Good evening, our [xx] being present, the House Committee on finance is now in session. I'd like to recognize our sergeants at arms tonight Ledge Stills, Morgan Lee, Charlie MacCroy, Dave Leighten, Wren Horkins and Dean Mashburn. We have no pages tonight, we have only one item on our agenda that is the proposed committee substitute to House Bill 97, the 2015 Appropriations Act. We will be dealing with the finance portions only. I would like those that wish to submit amendments to go ahead and get them to the chair so we he can stage things. Right now it looks like we will need to take a vote on this by 6:35, or start getting to the vote at 6:35 as we have session at seven. This point, our staff tonight we have Rodney Bizzell, Denise Canada from Fiscal Research. Dan Edifall[sp?] Trina Griffin our research staff. Jonathan Tarte, Cindy, where is your name tag? Miss Everett, and we are ably clerked by Laura Peraiyur[sp?] and Lynn Taylor. Representative Saine is recognized to present the bill. Thank you, Mr. Chairman. Good afternoon everyone, hope you had a great weekend. If you're on Appropriations I'm sure you did not, but nevertheless, glad to have you here. And Mr. Chair, before we start I know this is a kind of a kick off to, or for some it's Superbowl week at the legislature. This is the business that the people sent us up here to do and we'll get into some very serious discussions, but before we do I wanted to relate to you a story that was given to me by my friend Carl Sparkler, and Carl had the opportunity once upon a time to be the caddy for the Dalai Lama, and so at the end of it he was afraid that the Dalai Lama would not tip him and he said, hey [xx], hey how about a little something for the effort. And he says, there won't be any money but when you die on your death bed, you will receive total consciousness, so I got that going for me. Which is nice. Members of the Finance Committee here is to you and your pursuit of total consciousness, though I doubt today is the day. Thank you. Another day about my friend here at [xx] Nevertheless, we are here to considering taking of House Bill 9070, 2015 Appropriations Act that you have all probably gone through that over the last 24 hours, Mr. Chairman, at this point, I will turn it over to staff to let them give the overview of the bill. Ms. Griffin is recognized to explain the bill. Thank you Mr. Chairman Committee members, you should have four documents in your packet, there is a PCS, a bill summary, a fiscal memo and a chart that looks like this. I'll go through the tax Provisions and Denise from fiscal will run through the fee provision. So first, starting with the income tax related changes in the PCS, the first item is an extension of the research and development credit for four years. This is the credit for research expenses which includes university research expenses, the current sunset is January 1st, 2016 and the bill will extend that sunset until January 1st, 2020. The next item is an extension of the sunset for the renewable energy credit and it does this in two parts. There's a two year extension for solar projects, and there's a four year extension for all other projects. The next item is the reestablishment of a modified historic rehabilitation credit. This item is identical to the contents of House Bill 152, which has already been passed by the House and is currently in the Senate, and you can see that begins on page 2 of the PCS and runs through page 6. Mr. Chairman. Representative Saine. I'm not sure that anyone has moved the PCS bill properly before us, we might want to take that up. I believe that's correct, although it was properly noticed. Representative Saine moves that the PCS be properly before the committee. So many as favor the motion say Aye. Aye. Opposed No. No. The motion carries. Representative Saine is recognized to continue the explanation.
