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Senate | July 16, 2014 | Committee Room | Finance

Full MP3 Audio File

That mike is on now. Okay, would everyone take a seat so that we can have the finance committee come to order. First part, let's introduce our pages: Michela Alred, did I pronounce that right? Mikela, sorry, thank you. We appreciate you here. Sophie Headings, thank you for being here. Jordan Raglin, thank you Jordan. Ruth Parsons, appreciate you being here. Candice Brown, thank you Candice. Michalya Smith, did I pronounce that properly? Thank you. Autumn Fulton, over there. Thank you for being here. And Aaron Ray. All right, we appreciate very much our pages. I hope that this time at the general assembly is rewarding. The good news is we get the best and the brightest of North Carolinians here and we thank you for helping us move the general assembly forward. Sergeant-at-arms who've been very instrumental in helping us organize, get the room set up and make sure we can have timely meetings: Ernie Cheryl, Ken Kirby, Steve McKay and Ed Kessler. Thank you folks. We appreciate it. All right, members of the committee, we do have a lot of work ahead of us, so let's get started with the house bill 1245 Pleasant Garden Annexation. Representative, you're going to take care of that? Senator Wade. Thank you. [SPEAKER CHANGES] Good afternoon everyone. This is merely, Pleasant Garden has a gentleman there that had a farm when he was a young man. His father's since passed away and he's trying to put his farm back together and buy up the property and a small part of it needs to be re-annexed into the city of Pleasant Garden. [SPEAKER CHANGES] Okay. Senator Wade, we do have Senator Tillman giving a favorable report on house bill 1245. Any other questions or comments members of the committee? Seeing none, all in favor please say aye. [SPEAKER CHANGES] Aye. [SPEAKER CHANGES] Opposed nay, aye's have it. Thank you Senator Wade and I'll trust that you'll manage that on the floor for us. [SPEAKER CHANGES] Yes, sir. Thank you Mr. Chairman. ?? [SPEAKER CHANGES] Thank you ma'am, we appreciate that very much. All right, Senator Rabin, senate bill 101; special license plates. [SPEAKER CHANGES] Thank you, sir. ?? [SPEAKER CHANGES] Okay. Yes, sir. Senator Rabin makes a motion to replace house bill 101 with a PCS for discussion. All in favor please say aye... [SPEAKER CHANGES] All opposed nay. Aye's have it. Senator Rabin, would you please enlighten us on house bill 101? [SPEAKER CHANGES] Thank you, Mr. Chairman. One of my favorite subjects has to do with license plate and thank goodness this is a bill that is going to make special plates in North Carolina uniform. Easy for everyone, fair for everyone, and it's going to clear up a lot of the muddy water that we have had over the years in just how we go about doing this, accomplishing this. What it does is, we're trying to make a transparent process for the addition of and consideration of new license plates and specialty plates. And, we looked at several states... we looked at Virginia, we looked at Florida, we looked at Georgia and see how they did that. We modeled a program after that. We've worked with the Department of Motor Vehicles and other agencies to see just where the snags are and what we can do to improve, and we think we've done that. Thing that you're interested in - there are no new fees. The general assembly, the members, have the same discretion that they have now. But, what we're doing is, we're simply using a process that didn't work too well. It was a back-end process and folks wanting a special plate and organizations really didn't know how to do it. They came to the legislators, the legislators didn't know how to do it, and so now we're putting something in place that everyone goes to DMV, they're given online, they can be shown, walk through the steps, the people at DMV, in an effort to be more friendly to customers, can help them with the process. They have the hoops that they jump through, and by the time it gets to the general assembly it's all done and we just have an up or down vote and everyone gets their plate as they want. They sent their qualifications and what have you are the same and reasonable. The fees are still $10. It's just a front-end proposition rather than a back...

