, we have a difficult time knowing exactly how much sales tax is collected on fuel because it is not separately accounted for. The best guess to me is about 15 million. All of that, that's sold to those commercial aircraft is probably 12 million or more $13 million of it. So we only expect about $2 million that would actually be collected and used for the division of aviation, but far most of the field sold in the state is to commercial aircraft. Okay, I need one more question. I notice in section 5.2 there's language underlined about the manufactured homes, the etcetera, I'm just assuming that's because the section
was reorganized or something, or is there some change in those items? Miss [xx] can you help us please? Yes, you are correct, the part that the manufactured homes and module homes is just because it is reorganized, it is C, D and E that would be new and that is where we are are setting that the sales trade on those and aircraft is no longer 3% but 4 and 3/4's. Senator Stain. Thank you Mr. Chairman why are we not extending the R&D Tax Credit that has been a proven way to generate economic growth? The R&D Tax Credit or any number of other tax credits that are out there, will be continued to be discussed in the connection with the finance committees in the House and the Senate working on some other issues. If you'll recall, in the Senate budget, there were some modifications to the income tax some other modifications that you don't see in this bill. These are things that were pulled out that we feel represent a good compromise and as Senator stain, as you know, when you put one more thing in, then something else has to be put to balance it out and so we got to this point and that, and a number of other tax credits we think that the decision was just made that we would leave those for another discussion. Any question? Follow-up, on the aviation fuel piece, why are we doing this without any why don't we have some kind of provision that says it has to be tied to increase new flights to North Carolina or increase in the number of jobs. Whenever we do these Tax [xx] corporations we try to get something for the public in return, and part of the idea there is that without getting into too much detail with with an agreement with the airlines. We did have some discussions with some of the airlines about increased overseas flights, and about the possibility of of additional in state flights the conclusion we drew was that the best path for us to take would be to reduce the cost to the airlines let the market take care of those kinds of issues, trying to work out a specific deal just became too much of a problem. Final question. Senator Stane just to backup on that What we're trying to do is right now the only airline that receive this special cargo was American. What we say is that you're going to treat the American you treat the entire industry the same which is consistent with our tax policy. OK, followup? Final question yes sir on the sales tax businesses for staff, haven't had a chance to digest the chart, but how many counties win, how many counties lose, and what relative percentage of the state does each bucket reflect? Miss Canada do you have an answer to that? question. Tenese[sp?] Canada from Fiscal Research. We can count up the number of counties, and let you know if you're asking when you said the relative proportion I think you're asking population wise we can pull up the population data and try to get that to you. Thank you. OK Senator Brown. Senator Stan when you ask that question I guess you can base it off a lot of different numbers as far from year to year who loses this eliminates it down to about 11 counties who would show less revenue from one year to the next and of those 11, seven of those is very, very minimal again their is four counties that equates to about a percent I guess maybe a little more in one case, but overall it's a whole lot a whole lot less for the 83 counties that win, and a whole lot of less of a loss for those few counties that would lose. Senator Brown. It's a balance. Does this include any type basic expansion and would basic expansion help? That's a good point, this does not include any basic expansion and continue to be discussed by the finance chairs that definitely would help some of those larger counties with any type of basic expansion, but again as Senator Berger mentioned try to negotiate this you kind of you just continue to work it and those particular issues will probably continue work by the finance folks. Senator Stein do you have a follow up question? Just a comment, I counted more that 11 counties with negatives reflected here so I look forward to hearing from staff on what the numbers. They will report that back to the entire committee. Thank you. Again of you look at year to year it is 11.