Thank Mr. Chairman, I will turn that over to staff. Miss Creighton[sp?] Sure. The next item is on page 6 and it's the Senior Tax Deduction for Medical Expenses, and this would allow a taxpayer to take a deduction for their medical expenses to the extent they were deductible at the federal level, and if the expenses are incurred for a person who is age 65 or older, and this provision is effective for taxable years beginning on or after January 1, 2015. Part 2 of the bill are the sales tax changes, and the first item begins on page 7, line 39 and it would extend for four years, the sales tax preferences that we have in law for motor sports teams and there are three items. Currently there's a sales tax refund on aviation fuel with an expiration of January 1, 2016 and this would extend that for four years. There is a 50% sales tax refund on tangible personal property purchased by a team that comprises any part of a motor sport vehicle with the exception of tyres and accessories, also extended for four years and in current law there is an exemption to the sales tax on service contracts on items purchased by a motorsports team to the extent those items are eligible for the 50% refund. So to the extent this bill extends the sales tax refund on those items, it therefore would also extend the sales tax exception on service contract on those item. Moving on to the data center, piece this creates sales tax exception for data center equipment and electricity where $75 million investment over a five year period of active July 1st 2015 and this piece of identical through that has already been passed by the House Bill 117. The next item is the new exception from the sale tax on service contract that will apply to service contract on qualifying aircraft or jet engines is the service contract is sold by the manufacturer of that aircraft or jet engine and this and provision is now effective until the end of the July 1st 2017 and the bill contains definition for the aircraft and the jet engine. Part three of the bill is a motor fuel tax change and that begins on page and line 27 and this will reduce motor fuel tax rate from 36 cents to 33 cents on motor fuel with the exception for diesel and there is more detail, there is a chart in your summary that shows how the rate would apply as compared to what was passed in senate bill 20. The next item part four would require the Department of Commerce to use $500, 000 from the utility account to establish a work based experience pilot program, at a qualified cooperative innovative high school. It also requires commerce to study the expansion of this program state wide. Part five of the bill is a bond authorization, it would authorize the issuance of 2/3s general obligation bonds for a health sciences building at ASU an engineering building at NTSU, science building at UNC Charlotte, a DHHS medical examiner facility and WFU and and phase one of the Highway Patrol Training Academy and this authorization is contigent to the extent that these project are not otherwise authorized by May 31st 2016, to be financed by general obligation dept approval by the vendors, and then and finally though the last part of the bill are the fee provisions, and those begin on page 8 of your PCS and Denise is going to run through those, and it may be helpful to turn to your chart for those, and the fees begin and on page 3 of that chart. Miss Canada is recognized to explain the fees thank you Mr. Chair, trying to hold up the document that we're working from As Trina said starting on page 3, I'll do a very high level summary of each fee. We also have all the other fiscal analysts here who have more information about individual fees if there are questions. Starting in Agriculture and Natural and Economic Resources, Drug Manufacturer, Licensing and Registration fees this is an increase to two currently
existing fees that are paid by out of state companies related drug manufacturing and repackaging dynamic pricing for state parks and attractions, there's no cost estimate for the impact of this, but it would permit the department, pewrmit the [xx] to enact flexible prices for entrance and related activity fees at parks, zoos and aquariums. One item of note, it does not allow parks that do do not have a current admission fee to charge an admission fee. However, any park that has an admission fee may change it or also may change fees for incidentals within the park, cabin rentals and the like. The next item Food Manufacturer and Retailer inspection fees, a $35, 000 increase to the General Fund from raising a currently existing fee. Repealing the apprenticeship fee, no one impact on the General Fund because the Department of Commerce expects to fund the $170, 000 within its budget. Currently there's a $50 fee for persons that participate in the apprenticeship program, but that fee will be eliminated. Next setting the Utilities Commission Regulatory Fee, the bill incorporates operate tax bill 356 which sets the utility reg fee and the statutes. Currently the fee generates $15 million, this has not change the fee, therefore the general fund will continue to receive the same amount of money and there's no net impact. In general government, the insurance regulator charge, again, like with the previous Bill, there's no change. Setting the amount into the bill, the General Fund receives already and will continue due to receive approximately $33.5 million. Excuse me, The Insurance Regulatory Fund. The next item relates to The State Agency setup that collection. Three and a half to $4 million to each Carolinian university and approximately $4 million for The University of North Carolina at Chapel Hill these funds will go into the Institutional Trust Funds and not into