[Speaker changes.] ... in proposition, people will be required to get a legislator to sponsor them. They will just simply go to DMV, if they have a special plate they want for three hundred... people are required, they sign up...they're obligated. Then their representative or senator runs the bill. They get their plate. DMV sends them their plate and it's done. If it's a special background plate, then they're five hundred. Just like now. [Speaker changes.] So no new tricks, it's just an easy... [Speaker changes.] an easy way to solve a complex problem. [Speaker changes.] Alright, I've got Senator Tillman for a question. [Speaker changes.] More than a question, Senator Rabin, this is good work. We've had a convoluted process for some time now and John Carvey???? is not responsible for it. He couldn't explain it. Remember, you tried...sitting right up there...for several years? [Speaker changes.] Indeed. [Speaker changes.] So I think that we've got a simplified system, makes you go ahead and get the registrations and so forth...if you want them paid for in advance before you get the plate...and I think that's a change...and I like what you're tryin' to do...standardize the background and the plates. And the process. [Speaker changes.] We'll hold that for a moment. Senator Cook? Could you get up to your microphone, sir? [Speaker changes.] I'll try. I's just lookin' for the cost of this. I haven't seen any numbers in here. I didn't read it thoroughly tho'. [Speaker changes.] Mister Chairman? [Speaker changes.] Yes sir. The cost is the same. It's currently $10 per plate. [Speaker changes.] That's to DMV? [Speaker changes.] You have your normal plate fee plus $10 for special plates. Now the organization can add to that but that goes to the organization. That does not go to DMV or the state. [Speaker changes.] Follow up?? Yes sir. [Speaker changes.] I'm just tryin' to understand from the state's point of view, does this cost us more money to produce these various...and is it a significant amount? [Speaker changes.] Actually, no. There's a fiscal note with this that shows basically nothing that came with it. And revenue laws, Senator Cook, is going to be looking at...really, these are the hard costs. We're going to be looking at the soft costs in the next session...or in the interim, revenue laws is going to look at that...just to see ...because we want to know too. [Speaker changes.] Senator Rabin, could we have staff to help us. If Brian would give us some assistance. [Speaker changes.] We do. But Brice's ???????????? [Speaker changes.] Brice Paul???? of Physical Research. Senator Cook, to your question? The fees are maintained at the current standard ten dollar fee and that fee would then be credited to the Special Registration Plate Account, from which the cost of production and administration would be deducted. [Speaker changes.] Senator Cook? [Speaker changes.] Thank you...but we don't know what those costs are. [Speaker changes.] Well, I think the point is that they're going to be the same as they've always been and there's going to be a study to determine if indeed there's some additional hard and soft costs on producing these plates. And the study will report back to the General Assembly to handle that cost. Am I correct, Senator Rabin? [Speaker changes.] You're correct. [Speaker changes.] Let me..okay...Senator Hise. [Speaker changes.] Just to make sure and clarify anytime these license plate bills come up. This has no impact on currently issued plates...full colored plates...specifically those around the Blue Ridge Parkway or the Smoky Mountains? [Speaker changes.] Believe me, Senator Hise, as long as I live, I will never tread on that again. (Laughter.) [Speaker changes.] Other questions members of the committee? Senator Tucker? [Speaker changes.] Thank you, Mister Chairman. I heard the background...I know at times, you, Mister Chairman, have alluded to the fact that all these different colored plates cause confusion for highway patrol and other law enforcement officials. How does this resolve that issue? [Speaker changes.] Senator Rabin, you wanna' answer that one? [Speaker changes.] Smoky the Bear would be answering it. No, sir, I don't. I would love to sidestep that one if I may. (Laughing.) [Speaker changes.]It really does nothing to solve that problem. That was a vote last year that many of us lost. We're not going to tangle with that one again. So, it does nothing to resolve that issue of confusion. Follow up? [Speaker changes.] So Senator. Yes sir, follow up. So what you're sayin' is Senator Hise and the mountain folks won. [Speaker changes.] Yes sir, that is accurate. For the moment...(Chuckles.) Senator McKissick? [Speaker changes.] Yes Senator. I just wanna' get some clarification cause I see the categories here which have been established for tags and I guess we got forty-seven of them and there's been all this controversy of ...