Alright, I've got Senator McInnis. Thank you Mr. Chairman. On JDIG we have 100% of the median average wage in the county required to be eligible for the JDIG Program, has that been adjusted or is that still the requirement? No changes with reference to that particular provision of JDIG. I would point out that in the original Senate budget provisions there were some significant parts that dealt with money that, or limiting the amount of JDIG that would go to certain counties. All of that is out this Bill, and again that's part of of the balance that we try to strike with the bill that in exchange for some of the more rural counties seeing more of their sales tax dollars the exchange was that we did not make those major changes to the eligibility of certain counties for JDIG grants. OK. Thank you Mr. Chairman. Alright I've got senator, we're going to vote this out today ladies and gentlemen, and that is before 10 o'clock, but Senator Hise. Thank you Mr. Chairman I want to ask Staff if we could get a chart with a change from year to year as well in this because the way this is kind of laid out, for example, Catawba County this year goes from 27.2 million to next year 27.9 million, yet that's showing is a 2% cut in their tax rate, so I was wondering if we could get a chart that actually shows the year to year changes and actual dollars for these counties. Staff may we help that [xx]. We can provide a chart that shows the percentage change here, but you're correct that what this chart [xx] we haven't gone over it yet. It's a comparison of potential sales tax revenue under this plan versus potential sales tax revenue if no changes were made which is of course different than what you described and we'll provide that. Okay, Senator Hise. Senator Brown go ahead. Mr. Chairman, those charts should have been sent out to all the members as well and again that's what I was referring up Senator Stein, it shows 11 counties. And again, those 11 counties, I think seven of them it's like or less, so it's very minimal. And again remember sales taxes only, on average is about one tenth of the total budget of the county. So when you look at the total budget fees, it is less that one tenth or 1% of a total budget we're talking about? I've got Senator Apodaca. Senator Brown I may have not heard it, but isn't this just taking us back to the levels we were when this was changed in the 2007 budget and became a windfall for the larger counties. You're exactly right Senator Obadaka. For about 25 years it was allocated 50-50, exactly what this bill does. In 2007, for whatever reason, it was changed to 75-25. And as I stated in my earlier comments, what that did, is it killed 83 counties across the state. What this bill does is correct that wrong. It puts it back to where it was in 2007, it's a fair system, and it helps those rural counties that got kicked in the teeth in 2007. Senator Raben. Bill Raben. Thank you Mr. Chairman. Let me add on to that a little bit by saying, when you look at this numbers please consider the fact that we have already expanded the base some and that we're going to continue to expand this base hopefully. And these counties that are seeing the blues which are not losing much other than four, are going to very quickly jump ahead of the game again this is a pretty darn good option that we're looking at here and we've already boosted it up and we're going to boost it again and those with more population are going to benefit and those with for point of sale are going to benefit in the future and so it's not just a wait and see game this is something that's going to happen and something that we have plan to happen in our total tax reform docket. Senator [xx]. Yes, thank you Mr. Chair. First question on the sales tax component, the effective date is the beginning beginning of the next fiscal year, is that correct [xx]. Follow up. Is that correct gentlemen? Yes, that's correct. Yes, okay. Follow up. Let's assume Senator Raven and we'll get the benefit of the doubt that basics funds were already started that way this benefit everybody is able to get to level set but the real concerns the immediacy of the effective date that what we do with Mecklenburg and my folks that have made
commitments on infrastructure and that predicated on this revenue and yet have no means to offset a $12 million hole on debt obligations next year without either, I'm not even sure they could raise taxes in time to make that up so you've got a service delivery issue debt obligations, how do they address that? Senator Don. Senator Tarte if you look at Mecklenburg County from this year to next year I think their loss is a few hundred thousand, it's a very small loss. So if you look at the amount of revenue they generate this year, if I remember correctly it's less than a $1 million, and I can't remember the exact number somebody maybe can help me because I don't have the chart from them, they're very minimal from Mecklenburg County from one year to the other. Could you explain is this chart valid or not? This chart will show you what current law will generate compared to the 50/50, but what it also does is it has no expansion, and it also assumes a 3 1/2% growth rate which I think most would agree, is