the General Fund. ever to helping him in services and increase the North Carolina Medical Examiner Autopsy Fee from $1250 to $1750. Estimated benefit to the general fund of 1.8 million. Next, increasing the Medical Examiner fee, you'll see the cost estimate is -$110 thousand. That's because in some cases, the HHS is paying this fee I guess to the counties. The HHS will pay an additional $110 thousand. when we increase this county level fee. Next adult day care and adult day health overnight certification. This item adds the adult day care and adult day health programs to a currently existing fee of $225 per facility. Right now the fee doesn't apply to those facilities. And the next item provide a application credentialing fee. This is another case we all see in Euro - Dollar impact I found the general fund. Clearly the general fund receives $15 million from this. This is maintaining an existing fee, so no net impact on the general Mr. Chairman, moving to justice and public safety, the certificate of relief fee will be a new fee created by this bill, a fee of $50 for certificate of release petition, so as not to have a fiscal impact or estimate for this provision. Next, clarifying the boxing commission fee will see an impact to the general fund of a positive $4, 000. Finally, in the justice and public safety, clarifying the hazardous materials fee, this is a merely a wording change or a clarification, with no financial impact. clarifying that the maximum hazardous materials facility fee applies per site. The amount authority in the budget was calculated per site, so there's no physical impact mainly a change to the language. Moving to transportation, first, eliminating a 10 day trip permit and increasing the temporary tag fee. The temporary tag fee goes from $5 to $10. There's an estimated overall net impact of $800, 000 benefit to the highway fund. And finally the last item, increase DMV fees. You'll see in your packet, there are two to three pages listed of all the individual fees that are changing. Staff are available to talk about any one of the specific increases in debt, but for an overall strategy there's a 50% increase in almost all of the DMV fees that you see listed here. This is something similar to what
the legislature did in 2005, taking all of the fees increasing them by approximately 50% and you'll see we've outlined in the table, the impact on various fees. The civil penalty, forfeiture fund, the highway fund and highway trust fund. Okay. Thanks. Thank you Mr. Chair. Thank you. Are there questions for staff? And I'd ask members to hold debate, let's get questions and then we get in to the amendments, and then the debated bill is amended. Question for staff, representative Mall. Thank you Mr. Chairman, question for staff and Michael examiner I touch on fee, who is to pay those fees is it the additional training or superior court judge? Come from ledger budget, who pays those fees? Who the chair and. Mr. Chair. Okay yes Mum. Today is kind of research. Miss Tomas is recognized. Currently those fees are paid and 90% of the case is those fees are paid by the counties in which the person who dispense without it, and the person who does it in the county is not a residence of the county and I touch on the fees paid by the state. Follow up any other questions? Representative Jones. Thank you, Mr. Chair. I just had a question of curiosity on page 4, Section 6.9. When the increase in the medical examiner fee, they will say that the impact to the General Fund was actually that we would lose $110, 000 because the DHHS pays for a lot of this. I guess my questions is, Why are we doing it if it's going to cost us money? Can somebody explain? Is there a good reason that we want to increase that fee if it's actually going to cost the state money? Miss Thomas is. Mr. Chair, this is one of a series of proposals that came out of the HHS LLC Medical Examiner Oversight Committee this past interim. The fee for the County Medical Examiners is $100 per case, and the department recommended increasing that fee so that you could get a better quality of medical case reports coming out of the medical examiners. They will also require to undergo more mandatory training and so this is the fee that is paid by the counties and states to the 450 medical examiners who are out there conducting death investigations Follow up. Representative Waren Thank you and for staff again and, was it, who just answered it again? Miss Thomas. Well, my question to you is. Is this in it center perhaps to try to get more medals because medical examiners to have you examine these cases? It seem to me that The Charlotte Observer did a lengthy study about the number of cases that are actually investigated. I just want to know if this is part of this increase is part of an incentive to an enhancement Well, Miss Thomas[sp?]. Yes, this is part of a series of recommendations to improve the quality of the death investigations conducted at the county level, and that would include improving the training of the persons who are doing the death investigations and improving the compensation that they are given for doing those cases. Follow up? Anymore questions for staff? Right, at this point we have two technical amendments to start the fund tonight, the first one will be AMC 47 version 2, it is a page and a half, this re-formats section 2A to make it more readable, it changes no comment. I'm sending this one forward on behalf of the committee. Are there questions about the amendment? It's purely technical. You should have it, it's already been distributed. Page 97 - AMC aplha Mike Charlie-47(Victor. 2). Okay so as many of the with adoption of the amendment say aye, Aye, Oppose no, the amendment is agreed to.