the choose life plate that was authorized and, of course, there was a counter ? one that provided a different perspective. In the future, how will this process be followed through so that if somebody wants a plate that articulates a different perspective, other than choose life, and I want to know the extent to which it will change that process so that it will be less subject to political considerations when votes along those lines are taken? If we have an applicant who wants that and they’ve got the required signatures does that mean that they get that plate? [SPEAKER CHANGES] Thank you, Senator McKissick. May I answer that? If I stumble, I’ll ask staff to help. [SPEAKER CHANGES] Yes sir, Senator Rabin. [SPEAKER CHANGES] Senator McKissick, under the process that we are outlining, everyone will be treated the same. Everyone will be treated with transparency. They will go to the DMV, if they jump through the hoops and meet the qualifications, which they have to meet today, and are approved then that will come to the general assembly for an up or down vote, as long as they have a representative or senator that wishes to sponsor. [SPEAKER CHANGES] Quick follow-up. [SPEAKER CHANGES] Follow-up. [SPEAKER CHANGES] If an applicant goes through that process it would still be subject to the vote of the general assembly, as to whether they issue the tag or not? [SPEAKER CHANGES] Senator Rabin. [SPEAKER CHANGES] My answer to that is yes. [SPEAKER CHANGES] Yes sir. That is correct, senator. [SPEAKER CHANGES] I would simply ask to perhaps give some consideration to making certain that, when these tags come up, if they get a DoT sign-off, and it’s appropriate free speech, that perhaps we don’t have all of this coming back up before the general assembly for votes. [SPEAKER CHANGES] Thank you, Senator McKissick. Senator Tillman, you have a question? [SPEAKER CHANGES] No sir. I would like to address Senator McKissick on that point. Senator, do you want somebody other than the general assembly doing our work for us? You think it’s a political process and you’re saying that since you can’t get your plate-- [SPEAKER CHANGES] Is that a question? [SPEAKER CHANGES] I’m asking him a question. Senator, you’re saying this is a political process? [SPEAKER CHANGES] What I’m saying is that-- [SPEAKER CHANGES] Excuse me. Everything is through the Chair. What is your question to the Chair? [SPEAKER CHANGES] My question is to Senator McKissick. Let me take that back. I’ll just make a comment. [SPEAKER CHANGES] A comment would be great. [SPEAKER CHANGES] If we want to elect different people, Senator McKissick, maybe we can do that and get your license plate but, right now, it’s our job to approve these plates in this committee and in the general assembly, and I don’t think we need DoT deciding whether the plate’s appropriate or not. I think that’s our job and I think that’s the way we need to do this. [SPEAKER CHANGES] Thank you. Any other questions? Before we go on to accept the motion, I would like to say that since Senator Apodaca is not here maybe Senator Rabin would love to make a motion that we move license plates away from Finance and move it to Rules for future consideration. [SPEAKER CHANGES] I would do that only in the presence of Senator Apodaca. [SPEAKER CHANGES] Only in his presence. Okay. Ladies and gentlemen of the committee, we have a motion from Senator Tillman for a favorable report for House Bill 101 PCS and that is the motion before us. All in favor please say aye, the opposing say nay. Ayes have it. Senator Rabin, thank you very much. [SPEAKER CHANGES] Thank you, Mr. Chairman and members. [SPEAKER CHANGES] Moving forward. House Bill 1033, Special Assessment/Dam Repair. Senator McLaurin. This is not a PCS so you have the bill before you, Senator McLaurin. [SPEAKER CHANGES] Thank you very much, Mr. Chairman, members of the committee. This is a very simple dam bill. There’s no opposition to this dam bill and, in short, I’ll just say it’s a very good dam bill. [SPEAKER CHANGES] I think that’s a quite nice explanation. [SPEAKER CHANGES] As it states very clearly, it authorizes the county to impose a special assessment for repairs of a dam. This is requested by the Board of County Commissioners unanimously. No opposition. I would welcome any questions. [SPEAKER CHANGES] Senator McLaurin, Senator Hise has made a motion for a favorable report for House Bill 1033 Special Assessment/Dam Repair. Any additional questions? [SPEAKER CHANGES] Yes sir. [SPEAKER CHANGES] Senator Tucker, question? [SPEAKER CHANGES] Senator McLaurin, is this a dam tax? [SPEAKER CHANGES] Mr. Chair, can I answer that question? [SPEAKER CHANGES] You’re welcome to try. [SPEAKER CHANGES] No sir. This is not a--this is a dam assessment. [SPEAKER CHANGES] Members of the committee, you have

