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Senate | July 22, 2014 | Chamber | Finance Part 2

Full MP3 Audio File

can the finance committee come closer ?? will everyone please take your seat and keep the crowd noise down to a very minimum, just to bring everybody up to date our ?? and for your helping in the giving this pleading running ?? and smoothly, members of the committee we have two bills ?? here, we are going to take house bill 1224 local sales tax ?? first there is a ?? motions that we except the PCS for discussion ?? on the favor please say aye, for those ?? thank you, senate i believe the PCS is being handed out along with a chart ?? provide some simplicity in understanding ?? going to be very pleased to senate ?? all the good news with you, senate ?? [speaker change] thank you mister chair good to see you all in the ?? you do have a chart i believe that is being handed out what i am gonna do ?? this is a ?? some incredible ?? [speaker change] once again let me just say that ?? on the job ?? bills 2, 3, 4 and i guess now 5 i going to ask one more time for your enthusiastic support of those combine ?? to have a credible impact as we move forward in the economic development is going to help many segments its gonna help many companies from the largest, companies that we could possibly ever track to this state to the ?? entrepreneurs that ?? drop the economy of the state in the north Carolina ?? would be also glad ?? questions that you had on now let me if i can give you once again a relatively high level summary of what we ?? last meeting i hope you will conquer ?? after the presentation that we have a fact that once again listen to members i think i heard is important and that is to offer as much flexibility and options as we can too put this in place with the understanding that just as little bit about ?? we have a lot ?? we wanna take care of ?? take over ?? the recovery is on ?? and that we made efforts to ?? but we do have a lot of ?? for me and those ?? represent people there that do need a little help i think this plan will help both them we move forward in the next session or two we do further ?? to some more ?? i think they are going in the long run not only help our ?? large municipality and ?? to continue the prosper but i know ?? will help the urban i mean the ?? briefly description ?? also ask the staff to ?? they feel that i have left [speaker change] senate i have just a comment for folks in the audience would like a chance to speak on this issue there is a ?? of sheet that might ?? so that we can take ?? i am sorry ?? please proceed [speaker change] thank you mister chair most of the counties ?? be under the cap two and a half under the new PCS if you know ?? which is where they are, this is important all county's ?? each ?? of each option up to two and a half percent ?? they may still in act a half ?? for transit they may now in act ?? for education or general use ?? two and a half percent ?? they may also in act a quarter a quarter ?? transit education or journal use

Representative: …however they see fit, and when they see fit, meaning, if you want to do a quarter now and come back to do a quarter, you got that as much flexibility as we know how to give under this provision. Twenty five counties with only a percent remaining under the half percent cap, they may levy the quarter percent increments for transit, education or general use. Once again, everyone is subject ot the 2.5% cap. If I can, Mr. Chair, I believe Trina Mayer may want to add a little clarifying or more information at this time. Speaker: Would you like to provide some additional insight or would you… ? Okay. Trina: No, as Senator Gunn mentioned, there is a chart hat sets out all the options and he explained them very well. So, I am happy to answer any questions. Speaker: Okay, Senator Gunn, is that as much as we would like to discuss? We talked about this bill a few times. Senator Blue, do you have a question? Representative: I do. Speaker: Okay. Representative: Senator Gunn, again, in looking at this, it seems that the only county that will be, again, I don’t know the situation in McClemburgh – they have a half percent sales tax for the transport authority, but the only other county that is in the midst of trying to deal with growth in an area that has well over 1.5 million people, and has reached an agreement with two adjoining counties, that is, Orange and Durham, if they do as those two counties have done, for research for the transport authority, they have to go in at 1.5%: that is the deal, the contract that they are into. So, in effect, you are telling the state’s largest school district that if they comply with the deal that made with the other counties that if you assess yourself a sales tax in order to build a public transport system, then you are precluded from doing anything to help public education because the choice in Wade County is not to take a quarter of a percent for regional transit authority, and a quarter for schools, and a quarter percent to do general stuff. If, indeed, they comply with the agreement that was made when this tax was enabled they have to go in at 1.5%. so, my question to you is if it is the intent to put Wade county and the sheriff of Wade County alone? Speaker: You can respond to that if you like. Representative: Thank you Senator Blue. Let’s just make sure again that we are giving options to Wade, and it will certainly be there choice that if they want to levy the 1.5% for transit as part of their agreement, but that they will also have, today, the same options that the other counties have that are currently at 2%. So they do have that flexibility and can make that choice. I think another response to that goes back again to that we want to level the playing field. We want to look at where we are going to go moving forward. This 2.5% cap is going to be in place and provide some universal appeal to the whole are, but it will also, as we move forward in the next couple of years, as I have stated again, we know that this is a great thing that Wade and some other counties are prospering. Their sales tax, I hope and think is correct to assume, will continue to grow. We do know that some of the rural poor counties are actually, because of necessity, are actually coming to some of the larger counties and buying and purchasing to help increase their sales pace. We are committed to making sure that we are fair to everybody. The rural counties are very, very glad that Wade is growing and prospering, and I think that as we broaden this sales tax base,