Second amendment is ASV as the top procedure of Victor-46 version one, most to amend the bill on page 37 and 16329 but reading the lands, in the bill we are eliminating 10 day tags. These section of the bill inventively doubles the fee on the 10 day tags that we eliminated in the previous page so this is once again a technical clean up, move of the house committee so many of favor of adoption of the motion say aye, Aye, Oppose no, the motion is agreed to. Okay we have the amendment that is being passed out by Representative Howard A. M. C Alpha Mike [xx] Mr. Chair Yes What amendment did we just vote on? That would be A. M. C 407 A. M. C 46V1 wait a minute I'm sorry. Okay we did A. M. C 47V2 and then A. S. V [xx] victor 46V1, we are now taking up Alpha Mike [xx] 46V1 I just didn't take the amendment until after the vote was cast so Thank you for your chair from the Chair Representative Jeter. Does everyone have a copy of EMC46V1. Okay Representative Howard is recognized to explain her amendment Thank you members of the committee. The utility fund was created in 2002. They job development investment grant, it's been something that we have been very protective of for over the years. There is most of you already know, it's the counties that are classified in T1 and T2, and I believe this amendment will exclude the counties in T2 and there is a bout 40 obvious if you I'm not very familiar with the counties that are in T2 you might want to take a look at it. This fund was not developed to do education sort of a strong reach to say that that's the purpose that it should be currently there is about $19 and a half million in the fund 15 million is already committed obligated. So it doesn't leave a whole lot of money in there. When we develop these fund and started putting money in it under JDig it was to help small cities and large cities, but mostly T1 T2 exclusively for sewer, water, blog burn, infrastructure and I just done believe that this is the intent of what that fund was established to and then looking at the bill I'm not sure finance has been privileged to see the entire BLG late yesterday early this morning careful on my statement but I've been talking to some of the appropriation chairs, I understand that there's already been about close to $12 to $12 million already put in for this purpose and this is another $0.5 million. Taking money out of the utility fund and if you live in any of those tier two counties, you're excluded $0.5 Million will definitely come out of Almend, Alexander, agent Balk, colnel Caterber, Check Cleverly, Kelvin Cumberland, Couch David the bring forward Steve Granvore, Gilfred Honeld Hulk, Ray Madson madam of metro ownslaw, penicode, person, pair poke Stanley, Stokes,
Transylvania, Wayne and Wales. So you're taking the opportunity to access these funds away from your county and doing a pilot project and that was never the intent when this fund created because I was here when this fund was created. Then I'd ask you to support the amendment. Representative Adams. Yes thank you Mr. Chairman. Well, I had hoped to say something useful but Representative Howard has said it. I'm in complete agreement with her. I think if we're going to come up with a fund for educational purposes that should be specifically designed for that purpose, and I think the utility fund speaks for itself. Thank you. Representative Collins. I'm trying to figure out where we are, I've not idea which motion we are in or what part of the bill it applies to I can understand on amendment that talks about the part of the bill she was just referring to. Okay the amendment is H97 #AMC-46 version one, and it says moves to amend the Bill on page 10 line 50, to page 11 line 35 by the deleting the lines. Mr. Chairman. Yes, Representative Shyn. Pass it to the committee. Representative Gina do you have the amendment? Yes, he does because I just sent it to him. Yes just a tracking with arms flying in the air and everything else. Thanks. Is there anyone that does not have a copy of an amendment H97? -AMC-46 version 1 Representative Collins, do you have the amendment? Representative Martin. Thank you Mr. Chair to debate the amendment. I have our staff to handout, two handouts, that should be coming around, they look like this, they got an overview from fisscal research division on the Industrial Development find the utility account, and I absolutely respect Representative Howard's work in developing this and this proposal came under the work that I did on the [xx] and House Bill 117 when we really again to these different economic development tools, and as you see under the statutory authority the purpose is to assist local government unit and are the most economically distress counties in the state in creating and retaining jobs and then the purpose was really in various infrastructure which was in very high demand at the time when this was put into place and hasn't working well for a two two in two counties on the second page you see the chat that shows the number of requests and where as the funds has been distributed and what has happened is as we build up infrastructure we've accumulated money in this account and our last budget cycle $11 million was moved at the intended purpose of economic development into 201 and 202 counties and gone to random general fun things so one of the other things we did in the house bill 117 that we passed was to expand the uses of this funds and not just new job creation, but also that's recently expected to maintain jobs and then we have sub counties that have jobs but do not have the work force and that is going through education but in some cases it needs to be more collaborative and driven out of the economic developers. And so what we fund is when this projects that do what we say we want them to do which is break down the silos, we have a really hard time funding that. Because it's not all education, it's not all commerce, so I've worked with Department of Commerce, and they are supportive of this pilot program to look at, are they doing the right job collaborating with education and breaking in order to achieve that goal of economic development and when it gets rolled out statewide, it would be for Tier 1 and Tier 2 counties to figure out how that. So that's the work that they are going to be doing and I would respectfully ask that you defeat the amendment and know that commerce we're trying to do a collaborative approach. And this will go more towards capital infrastructure that's needed to
