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House | April 24, 2013 | Committee Room | House Finance

Full MP3 Audio File

It can be handled any way the committee chooses to, Dr. Lokey (??), but I believe that this has a real impact on what we're doing in the state. We all are very much aware that the Senate in budget reform is in the process of eliminating most, if not all, of the credits, and I believe that we need to have opportunity to work with therym, together with them, to stress the importance of jobs and this particular program of all of the money that we spend, as the Secretary of Labor said, we spend billions of dollars. This is one that you can put your finger on where's the money going, who does it apply to, we can account for every dollar that is spent there. I think that we just need, rather than send this bill out this morning, let it get caught up in all the appropriations, activities that's going on right now, we need to just have a time to work with the Senate and express to them the importance of this concept, and I would welcome you to be on that select committee, Dr. Lokey (??) because I think you could bring a lot of strength to that committee. [SPEAKER CHANGES] We have a follow up, Mr. Chairman. [SPEAKER CHANGES] Yes, sir. [SPEAKER CHANGES] Well, first, Representative Howard, I'd be honored to serve on that sub-committee, but let me say that I still don't understand why this bill is not going through the normal process. You have just indicated to us that you know where every dollar is going, and that's a whole lot more precise than many bills we have passed out of here. I can think of one bill of great import in terms of the budget, the repeal of the state tax rolled right out of here, didn't go to any sub-committee in terms of its implication for anything, so if we can roll the repeal of the state tax out in four or five minutes, I'm really not understanding why this bill needs a sub-committee. So if you could quickly respond to that, I'd appreciate it. [SPEAKER CHANGES] Excuse me for interrupting. We have a sub-committee that's taking occupancy taxes. We have a sub-committee that's taking the annexation bills. There's nothing out of the ordinary about setting up a sub-committee to study a bill in this committee. [SPEAKER CHANGES] Mr. Chairman, could I ask Representative Howard to address my question. As again, compared to the state tax repeal, is this not a pretty nominal bill, especially since you told us you actually know where alll the money's going. [SPEAKER CHANGES] Glad to respond, Dr. Lokey (??). To the same concept, perhaps there was a working agreement with the Senate before the state tax rolled out, perhaps there was. It's always good to do homework before you send bills up to appropriations. [SPEAKER CHANGES] Thank you. Representative Alexander. [SPEAKER CHANGES] Thank you, Mr. Chairman. I just want to go on record as being in favor of this approach. I think it makes a lot of sense. It is an approach that can multiply dollars. If anything, I think the tax credit out to be enhanced. I like the notion that it's multiple years, that there's a place to register the apprentice program, and quite frankly, I would love to see us do more of this kind of thing and figure out how to actually promote it, because it is an extremely cost-effective way to train people and get them into the work force. And ladies and gentlemen, that's my purely non-political, small business-oriented, let's get some some folks employed statement for the morning. [SPEAKER CHANGES] Representative Starnes. [SPEAKER CHANGES] Thank you, Mr. Chairman. Members of the committee, it's a good deal. Sending it to the sub-committee is appropriate. If you remember last session, we had a long laundry list of tax credits that we handled all the same way, and this is being put into the same category as the others, and we just wanted to make sure that the expiration dates were uniform so that they would fit in with the model of tax reform that we are proposing. As to the state tax credit, that was dealing directly with the availability for this year's budget, so it had to be dealt with in an expeditious manner.

It was a little bit differently than the tax credits but this tax credit is not being handled any differently than any other tax credit that's been approved in the last two years. [SPEAKER CHANGES] There being no further questions the motion is that we set up a sub, Representative Holley? [SPEAKER CHANGES] Thank you, Mr. Chairman. First of all, this is the first bill that I've been excited about. I think what you're doing is great and I'd like to make a request to be on that sub-committee is possible, thank you. [SPEAKER CHANGES] So noted. Representative Collins? [SPEAKER CHANGES] I have a question. I'd like to see this bill go forward, however it has to go forward, I just have one question since I'm not, I don't think I'm on that subcommittee. Does it, will this subcommittee have the authority to shelve or kill this bill without coming back to Finance Committee? [SPEAKER CHANGES] No sir, the subcommittee will be sent up a PCS. Any other questions? There being no questions the motion to send House Bill 341 to a subcommittee for further review and report back to this committee. All those in favor, let it be known by saying aye. Those opposed no. The aye's have it. The aye's appear to have it. The aye's do have it. The House Bill 341 will be sent to a subcommittee. Thank you very much. [SPEAKER CHANGES] Mr. Chairman, thank you and thank members of the committee and also thank Lieutenant Governor Forest, Commissioner Barry for bringing this to my attention. [SPEAKER CHANGES] Thank you. I got a little ahead of myself, we do need a report from subcommittee. Representative Moffitt, do you have a report for us from the Occupancy Tax Subcommittee? [SPEAKER CHANGES] I do. Thank you, Mr. Chair. The House Finance Subcommittee on Occupancy Tax met on Monday to discuss the [??] County Occupancy Tax issue, pleased to report that we passed that out favorably and it actually brings it in to conformity with the goals of the subcommittee and it will be accepted by the committee and I will, would like to, at this time, refer House Bill 546 Modify- [SPEAKER CHANGES] 545. [SPEAKER CHANGES] Excuse me, 545, Modify Henderson County Occupancy Tax, Senate Bill 172, Modify Jacksonville Occupancy Tax to your committee and we appreciate your work. Now we'd like to take up House Bill 35, Representative Brown. [SPEAKER CHANGES] Thank you, Mr. Chair, members of the committee. This bill has undergone a great metamorphosis. Two years ago we started as a constitutional amendment and then we went to a repeal of the Capital Facilities Act entirely, which is the vehicle by which