...over the next couple years; it would be my hope at that point in time that all counties will prosper, both large and small. [SPEAKER CHANGES] I've got Senator Stein. [SPEAKER CHANGES] Thank you, Mr. Chairman. The changes you've all made in the bill will certainly result in higher sales tax around the state; you're making it easier for 94 counties to levy sales tax, and so if those folks want to raise their taxes and you all are making it easy for sales tax to go up, power to you for raising sales taxes. But what I find problematic is the same point that Senator Blue just made, which is, you are targeting 4 counties in particular in this; there are 4 counties that are urban counties that were recognized as having transportation needs different than your typical small county or rural county. And they are Orange, Durham, Wake, Forsyth, Guilford and Mecklenburg. Those are the 6 under the transit. Well, Orange and Durham already exercised their quarter-cent optional authority AND their half-cent transit authority. Senator Rucho said yesterday that this authority's been out there and they should have known to use it---which, with all due respect, Senator Rucho, is preposterous because there was no sunset on it; there was no notice that any county HAD to exercise it and if they didn't use it, they lose it. And you are now taking away from Wake, from Mecklenburg, from Forsyth, and from Guilford authority that those citizens currently have. Those citizens HAVE the authority through their county commission to put something on a referendum and then--- [SPEAKER CHANGES] Is there a question coming up here? [SPEAKER CHANGES] I don't know, I'm on a roll. Really. They have the authority to vote for themselves whether to have a referendum and decide what is appropriate for their transportation needs, and you are targeting them and depriving them of that authority they have under current law. Here's my question: you talk about a level playing field. It doesn't EXIST. We're already pregnant, there are 2 counties that have 2 and 3-quarter cent, they are Durham and Orange. They are the ones that are in the transportation authority along with Wake. So you are now creating an UN-level playing field between and among those counties. Why on the one hand are you making it easier for sales tax to go up elsewhere; you're tying the hands of Wake County? [SPEAKER CHANGES] Mr. Chair? [SPEAKER CHANGES] Yes, sir. [SPEAKER CHANGES] First of all, I'd like to address something misspoken on part of this; these counties have a 2-and-a-half percent ability now, let's just be very, very clear with that. We're not raising taxes on anybody. They can use a one-quarter cent for transit---as useless as it may be in many of these counties, it is still there and it can be applied; and they've got the quarter-cent for general use; and the 25, of course, that have already done the 2-and-a quarter, they still have the option of another quarter. This is already there for them, so this is certainly no raising of taxes by any stretch of the imagination. Senator Stein, I will still have to go back to my comment before that this is leveling the playing field. It is offering these counties, the larger counties, options to the extent that they are available based on their current tax structure and what they have done recently; and it will, as we move forward, give us a little certainty at the 2-and-a-half cap as we move forward with expanding our tax base in the years to come, to what I would hope would put all the counties in a situation where they have a better, stable revenue source; and one that they can grow as we prosper as a state, and our economy. [SPEAKER CHANGES] Senator Apodaca, did you have a question? A motion? Why don't we entertain that motion? [SPEAKER CHANGES] Thank you, Mr. President. I move unfavorable to the original bill, favorable to the proposed Committee substitute. [SPEAKER CHANGES] Members of the Committee, you have a motion before you for a favorable report on House Bill 1224, PCS; and unfavorable to the original bill. Any additional questions or comments? Seeing then, all in favor please say "aye." [END OF AUDIO]