put up facilities to allow for work based experience programs. Further discussion and debate? Yes Sir. Representative Cunningham. Yes, I have a question for Representative Howard Does the [xx] lady yield? Representative Howard, would this not set a precedence because this has never been done before? Yes I believe it would because if you read the title provision it goes on to do a study, and yes Ma'am, I think it would. Thank you. Representative Howard is recognized to debate the amendment the second time. Well, a question please Sir, to Representative Susan Martin? Does the lady yield? The lady yields. Representative Martin, like I said I am not privileged to all of the information as I wish we were, but have you not already received over $400, 000 to do this in another provision somewhere else? I believe it's F2 in a money report? Representative Howard, I am not aware of that, but I think that this work that needs to get done with Commerce and Education is very important. So I'm trying to solve a bigger problem than just look for immediate funds. Is there anyone from staff that can answer that question? Yes Sir. OK, thank you for your patience as I get my documents in order here. Kris Nordstrom in the Fiscal Research Division and the question was, Is there the money item that provides $400, 000 to this same project, I'm sure necessarily which school would receive the planning money that is outlined in section 4.1 of what's forced right now the language in the they are currently with several criteria for who would be awarded that money, but does not specify the name of the school I would note that on page, I believe what Representative Howard was referring to is page F2, item number 10 cooperative and innovative high schools there is money in there in the first year to provide a $100, 000 non recurring planning grant to the Wilson Academy of Applied Technology. OK thank you sir. Representative Adams. Yes thank you Mr Chairman in Catawba county community college something very similar to this is being done in the form of simulated hospitals and a furniture[sp?] academy. My observation would be simply that two things. One tier one and tier two counties should be eligible for this and also that a community college is a better setting for this and that all local high schools can participate. Thank you. Representative Cotham. Thank you Mr. Chairman a question for Mr Nodstorn[sp?] that I think he just answered so only one school in the state is eligible for this is that what you just said? Yes ma'am [xx] for fiscal research if you look at the second line of section 4. one that says Department of Commerce shall establish a work based pilot program and shall select one qualifying school for the pilot program. Follow up. Follow up. Mr Nodstrim[sp?] do we know how many students are in this one school? The section 4.1 does not name the school that would be getting this grant. So the answer is no? Representative Howard did you want debate your bill a second time I think you just asked a question then it got away from you. My amendment? Well I'll just stay the course Representative Brawley say that this funds must not ever created to do this, and the member referenced to House bill 117 that has passed this chamber it has not passed in the senate to change the uses of the fund, so until there is a consensus on my side of the I of that that this utility front, which you know
for a purpose was and is in continuous to be and I just think that this is a good judgement for us to do this right now and start on this task as representative Komkerm[sp?] and it opens a brand new door, and now it is that that you support the amendment. Representative Martin did you want to debate again? lady is recognized. Thank you Mr. Chair, I'll just comment that, I don't think that the president because I have been lots of times when this fund has been swept and used for other purposes that maybe don't have anything to do with economic development, and the reason we're doing it for is so that commerce can do work to determine is there another fund that's needed? Is there some other way? Are they collaborating put it away with Education in order to come back with a proposal that would support these types of programs moving forward in community colleges and across the state. So, I'd ask you to defeat the amendment, and let us do the work to the pilot and move forward. Representative Blust. Inquiry of the Chair. Gentleman's recognized for an inquiry. Is it against the rules for someone to state what school it is that qualifies? Representative Martin, would you state the school? Are you willing to? Well, I know that. Well, I've been trying to say that the problem is that the Wilson Academy have applied technology which is not up and running because they don't have the infrastructure in place which is not traditional infrastructure of pipes in the ground, but it's physical updates required to make it so that industrial training and equipment that's been donated by companies who need skilled workers can be put into place, so it's infrastructure in that way which doesn't come out the education funding. So, they are not able to open without additional assistance. Now, it's possible there are a lot of other counties out there who are we heard about the furniture manufacturer who may be able to qualify for this funds, and who are interested over time to figure out how we can do this, and if you're able to open then maybe you don't need that, but our economic development directors across the state have different needs, and I think we need to have a tool that provide options for them of what is required for their county. At this point, I've got at least six more amendments beyond this one and we need to vote this one by 6:45. So, I would ask the committee's indulgence let's go ahead and take the vote on this one. Representative Carney you did. I have just this one quick question on the Bill sponsor, if I may. Lady's recognized. Representative Martin, is this a charter school or is it an existing school right now or is it waiting for funding to be developed? Lady is recognized to answer the question. It has been proved as a cooperative and innovative high school, with the additional waiver that require to have it locate on other than the community college campus because there's no space there so it will be, if plans are approved, it would be located, part on that high school campus if they can innovate and part on community college but it's part of a new, not yet opened cooperative and innovative high school. Okay. The question for the committee is the adoption of amendment AMC 46 Version 1 by Representative Howard, to remove this section of the bill creating the pilot projects. So many as favor the amendment say aye. Aye. Oppose no. No. The opinion of the ayes have it. The amendment is agreed to. The next amendment is also by Representative Howard ASV E-48 Version 1, does everybody have it? Representative Jeter has it so we should be good to go Representative Howard is recognized to explain the bill. Thank you this probably there an issue that many of us have gotten lots and lots of emails and had conversation is the medical expenses that we eliminated in the tax rewrite last year and this amendment would simply restore that medical expenses and also remove the age limit which was said that you couldn't install until 65, these are a lot of parents that have disabled children that need this desperately and with that Mr. [xx] I would ask for support of the amendment to restore the medical expenses deductions. Representative Sane[sp?].