special indebtedness is appropriated and approved. This year we have- [SPEAKER CHANGES] Mr. Chairman. [SPEAKER CHANGES] I'm sorry. [SPEAKER CHANGES] I'd like to move that the PCS for House Bill 135 be before us for purpose of discussion. [SPEAKER CHANGES] We have the, does everybody have the, we have a motion that the proposed committee substitute for House Bill 35 be before us. All those in favor let it be known by saying aye. Those opposed no. The proposed committee substitute is before us. [SPEAKER CHANGES] Thank you so much. This proposed committee substitute, really, is a compromise between the Senate and the Senate sponsor that we have this year, myself, and the Treasurer's Office and we have Treasurer's staff here if anyone should have a question. I planned to go, really, through a little bit of history on Special Indebtedness, but there is an excellent bill summary that you're very capable of reading. Of course, I'll be happy to answer any questions but the thrust of this bill is, is that with its passage we are going to limit Special Indebtedness to 25% of the total debts sponsored by the General Fund. Right now special indebtedness is 40% of our total debt, GO is 60%, that is way, way too high. So by virtue of capping it at 25% we're going to have to increase our GO debt to such an extent to even bring special indebtedness down to 40%, I mean to 25% which is going to be very, very difficult. So this bill accomplishes so much of what we really fought so hard for in 2011, to get a handle on the state's debt, and not even just a handle on the debt but what's so important to me is how that debt is acquired that is so disturbing to me and so dangerous for this sate. Like I said, I'm happy to answer questions

The treasurer staff’s here to answer questions. This is such a great bill you got, so we talk about being fiscally responsible in the state. If we leave out that, which is such a huge part of this whole picture, we make a serious mistake. So, I would appreciate some interest put regarding answering any questions that you have. Thank you Mr. Chairman. [SPEAKER CHANGES] Thank you Representative Collins. [SPEAKER CHANGES] I would just like to take a motion ?? [SPEAKER CHANGES] Representative Ross. [SPEAKER CHANGES] I just wanted to ask a couple of questions. I don’t know if they would go to the treasurer’s office or they would go to staff about the special indebtedness. [SPEAKER CHANGES] Someone from the treasurer’s office here could answer questions. [SPEAKER CHANGES] Mr. Chairman of the Representative Committee, my name is Tony Salari. I’m the liaison for the department. I’ll do my best. I was hoping to have Vans Holme in here, someone from State Work Government Finance, but he’s not. I’ll see what I can do. [SPEAKER CHANGES] We’re glad to have you with us. Representative Ross, you’re recognized. [SPEAKER CHANGES] Thank you very much, Mr. Chairman. The first question is, just where the treasurer’s office is on the spill and the proposal? I just want to hear it from the treasurer’s office and then I have another question, Mr. Chairman. [SPEAKER CHANGES] Mr. Chairman, yes. Representative Ross, we’re in full support of the bill. The bill basically brings us 25% figure that you see in the legislation, brings us in line with most other of the triple-A rated entities. There’s only I think seven other states that had a triple-A rating from all the rating agencies. The average amount of special indebtedness there is about 25%. We’re at about 40%. So, this brings us in line with other triple-A rated entities. Also, if you recall from the Data Ford Ability Study, they have been making a recommendation for a number of years now that the state rely more on general-obligation debt and less on special indebtedness. So, this brings us in line with the recommendations of the studies well. [SPEAKER CHANGES] Representative Ross. [SPEAKER CHANGES] Thank you very much for that. So, then my next question is, just because not everybody knows what special indebtedness is, are we talking just about certificates of participation or does other non-GO debt get caught up in special indebtedness? For example, revenue bonds or two-thirds bonds, or something like that, or are we only talking about certificates of participation in that type of instrument? [SPEAKER CHANGES] We’re only talking about general fund-supported debt. So, again, I’m not an expert on this. But, revenue bonds for example, let’s say, you’ve got self-liquidating revenue bonds. The revenue bonds, they should buy the university system that rely on revenue sources to pay the debt off. That’s not general fund-supported, but not being included in this. It’s only debt that the general fund supports. [SPEAKER CHANGES] May I ask a staff a question? [SPEAKER CHANGES] Representative Ross. [SPEAKER CHANGES] Just a question for staff. Are two-thirds bond special indebtedness or are they considered GO indebtedness because they go to the GO of the previous GO upon issue? [SPEAKER CHANGES] Cindy. [SPEAKER CHANGES] Representative Ross, two-thirds bonds would be GO debt and it is not covered under the State Capital Facilities Finance Act. [SPEAKER CHANGES] Just one final question for staff. Sorry that I’m doing this, but I think it’s important for the committee to understand. [SPEAKER CHANGES] You’re doing fine. [SPEAKER CHANGES] Cindy, could we just be clear. Are we pretty much just talking about certificates of participation here? [SPEAKER CHANGES] Yes, ma’am. Yes, ma’am, we are. In any other types of limited obligation. The statute defines special indebtedness and the primary when we think about is cups or that is generally what we refer to around here. But, it would be basically anything other than your revenue bonds and anything other than your GO bonds, and it is the debts supported by the general fund. It does not involve anything having to do with the “how I fund.” [SPEAKER CHANGES] Thank you very much. [SPEAKER CHANGES] Representative ?? [SPEAKER CHANGES] I’m sorry. May I speak? [SPEAKER CHANGES] Representative Brown. [SPEAKER CHANGES] I’d just like to address ?? involves the two-thirds provision is in the Constitution. So, that is certainly permitted. There’s four ways to incur debt without the vote of the people, and two-thirds bond is certainly one of those emergencies and other ways. So, it would not affect...the spill would never affect that. [SPEAKER CHANGES] Thank you very much. [SPEAKER CHANGES] Representative Luebke. [SPEAKER CHANGES] Thank you, Mr. Chairman. I realized that each member of the committee could speak for herself or himself. But, when terms like certificates of participation are used in debate in conversation, I’m just curious whether each member or this committee knows what...