[Speaker Changes] Oppose No, The ayes have it. Thank you Senator Gunn for a great job you will be handling that in the floor Am I correct?. I do have to say Thank you to the staff This is about the 1300th iteration of the this very simple bill. Thank you. Absolutely. Alight, if you thought this was fun Rep Howard , Please come forward with house bill 27 . I let you please explain this to every on and tell us how great it is and we will go forward. [Speaker Changes] Thank you Mr Chairman I really believe that everybody is going to be excited and like this bill. Many many years ago when I was going to the treasury office, there was a conversation with former member Bill McGade, I said, what happened to the? [Speaker Changes]Rep Howard, I don’t mean to stop you. But I do need to take a motion from Senator Brown that accept House bill 27 PCS for discussion. All in favor say Aye. Oppose No. Ayes have it. Please proceed. I am sorry [Speaker Changes] That’s Ok. We had a conversation on what happens to savings bond when they were lost or never redeemed. And so in recent months, our treasury has determined that they have the opportunity of taking ownership of the matured savings bond that are currently lying in the Treasury office and we can bring them in to North Carolina’s office. Hope that folks could claim their bonds. But for those folks who do not claim the bond, then we would take ownership and redeem those funds and the money would go to out sheet funds. I have asked all the questions that I can think of asking and I truly believe it Its a win-win situation for North Carolina. We will be one of the I believe the second state to proceed with this progress. In the summary, there is the explanation of the actions that are required for us to be a part of it. I believe there is no downside. Mr Chairman I would be glad to answer questions. [Speaker Changes] Senator Tillman [Speaker Changes] I have one question and then a motion. How much money we can anticipate that this bill that will be left over add to the [??] out there their clients [Speaker Changes] Well w don’t Truly know. But I will tell you the matured valu of the unclaimed U.S Saving bonds including [??] is $16.5 billion [Speaker Changes] That as with a b [Speaker Changes] B, Big B and with North Carolina being the 10th largest state patriotic state with the entire basis that we have here. I believe that we will get more than our fair share. [Speaker Changes] I have a motion Mr. Chairman [Speaker Changes] Yes sir, Senator Tilman [Speaker Changes] I moved on this wonderful bill motion for favorable report and the rest of the bill the fire wall resistance to the PCS. [Speaker Changes] Members of the committee. We HAVE A MOTION FrOM Senator Tillman we have a favorable report for house bill 27 PCs unfavorable to the original bill. Any additional question or comments. Senator Hise. [Speaker Changes] Just to clarify the figures that are quoted in the summary. We this is actually listed in the background as the amount being $16.5 million. [Speaker Changes]It’s billion [Speaker Changes]So that was an error in there. OK [Speaker Changes] Ok. Senator Jackson [Speaker Changes] Thank you Mr. Chairman. Thank you Rep Howard for binging this. Could you sort of explain me how the treasury office would try and notify the folks , just briefly that owns the bonds Speaker Changes: Yes sir, right now today I believe there is half a million dollar at the treasury office currently and that stands from closed out bank boxes just abandoned properties So one of the 1st things that has to happen is that we have to declare that from the rows and addresses

A court action, where we take ownership. There’s two types of, two categories of bonds. Bonds in our possession and then absent bonds. So there’s two types of the bonds and we would take ownership and we’re very fortunate that the state of Kansas has already done all of the groundwork for us and custody is, we are taking custody of the bonds. And then of course as in every other case, the treasurer’s office would hold these bonds for a number of, timeframe, I believe it’s 365 days that the bonds would be held. And then there would be a roster, as soon as that roster is determined, and be published at each clerk of court’s office in all 100 counties. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] Thank you Mr. Chairman. Thank you for that explanation, Representative Howard, but how is the owners of these bonds prior to they being I guess confiscated by the state, going to be notified that they’re fixing to lose their bond? [SPEAKER CHANGES] Well, they actually aren’t fixing to lose the bond. At any time in the future, reasonable time in the future and I would think that would be a long, long period of time, like any other claim that is made, folks can discover. I think there would probably be a flurry of activity when this is published. And as the newspapers and the TVs will begin to talk about it, folks will begin to think about, in that book, that the kids savings bonds. But after that flurry of activity, if the bonds are located in the future, that’s why we are setting up a separate trust account inside of the ?? fund, to keep the money secured. So at any point in time that someone claims their bond, that the resources would be there to pay for them. [SPEAKER CHANGES] Thank you. That was the answer I was looking for, so thank you. [SPEAKER CHANGES] Yes sir. [SPEAKER CHANGES] Okay, so basically Representative Howard, just to be clear, there is a separate fund within the ?? fund so that when these bonds are put in there, there is a safe location for them and they’ll be available for distribution if asked for. [SPEAKER CHANGES] Yes sir. [SPEAKER CHANGES] Okay. Senator Hartsell. [SPEAKER CHANGES] Thank you, Mr. Chairman. Representative Howard, I’m a little bit puzzled. And that is, normally property ?? to the state in the other fund simply because somebody’s been holding that money or that bond or whatever, and then remits it to the state for the fund. Because those folks who’ve been holding it don’t know who, nobody’s claimed it. Is this process designed to initiate a court action by the state of North Carolina against the United States Treasury? [SPEAKER CHANGES] That’s the first step. [SPEAKER CHANGES] And if so, sounded like a good idea in one sense, but how do you know what to sue the Treasury for? That’s what I’m wondering about. [SPEAKER CHANGES] It’s going to take a lot of legwork and a lot of diligence from the treasurer’s office. There’s apparently reams of microfilm that’s in the U.S. Treasurer’s office. But in talking to the treasurer’s office, they have certified that they have the time, the resources and the energy to go after the North Carolina residency addresses. And it’s going to take a while to get those, but I think it will certainly be well worth it. To that end, the state of North Carolina could actually see between 300 and 500 million dollars added to the ?? fund. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] Representative Hartsell. [SPEAKER CHANGES] But it seems to me that in going through all this, you go through it for the purpose of identifying someone who was or is related to the state of North Carolina, resident or otherwise. And if you’re doing that, aren’t you actually doing the work to begin with, that would result in those ?? funds, ultimately going back