The motion, do you have a motion before you for favorable report? On house bill 1033. All in favor please say aye. Opposed nay. Aye’s have it, thank you Senator McLaurin and you’ll take care of that on the floor, am I correct? [SPEAKER CHANGES] Yes, sir. [SPEAKER CHANGES] Thank you. Alright, let’s go on to house bill 1224 JMAC development fund modifications, that is a PCS Senator Rabin makes a motion that we accept PCS for house bill 1224 for consideration. All in favor please say aye. Opposed nay. Aye’s have it. Senator Gunn, you have the floor. [SPEAKER CHANGES] Thank you, Mr. Chair and good to see everyone. I think this is a damn good bill too Senator McLaurin, just for the record. It’s great to be up here and I’m glad I have the privilege to do two things that we have talked about since we’ve been down here and two things that are very near and dear to all of us. And that is, how we improve education in our public schools, and how do we do economic development to better create jobs and improve our economy. And in front of you today in house bill 1224 we’re going to make great moves and very productive moves to do both of those. What I’m going to do first is just quickly summarize, and really it’s from your summary to be quite honest with you, but part one of this PCS is going to create a new local sales option and use tax at a rate of a half percent, to be used by the counties for school construction, retirement of ??, classroom teacher salaries and supplements, TA salaries, and ?? potential support of community colleges this would be at their discretion. It would be limited to a subtle sales and tax use rate of two and a half percent. Just for the record, all counties now have the ability to tax at two and a half percent. Not all of them have taken advantage of this. What it will do in a nutshell is offer flexibility that I think is needed on the local level to make some of these decisions that could be important for their investment in their schools on a local level, and it will level the playing field also so that all counties are playing under the same rules with the same cap of two and a half percent on their tax. Part two, three, and four are going to do, are all economic development engines and I think they’re very needed and I’ll be glad to go into detail in a few minutes. Part two of the PCS will expand the eligibility criteria for the JMAC fund. Part three will create a job catalyst fund that will be administered solely by the department of commerce and secretary. And part four would provide just until the end of fifteen for this ?? an additional 14 million in JDIGG that is just a one time 14 million increase. Now to save you the misery of having me trying to explain section one, and being that it’s above my pay scale, I’m going to turn to our competent staff to go over section one and I will return and give you the summary of sections two, three, and four. And with that, I believe I will be calling on [SPEAKER CHANGES] You will. [SPEAKER CHANGES] Alright, Ms. Griffin, would you please kindly explain section one of that bill. [SPEAKER CHANGES] Sure, and you have a summary and if you look on the second to last page it just gives you a snapshot of the universe as it is right now, and it might be helpful to see the various authorities that counties have to levy a local options sales tax right now and what the rates are in the various counties. So you’ll see that on the summary, at the top it says background. Right now all counties, as you know, currently levy a two percent local sales tax that can be used for general purposes. And then, all counties also have the ability to levy a quarter cent under Article 46 that may also be used for general purposes. And then the other piece of this puzzle is the Article 43, which is a local sales and use tax for public transportation and the rate varies among the counties. There are six counties, Mecklenburg, Durham

that can levy a transportation tax at half a cent, and the remaining 94 counties can only levy a quarter cent. So the first thing that this bill does is bring those 94 counties up to the half cent under the Public Transportation article, so that they're sort of all on the same playing field. And then, the next thing it does is allow counties to choose to use that half cent toward public transportation, or there's new authorization to put that half cent toward public education. And the purposes are spelled out on page 2 of the ??, lines 17 through 27. It can be for school construction or to retire indebtedness for school construction, for the salaries of classroom teachers or classroom teacher assistants, or to supplement classroom teachers' salaries. It can also be used for community colleges, and that authority is fairly broad, that could be construction, maintenance, personnel. So the restrictions or limitations on the use of the local sales and use tax for either transportation or education is that counties would be able to levy one or the other, but not both, and the rate at which it can be levied would either be a quarter cent or a half cent, and it would depend on what the total local rate is in the county at the time they're holding the referendum. For example, if a county is currently levying 2% local sales tax, then the referendum would have to be at a half cent. Whether for transportation or education, it would be a half cent. If you're at a county that's already at 2 and a quarter, because you're levying the Article 46 quarter cent, then you could only levy a quarter cent for the transportation or education. And then also, just to mention there is, with regard to, so overall the bill provides that in no case can a county levy a local sales and use tax in excess of 2 and