?? cop is and uh--well, other than police officer. Um--and whether staff might be able to explain that if you think that's appropriate, Mr. Chairman. And then I do have a question for the Treasurer's Office. [SPEAKER CHANGES] Does anyone need an explanation of what a COP is? And what's your question, Representative Luebke? [SPEAKER CHANGES] I thought I saw a hand there just now, Mr. Chairman. [SPEAKER CHANGES] Representative Holley, you do not know what a COP is? [SPEAKER CHANGES] Can I--[crosstalk] [SPEAKER CHANGES] Let's let Sandy do it. [SPEAKER CHANGES] We have certain forms of indebtedness that are supported by the General Fund by appropriation and that's--there's--we have a broad term of special indebtedness. That covers lease-purchase types arrangements, it covers installment purchase contracts, it also covers something called certificates of participation. And that's a financing contract that's incurred between the state and a corporation that obtains--that holds the funds and--it's just--and you'd buy a--you participate in that corporate indebtedness. I--but, they're all supported by an appropriation by the General Fund. [SPEAKER CHANGES] Representative Warren. [SPEAKER CHANGES] Uh, Mr. Chairman [crosstalk] [SPEAKER CHANGES] I'm sorry. Representative Luebke, you had a question. [SPEAKER CHANGES] Yes sir, thank you. I just wanted to ask Mr. Solari ?? one quick question. The original version of this bill before the committee substitute said repeal. Now we're on limit and I just heard you say that the Treasurer's Office supports the limitation. If the bill had gone forward as a repeal bill, I'm curious; where would the Treasurer's Office have been on a repeal bill? [SPEAKER CHANGES] Again, Mr. Chairman of the Committee, Tony?? Solari, Treasurer's Office. We would have opposed that--a bill with that. That would have repealed the act. And mainly because the Capital Facilities Finance Act just acts as a structure under which the General Assembly can issue special indebtedness. Ultimately the General Assembly decides whether to issue debt or not. The reason we would have opposed that was because there's a lot of special indebtedness currently issued by the state that that forms the legal structure for. And we were concerned that if the legal structure that supports that--were repealed that that might raise concerns in the bond community. So, we would've opposed a bill that repealed it for that reason. [SPEAKER CHANGES] The Chair would note the bill had to say limit or it wouldn't have gotten this far. [SPEAKER CHANGES] Uh, well--thank you, Mr. Solari. And thank you, Mr. Chairman. [SPEAKER CHANGES] Representative Brown. [SPEAKER CHANGES] I would just like to remind Representative Luebke that the repeal of the Capital Facilities Act did pass the House in 2011, if you'll recall. [SPEAKER CHANGES] Representative Warren. [SPEAKER CHANGES] Thank you, Mr. Chair. I just want to commend the bill's sponsor for persistence in pursuing this and for her willingness to compromise. And Mr. Chair, I'd like to be recognized at the appropriate time to make a motion. [SPEAKER CHANGES] Well, we've got two people wanting to make a motion. Representative Starnes. [SPEAKER CHANGES] Thank you. Question for the Treasurer's Office, please. Help to understand the relationship--between--the correlation between the General Obligation Bond and the Special Obligation bond, or special indebtedness. A coup--is our credit rating directly tied to the percentages of each, and a couple of years ago, when we did lose our triple A or double A rating, was the percentage--was there a big gap in the percentage as opposed to what it is today? [SPEAKER CHANGES] Again, Mr. Chairman, Representative of the Committee, Tony Solari. The ratings--the bond rating agencies look at a lot of factors when it comes to the rating. It's partly state-supported debt, yes; it's overall fiscal management of the state, so there are a lot of factors. General Obligation Debt, as you know, is a vote directly of the people; special indebtedness is a vote that has to be voted on by the General Assembly but doesn't go to the people directly for a vote. As to the percentages a couple of years ago, I can't speak to that--I don't have the figures in front of me. Right now, we're at about 40% of General Fund obligated debt and special indebtedness. [SPEAKER CHANGES] Follow-up, then. [SPEAKER CHANGES] Representative Starnes. [SPEAKER CHANGES] Thank you. But it would be accurate to say that the rating agencies look more favorably on GO debt. [SPEAKER CHANGES] I believe that's true sir, yes. [SPEAKER CHANGES] Could I-- [SPEAKER CHANGES] Representative Brown. [SPEAKER CHANGES] In the--in the debt affordability study, if you'll recall, they cautioned us against any kind of debt incurred other than GO--

Representative Ross. [speaker changes] Thank you very much, Mr. Chairman. I'm going to support this bill but I want to -- because it's so much better than what we've seen -- but I just want to be clear about special indebtedness. Of course, we shouldn't get to a very high percent of special indebtedness because it's more expensive debt and it doesn't go to the way we've traditionally done debt. But, it is not bad in and of itself. Particularly during a time of low interest rates and high construction costs, it's a smart time to do that kind of debt because we can get things built quicker, we can get them built cheaper. It takes a long time to put votes out to do GO bonds. Also, we can get projects built that are necessary that the public might not want to build. One of those kinds of projects might be prisons which I don't' necessarily always want to build, but the public doesn't always want to have their taxes raised to build a prison, but sometimes the state of North Carolina needs a prison. So, I just want to be clear when we're talking about special indebtedness. It's not some tricky bad things. It's an important financing tool for the state, for particular projects at particular times and so, just having a limit on it is a smart way to go so that we don't abuse that kind of indebtedness but saying that there's something inherently wrong with it, I think, is really a disservice to the public and a disservice to good building and construction. One of the reasons why we don't take care of our facilities is because the public doesn't necessarily care about paying for it. [speaker changes] Mr. Chairman, I have a parliamentary inquiry. [speaker changes] Representative Stam. [speaker changes] The last several speeches appear to be about the bill we're not considering rather than the bill we are considering. Which one are we considering? [speaker