Thank you Mr. Chairman, just a question for the amendment sponsor. Representative Howard with your amendment and that expansion do you know what that would cost in addition? we've had several projections, but I think it's somewhere around 50. It's more than the 26, but 40. I believe my counterparts back here it's 44, 44 million. Follow up, Mr. Chairman. Follow-up. Could we get some type of definitive answer on that instead of a guess, a range or? It didn't sound like you were certain Miss, Representative [xx]. It's 44.44. Further discussion, further debate. Representative Dollar. I would just ask you to vote against the amendment. It's not that I don't share the amendment sponsor's desire. I think that certainly the heart is in the right place, and I think a lot of us would like to be able to do this, but at a very the minimum is going to cost the expenses already been mentioned and possibly cost more than that so for that reason your're moving major pieces of money around that you don't have so, I would ask you to ready to vote, to not accept this amendment and as the bill moves around and get to the other side and gets in conference we can certainly, it would be certainly for conversation and discussion but this amendment Mr chairman and members of the committee it goes way, way money at this time and I would respectfully ask you to oppose the amendment Miss Griffin could you tell us what the cost of the amendment would be? Mr Chairman and I I leave to Brian in case I've got this incorrect he can correct me, the amendment would be an additional 30.4 million and so in the budget currently the senior deduction for just those age 65 and over has a cost of 23.6 and the amendment would cost 54 million total so it's an additional 30.4. Thank you Representative Jeter. Thank you Mr Chair this is one amendment where I have found the most admiration for I understand Chairman Dollars concern about the appropriation side of the budget unfortunately I haven't seen the appropriation side of the budget so for in that respect I think if there's one thing we should do is the medical deductions for not only our seniors but for everyone children that are having expenses that affect seniors. There's a lot of groups that are not included if we kept this 65 $30 million $30.4 million seems to me to be a reasonable request and I urgently ask us to support this amendment. Further discussion further debate? Representative Jones sorry Representative Hager I had you down I apologize. Thank you Mr Chairman I'm trying not to talk a lot today or you all find that man unusual. On this I tend to agree with Representative [xx] and Howard on this I think this is something we need to do I think it's right thing for our people in North Carolina and we seemed to have found money for a whole other things it be nice if we could step up for our seniors and folks that have high medical expense in North Carolina. Representative Jones. Thank you Mr Chairman I concur with the previous speakers I quite frankly I think as we continue down the bill of amendments here we find plenty of opportunities where there are cut[sp?] outs and deductions for particular folks that we can look at in saving money but I do think that the medical deductions is one that we should allow and quite frankly I I think if were going to allow it we shall allow it for everyone and if were not going to allow we shouldn't allow it for anyone. I don't think we should practice age I have great respect for senior citizens 65 and over and I'm rapidly becoming closer to that group every day, but the hope of the matter is that younger people have disposable income on average and it's already
been pointed out that there are children with needs, there are younger people with needs. I don't think we should give an introduction to someone that's 65 and not give it to someone that's 64 it's an arbitrarily deduction and are out not to be picking winners and losers in that way if you will and for all these reasons I would vote for this amendment. Representative Stem. I'd oppose the amendment you can make an argument for every deductions just to deduct all but what you do there representative Johns as you then make it much more difficult to reduce the personal income tax that you want to do by forwarding in another 30 million. We just can't start unraveling tax reform at this stage and when the bill gets to the next stage you are going to have to come up with another 30 million of cuts that you want to propose it maybe free here of course not out of order, but money is money and if you spend it here you can't spend it somewhere else. Representative Johns. To debate the amendment second time. Thank you Mr. Chair I wasn't going to speak again since my friend representative Stern addressed me, I do want to say that I concur with his way of thinking, as far as unwrapping task reforms I'm extremely the concerned about this entire bill and how we're doing that, and quite honestly this amendment fails I will be more than happy to see someone offer an amendment that just took out the medical deduction all way around, my point is if you are going to do it, you should do it for everyone should not just for for 65 and over, and if you are going to choose any special deduction of ones that are in this bill I think the medical deduction is the best one and for the purpose for this amendment it changes whats already there it just takes away the age discrimination so I will vote for this amendment. Further discussion further debate? The amendment before the committee is to amend the medical expenses in page seven page lines 30-33 so as many of the amendment say aye Aye Those opposed no No, On opinion of the chair the aye's have it. Representative Stem is recognized to sent forth an amendment AMC 49 Version 1, Representative Stem Thank you Mr Chair since the committee spend 30 million this's an opportunity to