a half percent, so it sort of creates an overall cap. However, it grandfathers- we have two counties currently that are in excess of that cap, and that would be Durham and Orange, because they levy both the Transit Tax, the half cent Transit Tax, as well as the quarter cent. So this makes a provision for them. However, if Durham or Orange were to at any time repeal one of those taxes, they would then fall back under the 2 and a half percent cap that everyone else is subject to. The other thing that this does in Sections 1.2 and 1.3, this relates to giving the Board of County Commissioners the authority to direct how the funds coming from the tax on education would be directed. In other words, under current law, the Board of Education submits its budget to the county, and then the county approves that and appropriates the funds. But right now, counties are limited to allocating funds at sort of a high broad category level, one of which of those categories is Instructional Services, but that includes more than just teacher salaries, it would include textbooks and things like that. So the purpose of this language is to allow the Board of County Commissioners to specifically allocate the proceeds coming from the education tax for this specific purpose as identified in the bill, which would be the classroom teacher salaries or teacher assistant salaries. So that's what Sections 1.2 and 1.3 do. And Mr. Chair, I think that generally covers the overall mechanics of Part 1, but I'd be happy to answer any questions. [SPEAKER CHANGES] Sen. Gunn, would you come up and then we'll see if the committee members have any questions regarding Section 1 of House Bill 124. Representative of the committee. No questions on Section 1. Excuse me, Sen. McKissick, how are you? [SPEAKER CHANGES] Doing fine, sir. And I guess this is for Trina, I guess you want to make sure, Trina. So for Durham and Orange, we already have that half cent authority, that does not change the way that could be used, well for the other 96 counties, I guess, that are out there, you're saying that they will now have an either or option as to transportation or education, or some mix of the two, I would assume, or just one or the other? Is that right, Trina?

[0:00:00.0] Senator McKenzie, it is one or the other and you are correct for adjournment Orange since they are already over and above the cap it doesn’t effect what they are currently levying but for other counties they would opt for the education or the transportation and I guess one I did forget to mention one thing which is the article 46 quarter cent, the bill provides that no county may hold a referendum to levy that tax on or after August 1st of this year except for two counties that have it on the November ballot whose rate is currently less than 2.5% because that would be consistent with them being under the cap. So, there is sense that on the article 46 quarter cent tax only for those counties who haven’t levied it. The 27 counties that have it and levy it may continue to levy it. [SPEAKER CHANGES] Quick follow up Mr. Chairman. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] So, what I’m understanding is that kind of response to a question which is in back in my mind, this is simply gonna be levied excuse me they can ask to whether you will go either with the transportation or using it for public schools to be less slowly with a County Commissioner except for the counties in which a referendum is already schedule to occur, Trina… [SPEAKER CHANGES] The decision would be the board of County Commissioners would decide whether to hold a referendum on the question of the public transportation tax or the tax for education? [SPEAKER CHANGES] Okay. Senator Daniel. [SPEAKER CHANGES] Thank you Mr. Chairman. I was just wondering if staff could email this spreadsheet to the committee members that… [SPEAKER CHANGES] Is that one the website…Would you please send it Daniel? [SPEAKER CHANGES] Just the PDF so we could share with their counties just… [SPEAKER CHANGES] Yeah. [SPEAKER CHANGES] The spreadsheet… [Background Conversations] [SPEAKER CHANGES] Or the fiscal note, yes and actually that fiscal note has been updated it is on the website now, okay. [SPEAKER CHANGES] That assumes that can convert a website into a PDF and… [Chuckles] [SPEAKER CHANGES] Okay, alright, I have got Senator Blue. [SPEAKER CHANGES] I yell if the County Commissioner Association taking a position on this… [SPEAKER CHANGES] We will allow them to speak on that. [SPEAKER CHANGES] Okay, that was just interested in it Mr. Chairman because I know that there are discussions going on in my county on doing as Orange and Durham have done with respect to the transportation tax basically to expand different options for transportation and I will be interested on this at some point. [SPEAKER CHANGES] Thank you we will allow that. As a matter of fact what we will do is ask sergeant alarms to put a list up there for people who would like to speak on this. [SPEAKER CHANGES] Okay, Senator McLaurin. [SPEAKER CHANGES] Thank you Mr. Chairman, just again clarification, one of the counties in my district has already authorized a referendum to increase sales tax by quarter percent for economic development. They have already authorized that it will be on the ballot in November. So, they are okay with what they have done to this point by having already authorized it. [SPEAKER CHANGES] Which counties…? [SPEAKER CHANGES] It’s Richmond County. [SPEAKER CHANGES] Richmond. Is it under 2.5? [SPEAKER CHANGES] Yeah, it’s in the extent their total rate is under 2.5 right now. And yeah, they are scheduled to be on the November ballot, they could proceed with the referendum. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] Okay, I have got Senator Stein. [SPEAKER CHANGES] Thank you Mr. Chairman, Senator Gunn why wouldn’t we allow if a county is at 2% and they can go up to a half cent more to 2.5%, why would we allow them to that if they choose to designate a quarter to education and a quarter to transportation? Why must it necessarily be all one or other? [SPEAKER CHANGES] Thank you Senator Stein, we think that, we really wanna try to make a commitment emphasizing education and we think that having it at one half percent and allowing, supposed to be made is the appropriate avenue to take, there was little discussion but we do for like that is the best avenue to take on this particular bill. [SPEAKER CHANGES] I think probably part of that answer would also isn’t that we are not, we are looking not to have a tax increase on this so that’s why… [0:04:59.8] [End of file…]

2.5%. [SPEAKER CHANGES] Follow up question. [SPEAKER CHANGES] Follow up question. If the thought is that counties have the ability to bring up to their people referendum to get up to 2.5% not exceed 2.5% and they have both transportation and education needs, and they put it to the people for that purpose, I’m confused as to why we would not allow the counties to have what they want for how they operate their government and I just didn’t hear the answer. [SPEAKER CHANGES] Senator Gunn, did you hear that? Respond to his question. [SPEAKER CHANGES] ?? [SPEAKER CHANGES] Thank you, Mr. Chair. I would say also that Senator Stein will answer a question ? but I do think that we are wanting to see if you’re going to do and what to invest in the transportation we’d like you to go ahead and make that decision. If you want to invest in education we’d like you to go ahead and make that decision so we think that this is the best application in this case. [SPEAKER CHANGES] Senator Tucker. [SPEAKER CHANGES] Thank you Mr. Chairman. Probably a question for Ms. Griffin. Help me, back when we transferred Medicaid to the state, there was a quarter percent sweetener, if you will, given to the counties. Is that a correct statement? [SPEAKER CHANGES] Senator I believe you are referring to the Article 46. There was actually another article, the actual Medicaid swap was under Article 44, whereas the state sales tax increased as the amount to the counties under Article 44 decreased until it was an even swap. But at the same time and in that same budget bill the Article 46 as you mentioned was an additional quarter percent for counties. [SPEAKER CHANGES] Mr. Chairman, follow up. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] So with that quarter percent there was a broad flexibility for the counties to be able to use that money for whatever they needed to. Does passage of this bill supplant that ability for flexibility? For instance we got one county that used it because they were ?? court house. And they used that money to build a court house and now we’re saying that can’t be used, help me with that. Just, I need clarity on that. [SPEAKER CHANGES] Sure. So there are 27 counties that currently levy that quarter percent. That quarter percent may be used for any general lawful purpose and this bill would not change that for those counties. But other counties who have not, that don’t levy the tax would not be able to levy that tax under this bill. [SPEAKER CHANGES] All right seeing any additional questions? Done. Okay well that’s Section 1. Would you proceed forward with, lets do it one at a time, 2, 3 and 4. [SPEAKER CHANGES] Me? [SPEAKER CHANGES] Yes sir. [SPEAKER CHANGES] Thank you Mr. Chair. Section 2 is going to deal with some JMAC modifications. As ya’ll know, 2007 JMAC was formed and so the purpose was to maintain jobs in our state. I’m not going to go over what the dynamics are in that previous bill but it was limited to 69 million and 6 million dollars on an annual cost. What the PCS will do is it will grant for large employers the following modifications. First it’ll allow that large manufacturers that are investing to enhance their pollution controls are transitioning from coal to natural gas they will now be available. Secondly, it lowers the investment threshold for these companies from 69 to 50 million. Third change is it will increase the investment time from 3 to 5 years. And finally it’ll allow large manufacturer employers that are in Tier 2 to participate if population is less than 60,000 as a 7113 and the manufacturer employs at least 800 employees as full time at the project and maintains that level throughout the term. To give you an explanation on why we’d like to do this what we’re finding out now is this. We’re getting federal regulations coming down that are forcing employers in our state to choose between investing in their operations or shutting down their door and I think that we would all agree whatever we can do may