changes] So noted, and I'm recognizing Representative Collins for a motion. [speaker changes] I'd like to move that we give a favorable report to the proposed committee substitute on House Bill 35 unfavorable to the original. [speaker changes] ?? Representative Warren. We have a motion that we give proposed committee substitute for House Bill 35 with favorable report, unfavorable to the original bill. All those in favor, let it be known as saying aye. Those opposed no. Long discussion for no no's. [speaker changes] Thank you sir. [speaker changes] Proposed committee substitute ?? with favorable report. [speaker changes] Thank you committee. [speaker changes] Thank you Representative Brown. [speaker changes] Mr. Chairman. [speaker changes] House Bill 325. Representative McElraft. [speaker changes] You have a committee substitute? You are recognized to present the bill. [speaker changes] Thank you Mr. Chair and members of the committee. After all that, I think this will be a very simple bill, of course, every time I say that, that never happens. This actually is a bill to authorize ?? to set reduced fees at our state parks and lakes for active duty military personnel and veterans. Very simply. We have to authorize that before they can do it. It's not a mandate. It doesn't tell them what to charge. It just authorizes them to study it and decide for themselves which lakes and facilities to compare and make that decision for themselves. It's a way to honor our military and our veterans. [speaker changes] Representative Brawley. [speaker changes] At the appropriate time, to make a motion. [speaker changes] Representative Brawley, I will recognize. I've been told we have someone from outside that wants to speak on this bill. Is that true? [speaker changes] no. [speaker changes] Nobody here to speak on the bill? [speaker changes] I don't think so. [speaker changes] Representative Brawley, you're recognized for a motion. [speaker changes] Thank you Mr. Chairman. Motion for a favorable report on House Bill 325. Is there a referral to it? [speaker changes] no. [speaker changes] We're done? Good. Thank you. [speaker changes] We have a motion that we give House Bill 325 a favorable report. All those in favor, let it be known as saying aye. Those opposed no. The ayes have it. Thank you. [speaker changes] Thank you Mr. Chair and members of the committee. I told you it was simple. [speaker changes] House Bill 362, Representative Faircloth. And you have a PCS in your folders. Representative Collins makes a motion that the PCS be before us for consideration and Representative Faircloth is recognized to discuss the PCS. [speaker changes] Thank you Mr. Chairman and --

Members of the committee, this is an agency bill from DPS and makes as a result of some reorganization to the department the last time we were together and some changes to the way business is done there. I would like to have, if I can, Mr. Chairman Doug Holebrooke from the department to explain the technical changes. Mr. Holebrooke, would you like to come forward and identify yourself? [SPEAKER CHANGES] Thank you Mr. Chairman, I represent [??] members of the committee. I'm Doug Holebrooke, the Department of Public Safety, and I'll just go through the bill section by section to sort of let you know what these changes are. These are related to the consolidation of the three criminal justice agencies: Adult Correction, Juvenile Justice, and Crime Control and Public Safety last year into a single department of public safety. Several things continue to crop up that need to be dealt with. The first one is section 1 has to do with what's called "Force Account Authority" for our engineering section. In the original consolidation change, it changed "Department of Correction" which was originally in this chapter or statue to division of Adult Correction of the Department of Public Safety. Our engineering section also needs responsibility for our juvenile facilities as well so by making it for the Department of Public Safety it allows us to handle our repair and renovation projects through our own department for Juvenile Justice as well as for Adult Correction. Under section number 2, basically what this does is strike out all the specific language about the structure of our divisions. Each of our operating divisions has a separate chapter setting it up into Adult Correction, Juvenile Justice, and Law Enforcement. This provision as enacted in 2011 creates a much more detailed structure that is not mirrored in virtually any other state agency, and also since the transition in January, a number of these offices have been shifted around within our administration section. Our operating divisions do remain the same with Adult Correction, a separate Juvenile Justice agency and a separate Law Enforcement entity, but we are no longer going to have, for example, an office of External Affairs. This degree of specificity and statue is unusual and prevents the secretary from being flexible with assignment of supervisors. Section number 3 takes into account that we no longer have an office of External Affairs, and assigns those responsibilities to the secretary to assign out to supervisors as need be. Section number 4 is actually a chapter that identifies that the head of Adult Corrections shall be a Chief Deputy Secretary. Again, it's very unusual to have actual position titles appear in statue so we're asking to just have that removed. Similarly in section 5, there was a lot of language that laid out the identity of the Chief Deputy Secretary for Juvenile Justice; Again, unusual to have identified work titles, so rather we're referring to those people as commissioners now, and that gives again more flexibility for what position is designated there. Section 6 is about our correction enterprises section, here to for they have been limited to the items that you see in 1 through 5 as far as audiences to whom they can sell products or services. This changes the request of that division to allow us to provide services and goods to any non-profit or under number 6, to private contractors when they are doing contractual work for a public agency. Sections 7 and 8 go together and they are related to purchasing and contract. They alter the authority of the Secretary of Administration so that rather than a firm statutory cap for contract reviews at office of P&C at 25 thousand dollars. It allows the Secretary of Administration the authority to set benchmarks, where certain agencies might be lower than 25 but certain ones where for us, for example, a 25 thousand contract may be very miniscule. It would utilize our larger purchasing operation to take that out of the DOA. Section 9 is an emergency management issue. If you see down on line 31 on page 4, we handle a response to emergencies, hurricanes and such, and until an emergency is declared, we do not have funding currently to respond. We frequently have [ENDS]