probably a low number. So it's a very conservative number to work with. Again I'll look at Meck from, let's say I'll give the numbers Mecklenburg would go from 216.6 million to 215.2 million. From 1516 to 1617. Very small change in their revenue. Alright, one last follow up then. Last follow up to Senator Tod. And maybe this happen and I did not graduate from the School of Maths and Science like Senator Hise and Senator Smith Ingram, but what you're looking at is a growth in everything factored. The 1617 number. Under current statute Mecklenburg would take 227 million and it's going to 215 if it's to change. To me that number seems about 12 million not 100, 000 is that not correct? Senator Brown. If you want to base on what current law would be. But I think what you're missing Senator Tod in 2007 when it was changed from 5050 to 7525, Mecklenburg is probably had a $60 million windfall in eight years, above what they would be. This corrects that wrong that happened in 2007 and it also allows Mecklenburg county to stay pretty much neutral as far as revenue from change from this year to the next which something I would think they can manage. If you look at their total budget that approaching $2 billion a year I would hope that they could that a little bit of diffrence which is less than 1/10th of 1% of their total budget moving forward. Okay Senator Tod. And again it's it's a difference and a projected increase, It's from actual dollars collection on one year to actual dollars in the next year the difference is much, much smaller. Okay I've got Senator Van Duyn a question [xx] on Henderson County is 2% winner we are quickly I just looked the medium income household income in Henderson county is actually greater than it is in Bladen county. absolutely Senator Apadoca I was just suggesting since the lion share of sales tax goes to the state. Wouldn't we be better of looking at that portion of sales tax, and targeting where we really done to redistribute it, based on the need of those counties, rather than this formula that does create losers? Is that a question? It was a question. No, I'm just saying since most of the sales tax comes to the state, why are we making losers out of this counties, when this is our problem to solve? Okay. Senator Berger. Senator Van Dyne, I would quarell with whether we are making losers with those counties what I would say is that in essence what we are saying is that people who spend their money have some expectation that the tax on what they spend is going to go to benefit them. And this current system is one where those folks are seeing tax dollars that are in another county going to that other county and they're seeing the schools being build in the other counties, they're seeing services that there are more resources in those other counties from the dollars that come from the more rural counties or
the counties that have fewer shopping opportunities. And so our position would be that this actually modifies the local sales tax distribution to a system that not only is historically consistent with what we've done, but is one better reflects how those dollars spent should be allocated. OK, got that one? Then I'm talking about Senator Waddell. Thank you Mr. Chair. We want to stay on time, so let's make concise questions. I was looking at your section here concerning school constructions, and the changes therein with the one-half sent, stated here one-half sent local option sales tax must be used [xx] public school passed out 60%for the public school so what affect will this have in our larger counties? Chairman I may have you to correct me if I'm wrong what this will do, or should do is give the county more flexibility on how to spend there sales tax dollar, there may be some counties who have invested and built the schools all the schools they need so they don't need any more school construction while there're some that way behind and gives more flexibility to the counties Yes Follow-up what will happen to those with growing enrollment and usually they've already made plans years ahead of time and with this change taking place July 1, 2016 Again they have the flexibility to continue to vantage that and if the needs are they can do that Senator Waddell I don't think that particular provision changes the dollars that they receive it just changes the strings that are attached to those dollars, and makes so bit the local folks can make a decision irrespective of what was the law that said that some percentage had to go to school construction. If they want to spend on school construction they can they are free to do that, but it allows the locals to make that decision . Okay senator Apodaca you've got a comment? Yes sir Mr. Chairman thank you. One of the thing I'd like to say friends from Wake and Meck I think we've had $300 million with the JDIG grants go to those two counties in the last couple of years and I'll see that parked in in a chart and also senator Van Duyn one thing in Henderson county we do is we chase different type businesses to come in with different type jobs and salaries and that is pay dollar force there is something a friend in bank and may want to look at you and I've had that discussion with them also it's a, I think