...to the folks who owned the money, as Senator Jackson is talking about. And I’m just trying to figure out is this, I don’t know, it sounds great, but if you’re doing all the work to find out who they are, well maybe that’s just a service that we’re doing for our residents or heirs, but I’m just trying to understanding it. [SPEAKER CHANGES] I understand and there’s two ways to look at it, of course, if the money comes back to the residents of the state of North Carolina, hopefully they’re going to spend it here in the state of North Carolina which would increase spending and help with our tax base, but we believe that it’s going be well worth the effort to identify these people. If you remember, the United States began issuing these savings bonds after the first World War. That was before Andrew Brock was ever thought of, or his parents were probably thought of, but you have two series of bonds. You have the E bonds and the I bonds. The oldest bonds are the ones that continue to accumulate entries for a much longer period of time. The ones that most folks in North Carolina purchased was the $16.75 that will material to $25 and that was the end of the road. It is done at $25. These are...there’s millions of them laying out there that people have forgotten that they had, they were destroyed in house fires and things like that. I know I’m not answering your question to the point that you want me to get, but after looking at this, talking to the treasurers office and even talking to the folks in Kansas, that was the first state that has moved forward to do this, I sincerely believe it’s in our best interest to try to retrieve this, otherwise the money stays with US Treasure and we gain nothing. [SPEAKER CHANGES] Senator Rabin? [SPEAKER CHANGES] Yes. Thank you. This one, the tall one. It sort of follows up on what Senator Jackson’s question was. Once we find out about all of the bonds and all of the people, are we planning to proactively inform the folks who own the bonds now that if you don’t redeem them by a certain date, you’re going to lose them to the state of North Carolina? [SPEAKER CHANGES] That’s not really the way that it would work, Senator Rabin. We would take custody, take claim of the bonds. Then the state of North Carolina would convert the mature bonds to cash. The cash would go into the escheats fund, into a separate trust account where it will remain for a long period of time. If it at any time that these folks were located, or if they just opted to look at a list that would be provided at the clerks of court office, it may be their great grandmother or their great aunt, a distant relative, but if they could claim ownership, then they would be eligible to secure the cash for the bond. [SPEAKER CHANGES] Follow up, please. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] I’m probably a little bit slow because it’s so late in the day. The question is, will we proactively contact the people who own the money or do we just leave it up to them to sort of go to discovery? If we’re going to go to discovery, I think its wrong. [SPEAKER CHANGES] I think that you would have to consider the depth of the process. If you have an address for someone at Route 3 in Mocksville, North Carolina and that bond is 25 years old and there’s not even a Route 3 in Mocksville anymore, it’s now all housing addresses, particular street addresses, I think that list would show that name and that last address. But it would not be productive or, I don’t think it would be even feasible to try to send out letters and things. It will be a public record of the last ownership of the bond. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] Follow up comment more than anything. I happen to have some of those kind of bonds. Before you take my money, I’d like to know you’re going to do it.

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