situations where we will need to do evacuations, that we may need money to authorize rental of helicopters for helo aquatic rescue during a hurricane. This would allow the department up to 2 million dollars, depending on the level of the disaster, prior to the disaster declaration. In the past there has been a State Emergency Response account, it has not been funded in a number of years. That would obviously be the first place one would go for this kind of funding, but in the event that that is not funded and it continues to not be funded, this is a critical time for us between the onset of a disaster and the declaration of the level of disaster. Finally, Section 10 sets a retirement age for our Highway Patrol, and a minimum age of 21 for entry into Highway Patrol School. So one would have to be between 21 and 39 to apply to join a Highway Patrol School, and requires a retirement age of 62. There is an exemption in the Federal statute, as we understand it, for, about setting of mandatory retirement ages, but it requires, and that is the case, I believe, for firefighters and law enforcement, but it requires that it be in law not in policy. We have consistently had a policy of 62 year old retirement age for Troopers, but the Federal statute requires that it be in statute for our state, so we are asking to have that codified. And I will be happy to answer any questions about this bill. [SPEAKER CHANGES]. Anybody have any questions? Representative Collins. [SPEAKER CHANGES]. I have a question of the gentleman. Is all of Section 10 codification of current practice, or is some of that new? The 21, 39, 62? [SPEAKER CHANGES]. That is codification of our current policy. Yes, sir. [SPEAKER CHANGES]. Go ahead, Collins. [SPEAKER CHANGES]. Do we, I'm asking this question because I honestly don't know, do we currently and consistently have a nice, large pool of qualified applicants for the Highway Patrol, or are we sometimes like other law enforcement agencies, kind of stretching to get the people in the field that we need? [SPEAKER CHANGES]. Sir, we have not, for the past year we have not been able to do a school, so we were not taking on new Troopers. So right now we seem to be doing much better at getting ?? pent-up demand, but we do have pretty consistent turn-over as well. I'm not sure of the rate of that. [SPEAKER CHANGES]. Representative Collins. [SPEAKER CHANGES]. Last follow-up. The only concern I have with that is, it would seem to me that perhaps the 39 maximum, I'm concerned, maybe if we get to another time where we don't have plenty of Troopers and maybe there are, say, DEA agents or Homeland Security agents that have retired from a Federal Law Enforcement job in their 40's and are perfectly capable of working Law Enforcement, and still in good vim and vigor, and would like to apply for our Highway Patrol. To me, that age 39 to start is kind of an arbitrary figure. I don't know if there are any exceptions for that, for people already trained in law enforcement or not, but it would seem that we would want to make that exception if that situation arises. [SPEAKER CHANGES]. Mr. Chairman, Joseph Dugdale, who is with our Highway Patrol as their General Council is here and he can speak to that particular policy question, if that's... [SPEAKER CHANGES]. He is recognized. [SPEAKER CHANGES]. Thank you, Mr. Chairman. I'm Joe Dugdale, and I've been working with the patrol for about the last 26 years, and this has been the practice of the Patrol since I've been with them. Actually, the hiring age at one time was 34 and over the years has crept up to 39. The 39 cap for the hiring age was not something that was arbitrarily selected by the Highway Patrol. It was developed through two things; one, consultation with the Highway Patrol Medical Director's office and their recommendation. And there actually was a period of time, actually two years, where the cap was entirely lifted because the exemption that we have under Federal law actually went away, and it took two years for the Federal Government to give it back to us. And what we've discovered was when we put applicants in the Highway Patrol Basics School over the age of 40, that statistically they were much more likely not to be successful in the Basics School, because the Basics School, as most of you know, is probably one of the most rigorous training academies that we have in North Carolina, and that's because the essential job functions of a State Trooper is so rigorous

That most law enforcement agencies in the state because unlike local agencies, troopers are out there on the side of the road by themselves, any time they attempt to effectuate arrest, they don't know whether the arrestee is going to resist or run. And they don't have backup because they didn't anticipate that. And so on the advice of the medical directors office, and the statistics that we had, we were recommending the legislative cap of 39, which again, has been a practice of the highway patrol other than a two years where we lost all federal exception for, well 26 years that I know of. And for longer than that, but I can't tell you exactly how many years. [SPEAKER CHANGES] Representative Ross. [SPEAKER CHANGES] Thank you very much, Mr. Chairman. I think this is a another question of the department. I actually was contacted by somebody who was concerned. Not necessarily about the age for the applicants but the age for retirement at 62. For two reasons, one, if that person is very fit and able at age 62, sometimes we have 62 year olds who are in better shape than 45 year olds. And then the other concern that person had was, that if you joins the highway patrol, sometime after the time that you were 33, because we had the 30 year retirement, you would never be able to get in your 30 years for retirement if you had to retire at 62 and was wondering whether rather than saying 67th birthday, that there be some kind of fitness and aptitude test or something like that for people who might want to stay on to be able to have their 30 years for retirement. [SPEAKER CHANGES] Representative Ross, Dough Holebrook again, chairman, the retirement aid system, as you know, has at a certain point, has a sliding scale. You don't have to get, when you reach a certain age, you do not have to have 30 years. And the patrol also has salary, it's not a salary continuation program. At 55 they can, or at 30 years, can start drawing a