we need to take a historical look at the tax change back to '07 and remember why it happened to begin with, that's why the state took the county portion of the Medicare back, if you really want to get the true picture if you lets stay at that back to what the counties would have lost going forward nothing that is not far greater, Senator Tarte then 12, 15 or probably $50 main, so let's take a realistic look at that, without that being said I move for a favorable report to this Bill on favorable to the PCI of the original bill. I'm going to hold that, about three more people to talk about, and then Senator Ben Jackson is there something you want to add to this discussion? Famous Chairman, Senator Apodaca brought on my phone about Wake, Mecklenburg and Durham is well going to J day, thank you. Okay I got senator Ford. Thank you Mr. Chairman, I'm listening to the discussion and I'm quite frank, I'm a little bit disturbed primarily based on your comment as relates to the accuracy of the liability of this chart and what I'm trying to get to is some numbers that we can agree on as relates to physical impact according to my colleague Senator Tuck our counties are going to affected a major way in my opinion senator because if you look at the gun chart, it shouldn't show the when you loose 1.7 million dollars in 16/17 say something, the county will loose 5.8 and to me that is not a minimum amount of dollars, can we come up with some numbers that would we can agree with primarily not to discuss among ourselves so that our counties can use support of the properly budgets so direct in cover the obligations. Last quick point Let's get the issue of the charts, let's have Miss Canada just explain that, because the Chair may have, I was asking a question, I didn't know whether it was valid on not. Miss Canada. Denise Canada fiscal research. Okay, let me review what the [xx] is versus the hypothetical chart that's being discussed.
The chart that you have in front of you compares the potential sales tax revenue each jurisdiction would receive under this bill, to the potential revenue that each jurisdiction would receive under current law. For each year. 16, 17 it shows current law versus but address section it might receive under this Bill. Now an alternative way to look at the data which is normal right or wrong, but as a different way to look at it would be to calculate the percentage change year over year, one reason that I noted in this chart is particularly for counties that are loosing money this rate includes the growth rate for all counties, let me back up and say that there is 5.4% growth assumed in the first year, 4.6% the second year and three and a half in all of the out years. When you look at year over changes you have to acknowledge that the data includes that growth. So, it obscures names that's the reason we've shown 50-50 versus current law. However, certainly we can provide the other chart that you're describing, a chart that would calculate the percentage change over a year will do that and we can send it to the committee. Senator Floyd does that help with the understanding of the chart? So, I don't want the Chair to have made a comment that is misunderstood. I appreciate you bringing in that clarification, and again my whole motivation is to get some accurate numbers so that we can get them to the cities, and the counties so that they can make their adjustment. I would add as there has been a lot of conversation as relation to going back to 2007 I would ask the staff to put it in the context as relation to what counties received and what counties didn't receive, and I've got some information in relation to the medic aid swap that shows that Jones County was a beneficiary of the same . 8 increase. Robinson County was a beneficiary of 11.6 while Mecklenburg only received 1.25, Wake received point 06% so there is a lot of information going back and forth who won and who lost. That to me is irrelevant by then where we're going now. I just want to get some accurate information so that we can have our cities and counties budget properly so that they can pair for the changes that were about to come. Folks, we're going to vote on this bill today, okay and I've got Senator Hudstle. Quick. Thank you sir, I just wanted real quick question, the charts reflect no, eliminate the adjustment factors via county in their entirety and that is assumed in this chart, it wouldn't be possible to get a listing of what those adjustment factors are now? I think they are in the bill yeah, all right. Okay, okay. All right, all right then I've got [xx]. Yes sir, Senator Ford if you look at Mecklenburg county, I think Mecklenburg County now receives 86 or 87 cents on the dollar. This [xx] seem to a dollar, so their's a help there for Mecklenburg County because to be quite honest, I think they are unfairly getting the capital place and this corrects pace, it moves them from 87 cents to a dollar, that's part of the adjustment and at retirement that will make a huge difference from Mecklenburg County and again this is a balance because if you look at the JDIG dollars that were rewarded, I think we've all heard about it almost 90% of those dollars went to three counties and I don't see that