These modifications to retain jobs should be our number one emphasis and therefore, the Jaymac will serve this purpose and I'd like to have your support on that. [SPEAKER CHANGES] Members of the commitee, this is a bill that we in the Senate have already passed and back to the house, and my recollection is that it was passed unanimously, I think, earlier in the session, so you've seen this bill. Are there any questions on section two? See, none. Section three, Senator Gunn. [SPEAKER CHANGES] Thank you Mr. Chair. Personally I'm real excited about this being added and being considered today. It's being titled the "Job Catalyst Fund". Today and moving forward, I've had a lot of discussion with the Secretary of Commerce and to be quite candid with you, she's doing a great job. We've got opportunities out there, and what we're seeing in the economy is we've got a window of probably the next five years where we're going to have a real opportunity for some significant jobs and some very, very large employers. But, she's missing a big tool in her toolbox, and what the job catalyst fund will do is provide her what I think is a much-needed tool so that she can go out and close deals. Let's close these deals. This'll give her the opportunity to compete nationally and internationally for high quality jobs that we so, so want. Now, it will be- the Job Catalyst Fund- by the way, this is strictly a framework. We are not talking about an appropriation today. We are trying to establish a framework moving forward and that will come at a later time. First of all, let me let you know it will be solely at the discrestion of the secretary. She needs and we need for her to have that flexibility when it comes to closing deals, and this will give her, in fact, that. Now, as you will see, there are a lot of benchmarks that are required to be made to even be eligible or for her to have the right to go out and pursue companies. Based on whether you're in tier one, tier two, or tier three, minimum jobs is 500, 800, and 1200, respectfully. Same thing, whether you're in tier one, tier two, or three will dictate whether the project is to be a 20, a 35, or a 50 million dollar investment. There also is a wage requirement. If you're in tier one and tier two, your wage requirement will be 100 percent of the average wage for all insured property employers in the county. If you're in tier three, your requirement will bump to 110 percent. You must provide health insurance and you, of course, need to have your tax debts paid and be in compliance with any regulatory like ??. Now, the local governments must participate. We've had a lot of dialogue on this but I think that it is critical that we have a commitment from our local governments to participate. That participation rate will be as follows: if you are in tier one, three percent of the investment will need to come from that county. Tier two, it'll be a six percent, six dollars for every hundred invested on the state, and if you're in their three that'll be nine percent. They can be used to acquire and improve land, infrastructure, facility development, capital investment, and for other manufacturing products. [SPEAKER CHANGES] Mr. Chairman. [SPEAKER CHANGES] Yes, sir. [SPEAKER CHANGES] Senator Rabin. [SPEAKER CHANGES] Senator Gunn. [SPEAKER CHANGES] Would you ask him a question? [SPEAKER CHANGES] Yes, thank you. Senator Gunn, would you care for a glass of water? [SPEAKER CHANGES] I'm great, yes. It's been a big day. [SPEAKER CHANGES] May we open it up for questions on section three? Senator Brown, yes sir. [SPEAKER CHANGES] Thank you, Mr. Chairman. Just a comment. I think this fund would put us in position to compete with other states such as what South Carolina's doing now. South Carolina has a similar fund as this.

for the Commerce Secretary and the Governor can make a quick decision on some of these projects and time's important on a lot of these projects so it just gets us in the game on competing with those other states. [SPEAKER CHANGES] Senator Ford. [SPEAKER CHANGES] Thank you Mr. Chairman. Senator Gunn, how, and I think I heard you, you said you're not going to talk about any appropriations at this time but if you are how are you proposing we capitalize this fund? [SPEAKER CHANGES] Senator Gunn, would you like to respond to that? [SPEAKER CHANGES] I'm not sure I can but it is an appropriation matter and I do not think that that is decided. I think we were going to get with, from a practical matter, we're going to get with the Commerce Secretary to see what number may work for her. I will have to, I'm not sure Mr. Chairman. [SPEAKER CHANGES] Senator Ford, we're getting the framework in place and at some point it'll have to be appropriated from the General Revenue. [SPEAKER CHANGES] She'll find the funds. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] Yes sir, follow up. [SPEAKER CHANGES] Next question is, can you talk, Senator Gunn, about taxpayer protections as it relates to the framework then about this fund, making sure that we protect taxpayer money? [SPEAKER CHANGES] I tell you what. If you could hold on that and let us do the JDIG and let us go through that for a minute and let me come back to the protection if I can. Okay? [SPEAKER CHANGES] Senator Ford, just to maybe be of assistance. It will have the same guidelines and protections as the JDIG fund does with ??? and everything. Any additional questions on Section 3? Seeing none, Section 4. Senator Gunn. [SPEAKER CHANGES] Yes, JDIG modifications. We have spent a lot of time with the Secretary. Here's the good news. The good news is she's out there churning up opportunities for us and some of them she has commitments and some of them she feels that she will get commitments. An issue has come with the fact that the JDIG allocation goes to 2015 and if we and if she is successful and we are fortunate enough to have her be successful, which I am betting on the Secretary, then we are going to be in a position where we're not going to have a tool because we will not have those funds available. So what we want to do in this JDIG modification is that we want to increase the JDIG cap commitment to an additional $14 million and this is a one-time commitment and it will run through the 2013-15 fiscal biennium. Also there is, as you may know, in Section 4.b there is a JDIG requirement as to cost benefit analysis to determine whether a JDIG award is appropriate. What we want to do in this so you do know this is the PSC would allow disregarding of the cost associated with the awarding of the JDIG as relates to the job catalyst fund. The job catalyst fund will be outside what is the cost benefit ratio for the JDIG grant. I'll be glad to answer any questions. [SPEAKER CHANGES] Before we go with questions on that, Senator Ford, would you provide some additional background on Senator Ford's question. [SPEAKER CHANGES] Senator Ford, the bill does provide that if the company does not maintain the minimum requirements for the greater of ten years or the life of the grant plus five years then they have to repay the amount equal to the disbursement of the fund to the local government unit. The local government unit in turn would remit that back into the job catalyst fund. [SPEAKER CHANGES] Follow up? [SPEAKER CHANGES] Follow up. Is that going to be done annually? [SPEAKER CHANGES] The reporting would be done annually. Yes. [SPEAKER CHANGES] Members of the Committee, we need to backtrack for just a moment to clear up section 3. Section 4 is before you. Senator Gunn has done a very good job explaining it. We have staff available to help and assist with any questions. Are there questions on Section 4? Seeing none, let's go ahead and we have two speakers assigned. Joanna Reiss from the North Carolina Association of County Commissioners. Ms. Reiss identify yourself, your title, and you have two minutes. [SPEAKER CHANGES] Thank you. Joanna Reiss with the Association of County Commissioners, Director of Government Relations. While we appreciate the attention to and conversation surrounding local revenue needs we do have some concerns about how this current legislation is structured, particularly the piece that is actually some loss of flexibility in the use of the funds. This is a rather large change to be making so

Quickly, perhaps the committee and the general assembly would consider sending this concept to a revenue laws to study as a potential piece of a more comprehensive tax reform package. Thank you. [SPEAKER CHANGES] Thank you. I have one other speaker and I hope I pronounce it properly, Erin Wynia from the League of Municipalities. Erin would you pleas identify yourself and your title. [SPEAKER CHANGES] Sure thing. Thank you Mr. Chair. My name is Erin Wynia, I am a legislative and regulatory issues manager at the League of Municipalities. And thank you for the opportunity to speak today. This is the first time that we've seen this language so I will offer very brief comments. I haven't had a lot of time to digest it yet. Like the county association we do appreciate the attention to the needs of local governments to have local option revenues. What we worry about with this particular proposal is the effect it could have on regions to raise funds for transportation. Those are usually levied at the county level and obviously affect the cities within. So we do ask for your further consideration in a study I think would be an appropriate place for that to happen. Thank you very much. [SPEAKER CHANGES] Very fine. All speakers that have been [??], members of the committee any additional questions or comments? [SPEAKER CHANGES] Senator Hise, you have a motion? All right Senator Hise sends forward a motion for favor report on house bill 1224 PCS, and unfavorable to the original bill. And with that all in favor please say aye. [SPEAKER CHANGES] Aye. [SPEAKER CHANGES] Oppose, nay. [SPEAKER CHANGES] Aye's have it. Senate bill 763, Senator Reagan. [SPEAKER CHANGES] Are we gonna do... [SPEAKER CHANGES] Oh excuse me, I'm sorry. Ladies and gentleman that is our technical and corrections bill and we have some additions that are going to be made to that. we're going to go ahead and postpone that one for today and we will take that up tomorrow in finance. Do we have our scheduled time yet? Stay tuned to the time, in finance we will bring that forward tomorrow. And if there are no other comments or questions through the committee this finance committee is adjourned.