supplemental retirement that levels out their retirement. So troopers that who would start after 33 may in fact still be at the same benefit. Because they have a separate retirement. [SPEAKER CHANGES] Mr. Chairman. [SPEAKER CHANGES] Representative Ross. [SPEAKER CHANGES] Well that answers one question about retirement. But they may not want to retire. I mean they may be 62 and in great shape and very smart and doing more than the 50 year olds. And so why is it based, I understand that it's based on a much older age. But if it's based on age 62, why is it, why can't it just be based on some kind of a assessment of their basic skills after the age of 62 to make sure that they're still an asset to the troopers. [SPEAKER CHANGES] Mr. Chairman I'd like to ask again for Joe Dougdale from the highway patrol to respond Representative Ross. [SPEAKER CHANGES] Yes, sir. [SPEAKER CHANGES] Thank you Mr. Chairman. The, again, we consulted with the medical directors office on that. And representative Ross, what you're saying is absolutely correct. It could be done on a case by case basis. One of the problems we run into is then, who would make that determination? The highway patrol obviously would deffer to the medical directors office. What we know from our years of experience with state government is, if the medical director's office was to determine that no somebody should retire, there's really not safe to continue working a road. Then of course the way state government is structured, they would get a second opinion from their family medical doctor who, our experience is, would disagree with our medical director. And ultimately the decision of who gets to stay beyond a certain age, would rest not with the patrol commander, not with the highway patrol, but with an administrative law judge in OAH. And that process would be cumbersome and under state practice then, what would happen is we would compel somebody to retire three years later. A law judge would be telling us the state to hire them back, give 'em back pay, pay attorney's fees, and we just feel like that would be an expensive burdensome process for the state of North Carolina. Statistically what the medical director's office tells us is, age 62, is a reasonable age to mandate retirement. It's been the mandatory age for the highway patrol for many many years. Most federal law enforcement agencies actually have a lower retirement age

state law, the way it's structured, the retirement system for law enforcement actually allows law enforcement officers to go out on reduced retirement at the age of 55 if he or she has 5 years of continuous credible service and they not only get a state pension, they also get a separation allowance. The separation allowance, by the way, was designed to encourage law enforcement officers to retire at an early age and so if we don't get legislation to allow the highway patrol to continue with its historical practice of having a mandatory retirement age, what you then have is basically working against that separation allowance that is designed to encourage officers to retire at an earlier age because of their recognition of how dangerous it is for somebody beyond that age to be working a road by themselves. [SPEAKER CHANGES] Thank you, representative Starnes. [SPEAKER CHANGES] Thank you Mr. Chairman, I have two questions. The first one is: on section 6 involves the correctional enterprise, and the correctional enterprise is where people in the prisons, they make products and they sell them and I've always been a little bit concerned that we don't get the government into competition with private sector. Of course, it's a good thing that prisoners are able to learn skills and make products but every session we tend to expand their authority and this bill continues to expand the markets where they can sell their products. I'm just curious, is there anybody in the audience who has a concern over this expansion of the correctional enterprise? Mr. Chairman? [SPEAKER CHANGES] Representative (??). [SPEAKER CHANGES] I have received no complaints from anyone about that. [SPEAKER CHANGES] Okay, thank you. And my second question is, chairman? [SPEAKER CHANGES] Representative Starnes. [SPEAKER CHANGES] Deals with section 7 and 8 and is talking about sector of administration purchasing contracts... is lifting the cap at $25,000 for contracts have to be approved. Obviously there must be a situation where they feel like this is too low. Is there somebody from the DOA who would like to comment on this section and just give me an idea of what you think would be reasonable expansion? Because apparently there's no cap on this and I just wonder how high they envision it going. [SPEAKER CHANGES] Identify yourself. [SPEAKER CHANGES] Mr. Chairman I am Sam Bias (??), I am the state purchasing officer and I do have some comments both on section 7 and section 8. With respect to the cap, there is a procedure in fact, there is a procedure in the very next sub-section... of 143-53 sub-section B, that provides a very elaborate procedure for determining whether a delegation cap should be raised or should be lowered and I would argue that the end of this section which talks about... I'm sorry... I'm talking about... Yes, the end of section 8 which talks about how that $25,000 cap can be raised should be deleted and the procedure in sub-section B used which does set out criteria that an agency must satisfy if they want to change their delegation. I'm not opposed to removing a cap as long as that procedure must be followed so that we can determine whether it's reasonable or not to raise it and determine how much it should be raised or, in some cases, should be lowered. I would also, if I may Mr. Chairman, comment very briefly on section 7 with respect to the protest changes that this would make every agency have a different amount with respect to whether they decide a protest or whether the state purchasing officer decides to protest because that procedure is set out