get 44 million back. The best way to understand it is not the amendment it self but in the committee summary the bottom of page two, just to write to the research and development credit and according to the fiscal note there is close to 44 million a year for 16-17 for four years so the $172 million I ask to make present value of that $150 million, so we are talking big about you, it have not been discussed in committee is what I know in either side and I don't quite know the whole about it although I speak my views in labs because my father was head of research for a couple of major North Carolina manufactures, but here is the problem if you look at it here, at the bottom of page two of the committee summary. Most of this credit is to 3.25% of the amount of the expenditure. Now I don't believe 3.25% is enough to actually induce an actual research, that's not why companies do the research that's not big enough to get the research done. They do it for other reasons, of course if you give them a whooping percentage maybe they'll do research they don't really need, if you give a 100% credit or 50, but then you have this anomaly that if they get it done, the research done at a North Carolina University Research Expense, then it's a 20% credit now just think about that for a minute. What is that saying? I guess what it's saying is whoever constructed this because remember the purpose of this is to induce research and development. I guess they're saying that the research done at UNC it's 1/6 is valuable as research you get at a private lab. How can that be, that's almost a slam on UNC or you can say well this is really just disguised, subsidy to UNC in which case it ought to be in the education budget instead of here in
this tax credit and I would encourage you since you just spent 30 million that we didn't have vote for this amendment and you can at least get it back and then maybe we can talk about the policy subsequent meeting, where we actually discuss R&D, rather than just have it as part of package that is given to you today. Representative Martin. Due to debate the amendment Mr. Chair. Yes Mom. I just wanted to share with you all, this came up for discussion a lot when we were talking about the overall strategy four in senate and economic development we have the report from UNT center for competitive economies that was completed and reported back in January of 2009, and a lot of that recommended reducing incentives and tax credits, reducing tax credits and leave it to lower our corporate tax rate, with the one exception. In their recommendations it was to retain the North Carolina research and development tax credit and that was the only investment based tax credit examined that was co-related with companies adding new jobs before and after receiving the incentive and it is also distinct from other investment based tax credits in that it is available to companies regardless of the industry business type or size, population, partnership liability companies were eligible and I'm not exactly familiar with this language but this is based on a report, so it enhances it's prospect of use by firms in distress areas and scene innovative corporate strategy that undergo growth companies regardless of industry so we move with a lot of these recommendations of eliminating a lot of the credit and reducing our corporate tax structure, they did say that the discretionary grants like the JJ program were a better approach than these text credits except for this one text credit so with that in mind and that research to base it on I would say to defeat the amendment. Representative Sane. Thank you Mr. Chairman, I think representative Martin summed it up very well, I'll just tackle that and from the conversations that I've had with the business committee and with entities looking to come here, there are indeed tax credit is very important until we get to a zero income tax incomplete tax reform in it's entirety, I think this is something that we need to keep in our toolbox as far as business recruitment and development, thank you I'm sorry, representative Howard. I'd like to help representative Stan since we is be on the same page. We did the tax two years ago started it, representative Louis, a lot of people were involved. There was a conversation with respect to the R and D tax credit. It was very evident in speaking to the various groups, that and the cooperate tax reach 3% that the need for these credits would not be as important or actually important at all there was an unwritten I guess gentlemen agree mode that when the cooperate tax drops to three this will be eliminated. With the the why the trigger is written currently fortunately or unfortunately have you look at it that cooperate tax will if that trigger not this year but next year and it appears that we stand in the credit through 2020 with this amendment so I would as that you support the amendment because I believe it's the right thing to do and there is real column that agreement representative Stem. And filially this is argument that appeal to all of you almost to all of you. I read that 2009 study and if that would be the same credit that we're talking today and I believe it is, if I recall it was like 80% of these credits with the businesses in Wake, Mecklenburg or Durham county so when I argue this debate here I'm not arguing a provision matter rather it's for the good of the state as a whole. Representative Jones. Thank you Mr Chair I'll be very brief I wanted to work my way back into Rep. Stance good gracious since we argued on the last one but I do totally agree with him on this one