changing very much, so it's a balance of you win in some places we'll ask you to give in some places and that's what this is about and it's really about going back to 2007 or what was a fair system then there has been a truly unfair system to a lot of counties since then. Okay, I've got one more person to speak and then we've got a motion for Senator to seek briefly. Yap and that's simply this, I think the bill overall has a lot of redeeming qualities it will be the only aspect here that gives me some heartburn is sales tax redistributions. And the thing that I was wondering could be considered as this moves forward is whether we could come up with some type of whole harmless solution for one year or two years for the counties that are going to be suffering adversely in terms of economic impacts losing basically 11% right now. Randal County, my district they gained 15 but minimise the impact. Perhaps try look at carving out some resources for one or two year period to assist these counties that really are going to be adversely impacted economically understanding that moving forth, they might 50-50 distribution, but at least whole harmless them for some reasonable period of time so they have internally to do whatever they might need to do in
terms of financial house keeping to offset revenue losses. Would you like to respond to that comment and then we are going top take up the motion? Senator Burger Again, I've been working on this bill all session. And my regional bill had it all been allocated some capital. I've sat down with Wake County folks, I've sat down with [xx] folks, I've sat down with I don't have many different counties to discuss this issue. I've worked with the county commission association, the league of municipalities to try to find something that's a balance fair approach to this issue. For me to compromise it to 50-50, after listening to a lot of folks Indian maybe that's a fair thing because it does take it back to 2007 what was a fair system at that time. We could argue numbers about Medicaid swap and how that may have affected the change, but does anybody here want to take Medicaid to the counties? I don't think anybody here wants to that If they do raise your hand. I don't think will see any. So again, what happened in 2007 unfairly for 83 counties, and this corrects that, and again as this thing plays out we know where the growth in the state is taking place. Mecklenburg County you know will be 125 million in the next five to ten years, Wake County the so what would happen over time is those counties will continue to benefit on sales tax dollars moving forward those small counties that have very little growth or negative growth will continue to be stagnant even after this adjustment. This is just trying to level things back at make it fair to those counties that took a huge loss in 2007, get us back in that same situation we were and really help somebody's counties that need help. Eight counties today gave no teacher supplement, eight counties because they have no revenue to do so. Mecklenburg County gives over $6000 teacher supplement. So you got eight counties with zero, a few counties make and one other over 6000. How do you compete in that situation? You can't. Some counties haven't built schools in 30 and 40 years because they can't support a bond or referendum. How is that fair to those counties? It's not. This corrects some of those wrongs that took place in 2007, I think it's a fair compromise on my part going from 100% to 50:50. We made a lot of compromises on the JDIG and in the incentive piece to help those counties that will lose a little bit this scenario, but I think you more for making up with the compromises we made on the incentive piece and that made it a good bill. OK. We have a motion before us members of the committee, and the motion was if may have a favorable report for House Bill 117 PCS unfavorable to the original bill. Any other quick short comments? Seeing none, all in favor of the motion please say aye? Opposed? The ayes have it. Now announcements. Mr. Chairman. Two scheduling announcements, so one is the Chair is understanding that the Economic Development Bill heard today will be heard briefly in Senate Appropriations Base Budget on Monday afternoon at 3 P. M. Just schedule on that. And it's also the chairs understanding that both of today's bills will be heard on second reading by the Senate on Monday night at 7 P. M. And lastly, we do have a Medicaid meeting in Healthcare going on the sixth floor 43 after all of that. In 10 minutes. Excuse me Mr. Chairman. Yes sir Senator Rabin. A word from Senator Hise please. In 10 minutes we will begin the Healthcare Committee meeting. Mr. Chairman, members of the committee. Senator Berger, comment. I just want to thank members of the committee for considering this bill, thank you. Alright. Mr. Chairman. Where am I? Right here. Is the expectations that we'll get that data from staff prior to that appropriation meeeting? Staff is there a chance of getting that data that is being requested before, excuse me, before when? Before appropriations. Before appropriations meeting, before Monday? We'll put It will be done.committee before then. OK, committee meeting is adjourned.