every solicitation document that goes out. That would have to be customized for every agency. I believe that would lead to confusion. I believe a set cap should remain and that that $25,000 cap is a reasonable level to determine whether the matter is of sufficient complexity that an independent body that is independent from the agency that is using the material whether that should be decided by the state purchasing office or somebody at PNC rather than the agency itself. [SPEAKER CHANGES] Thank you. Representative Stam. [SPEAKER CHANGES] Back on that previous point about the age of retirement, I just wanted to testify that age 50 my body started to go and at age 60 my mind started to slip. [SPEAKER CHANGES] Representative. [SPEAKER CHANGES] Representative Stam I have some vitamins I'll share with you, I'm 69. [SPEAKER CHANGES] Representative Holley. [SPEAKER CHANGES] Thank you Mr. Chairman. I understand what the state purchasing office is talking about, about the caps. As far as under Section 7 that it needs to be spelled out and I'd like to offer an amendment to make that correction. I also have a question that I'd like to ask someone from, in reference to Representative Starnes' question about the use of Correction Enterprises and my question was if a private for non-profit can purchase this equipment or this paint or something from Correction Enterprises can it then use it or resell it or what have you? I just wanted to make sure that's cleared up too as well. [SPEAKER CHANGES] Mr. Chairman in response to. [SPEAKER CHANGES] I'm sorry someone was distracted. Can you direct your question to who? [SPEAKER CHANGES] Well the question about Correction Enterprises I think this gentleman can answer. [SPEAKER CHANGES] Representative Holley the intent is certainly not that they would be able to resell it but that it would be services or provided for their immediate use. We certainly could add as you see under section subsection 5 it says products purchased by state and local governmental employees may not be resold. We would certainly be glad to add that to subsection 4 for the internal revenue, for the not for profit groups as well. That's not, that was never their intent. It was simply that we could provide services to those nonprofits but not that they could resell. So we would be happy to take that as an amendment. [SPEAKER CHANGES] I'd also like to submit that as amendment along with, you may not have heard mine under section 7 the cap I'd like to keep the cap for $25,000 by the agency awarded under section 7 1, 1 line 43. I'd like to keep the benchmark that's currently in place in that and I'd like to make an amendment to do so. [SPEAKER CHANGES] Stams we're good on the amendment. [SPEAKER CHANGES] Representative Hollo. [SPEAKER CHANGES] No. [SPEAKER CHANGES] Representative Lewis. [SPEAKER CHANGES] Thank you Mr. Chairman. As staff prepares this I just wanted to say for the record that those of us who've known him for a while believe Representative Stam's mind to be as sharp as it's always been. I would expect Representative Stam to challenge that on primary procedures as being out of order. [SPEAKER CHANGES] Representative Starnes. [SPEAKER CHANGES] Thanks. Mr. Chairman I understand that we've got a finance is going to meet again tomorrow. Can we just displace this bill and reschedule it for tomorrow and that way we can make sure. We don't have to rush. That way we can get it right. [SPEAKER CHANGES] Representative ??. [SPEAKER CHANGES] The bill will be displaced until tomorrow while we're preparing the amendments for consideration. Thank you very much. [SPEAKER CHANGES] House Bill 466. Representative McNeill. [SPEAKER CHANGES] Amend private practice, private protect the services act. [SPEAKER CHANGES] Good morning feel free to interrupt me at anytime for a motion.

[0:00:00.0] The House Bill 466 is presented to you at recommendation of the private protective services but it make certain technical changes and a law that deals with Private Protective Services Board and includes $100 maximum late fee for some of the applications. The Private Protective Services Board is 13 member board that is housed in the Department of Justice. They set educational requirements, administration, administer licensing and set training for persons engaged in the private protective services industry that includes armor car professional carrier services, professional detection, deception examiners, electronic measures, security guards, and patrol professionals, dog professionals and private detectives and private investigators. The bill has several different moving parts to it, one it allows 90 days to a business to register and you qualify an agent when the originally qualify an agent see this to serve as a qualifying agent and the current law is 30 and 60. It amends to allow 90 days for an applicant who receives notices ___[01:25] license to complete the process, the board may grant an additional 30 days extension for good cause. Current law requires applicant to reapply if a license process is not completed. It authorizes a maximum $100 late fee for the 30 day extension where the applicant or business fails to act by the first 90 days. It authorizes 90 day extension to complete the renewal requirement, if a licensee is temporary and unable to complete the renewal application requirements because of a physical disability or medical condition and it requires ___[02:00] employee and an arm guard to renew his license every two years. The current law does not impose the renewal requirement and then it updates several cross references. And again, this bill is recommended, the recommendation of the 13 member Private Protective Services Board. And there is a fiscal note… [SPEAKER CHANGES] Command the bill and stand, asked any questions? [SPEAKER CHANGES] Representative Davis. [SPEAKER CHANGES] Mr. Chairman thank you, the appropriate time I would like to make a motion. [SPEAKER CHANGES] Okay, Representative Luke. [SPEAKER CHANGES] Thank you Mr. Chairman and Representative McNeil I realize, I have hardly see this fiscal note with a smaller impact than yours in terms of the amount of revenue 29,000 and for reason I won’t ask about 2,500 next year etcetera. But my question is really this and not necessarily for you but perhaps to other senior members of the committee, to the senior members of the committee, our republican colleagues, why is a fee justified but a tax, a fee increases okay but tax increases not? And maybe Representative Stam would like to take that out. [SPEAKER CHANGES] I would be glad to move to Chair and someone who direct that too. [SPEAKER CHANGES] Yes, I would like to direct that too, my friend Representative Stam. [SPEAKER CHANGES] Representative Stam would you like to answer his question? [SPEAKER CHANGES] Yeah. So, actually Representative Luke could probably ask his own question, taxes are collected for the general support of the government, fees are either regulatory or for the purpose of supporting like a user fee and that is and we also have tolls and we also have some other things and that distinction is well known to Representative Luke and lots has been written about that by our fiscal research staff and by school of government and I’m curious after while Representative is curious about it except since we don’t have a whole lot of time I will not ask him why he doesn’t understand that distinction. [SPEAKER CHANGES] I wouldn’t allow the question anyway. [SPEAKER CHANGES] Representative Davis is recognized for the motion. [SPEAKER CHANGES] Thank you Mr. Chairman. [SPEAKER CHANGES] Thank you Mr. Chairman I would like to make a motion that we give a favorable report to House Bill 466. [SPEAKER CHANGES] Representative ___[04:28] [SPEAKER CHANGES] Well, I do have a question, why should we charge somebody a $100 late fee for their renewal? I mean this is just a way to generate money and according to the fiscal note it’s something new so they figure 2,950 people who are not gonna be aware that they have got to renew it and they are going be hit with the fine so why you just trying to raise money on this? [SPEAKER CHANGES] Are you asking me that? [SPEAKER CHANGES] Yeah. [SPEAKER CHANGES] Okay. [Laughter] [0:04:59.9] [End of file…]

Well, the proper Texas Services Board is a receipt. Totally funded by receipts, okay. They don't take any money from the general fund. They have an operating budget of $1.4 million and they support eighteen full-time equivalents. A late fee is pretty much- any time you have a late fee, it's designed to, I guess, increase a person's awareness that if you don't get your paperwork completed and done on time, that you're going to have to pay some type of penalty. $29,000 out of a $1.4 million operating budget is certainly not a lot and I don't expect they're doing this because of the revenue or the need for revenue. I think it's more designed to get people to get your paperwork in on time. I'd be glad to elaborate on that any further. [SPEAKER CHANGES] Second question. [SPEAKER CHANGES] The reason, the $29,000, I think, comes about to the fact that there's about sixty-three agencies now that would be required to renew their licenses that are not currently required. The theory behind that, that's why the money is $29,000 one year and it's smaller the next year. They have about five new licensees a year, so the second year they're assuming that there would be five new licensee. That's why it goes every two years. they renew every two years, that's why you see the revenue is more one year and less the next year, because it's a two-year renewal. I don't know if that explains your question or not. [SPEAKER CHANGES] Representative Starnes, another question? [SPEAKER CHANGES] Is there anybody from the public that would like to weigh in on this? [SPEAKER CHANGES] Representative Collins has a question. [SPEAKER CHANGES] I think there may be an answer in the bill analysis. The second bullet point there. It sounds like, to me, we're kind of easing up on the current situation. It says after ninety days that they've had to get this thing straight that the board may grant them a thirty-day extention for good cause and impose a late fee which would be a hundred dollars. Apparently in the current situation they've got to completely reapply again, and I would assume that would be more costly than a hundred dollars, so it looks to me like we're kind of easing up on them a little bit and extending them some grace. [SPEAKER CHANGES] Thank you very much. Do we have a motion that we give House Bill 466 a favorable report? All those in favor, let it be known saying aye. Those opposed, no. The ayes appear to have it. The ayes do have it. Thank you very much. Representative Dockham, can you take care of us in about six minutes? [SPEAKER CHANGES] House Bill 340 before us, Representative Dockham. [SPEAKER CHANGES] Thank you, Mr. Chairman and members of the committee. I'll try to be very brief. House Bill 340, we're just authorizing the Department of Insurance to regulate to travel insurance producers. The newly-regulated producers would pay a registration fee to the Department of Insurance. This bill had a full hearing in the insurance committee and I know of no opposition. I believe the reason the bill is in the finance committee is because it does require a fee to be paid to the Department of Insurance, and I'd be happy to answer any questions. [SPEAKER CHANGES] Anyone from the Department of Insurance want to speak? Representative Howard. [SPEAKER CHANGES] Mr. Chairman, Representative Dockam is correct, it had a full hearing in insurance and now I would like to move for a full favorable report at the appropriate time. [SPEAKER CHANGES] We have a motion for a favorable report. Any further discussion? Representative Blust. [SPEAKER CHANGES] Yes sir. I retired three years ago. Thank you, Representative. [SPEAKER CHANGES] He is a retired insurance agent. [SPEAKER CHANGES] Recovering insurance agent. [SPEAKER CHANGES] We have a motion that we give House Bill 340 a favorable report. All those in favor, let it be known by saying aye. Those opposed, no. Thank you very much for your efficiency. [SPEAKER CHANGES] Thank you, Mr. Chairman. Thank you, members of the committee. [SPEAKER CHANGES] We have nine more minutes. House Bill 671. [SPEAKER CHANGES] Thank you, Mr. Chairman. This bill arises. It's a Mills River de-annexation bill. Mills River was incorporated just a few years ago and when it was incorporated they used one set of maps and they were not quite the same maps as the fire district maps. This simply moves twelve lots away. They've had a public hearing. There's no-

Supported by both the county. At the appropriate time i would like to make a motion for favor report. Times appropriate. i would like to make a motion for favor report on house bill 671 and representative Luke would like to make a statement. I would just like to ask for the record that the city is okay with this. The city actually requested it we have a motion for favor report on house bill 671. All of those in favor let it be known for saying i those oppose no the I's have it i also believe that house bill 524 is also. Thank you everyone's in agreement representative Brandon. Thank you Mr. chair its good to be back in the finance committee. This is a local bill very simple its just we call it the green jobs grow bill. It gives us an opportunity bill date. Just like the bill says its a small business bill inter prize program the whole entire delegation support it turns out the government unanimously support it Representative Moran. For a motion please. Your recognized for a motion to give a motion report to house bill 574 we have a motion house bill 574 all of those in favor let it be known by saying i those appose no. the I's have it thank you very much senator Brian. We have voted to set up a sub committee for house bill 341. The sub committee will be the chairman. Representative starnes, howard ,lewis, hanes moffit holley ceaser and rolley meetings adjourned