than with Rep. they have already made the comments that I would made but I think this is a good amendment and I will support it. Representative Slain. Thank you Mr chairman and I hate to interrupt the bro hug guys worked it you know representative Stern just want to make the statement that the reason that a lot of that is in three or four counties you mentioned is that's indeed where a lot of the talent and the university talent involved in some of the resource and development is located and that's where important people are located so I would expected to be there, thank you Mr Chairman. Representative Dollar question for staff, the staff has a break down of the companies that what percentage of the companies that received there ND tax credit would be receiving as a part of cooperate return subject to the cooperate income tax and what percentage would be receiving it being taxed under the individual tax rates or the other tax rate other than the cooperates that was cut adjourned and twice recognized to answer the question. Representative Dollar we do not have a data right down and credit Follow up. Follow up on the it's fair to say that or is not fair to say that there are some which lineage of the business received on ND touch creditors and the benefit and the credit and they have not touched under cooperate income tax. Mr. Talt. Well it's fair to say that if one of those indies was organized doesn't LAC or ESCO that will pass through and this subject for income tax is used to reduce personal income tax and if there no organization is S-cop LAC and instead organizes the central, they will be used to reduce cooperate income tax. Mr. Chairman. Follow up. And that's point we may not have what the figure is the point is is that not everyone who is receiving the R and D tax credit is taxed under the corporate rate, but beyond that this is a request of the governor and this basically it means jobs. If you want to cut it out, it's jobs and one thing that I think is very strange that I hear from time to time is, Why is it a problem for their jobs to be in Wake County and Mecklenburg County, and Durham or Greensboro or Western Salem? I never quite understand that because the money comes in, and if somebody can show me which dollar that we appropriate tomorrow came from my home county of Alamance and which one came from my home county now of Wake, I would like somebody to do that. Obviously the whole point of this is jobs, and as Chairman Martin pointed out we have studies, we know from our friends in the university system this is an effective jobs building credit, so if you don't like incentives and I understand my dear friend Representative Sterm doesn't like them, then obviously you're going to vote no, I can appreciate that position. But if you understand that some of this have value, and if they have been tested, and this does mean jobs, I would respectfully request that you vote down this gentleman's amendment. Representative Blast. I have a question, I'm trying to look it up, but I'm not fast enough. Is this credit refundable? And if it's not refundable and our corporate tax rate is getting ready to drop, why is it a level fiscal hit for several years? If they were non refundable wouldn't be amount loss go down when the tax rate goes down for corporations. You're correct, that it is similar to cash as you referring to, we've seen the credits utilize at a pretty steady rate around 44 million a year that could potentially reduce them is not likely to eliminate tax bills being able to take them because there are carried forward associated with credit.
So if there's any low impact is likely timing not loss of the impact. Followup. But is it refundable, or is it just a credit against actual income? It can offset 50% of income or franchise tax liability, up to 50% in a given year, and then to the extent they're limited by that cap, the installment, pardon me, the credit can be carried forward. Follow up? Representative Adams. Thank you Mr. Chairman I will be brief. I have a very good friend who graduated from [xx] state some years ago, PhD and Plasma Physics. He got a job with a large pharmaceutical company locally, and he spent the last 40 years in medical manufacturing. Recently we had a conversation. He made a remark that I will use to judge my vote here. He said that research is what you do when you don't have anything else to do this money would be better utilized going into manufacturing through reduction and income taxes rather than a research involvement tax credit. Thank you. Further discussion further the debate. The question before the committee is adoption of amendment AMC49 by representative Stam. So many as favor the adoption say aye. Aye. Oppose, no. No. I'm going to call for that, so many as favor the adoption please raise your hand, and hold it up we don't have the same number OK, Keep them up 17 Thank you. So many oppose this motion please raise your hand the motion fails 17 to 20. Representative Connie is recognized to sent forth an amendment SV41 V1 the lady is recognized to explain her amendment, Thank you Mr. Chairman and I want to thank you for letting this amendment get heard this is in response to the Senate Bill 20 that passed out hear with a lot of debate on the floor and a lot of you all didn't like that piece that was in their, this was the decoupling from the Federal Government this amendment would just have us conform to the federal income exclusion with the state this is where if you are a homeless or close down or in short sale your loan would be forgiven if we conform to the Federal Government, I'm just asking that you gives this serious consideration. The economy is on the uprise, but there are a lot of people in 2014 they're going to be hit mighty hard, and I would ask that you give this serious consideration and support the amendment. Excuse me, does everyone have of amendment ASV 41 V1 moves to amend the bill on page 43 part 6A conformed to income tax exclusion for discharge of principal rent residence indebtedness for 2014 taxable year, has everybody got it? Okay, further discussion, further debate? Representative Martin. I was just curious if you had a cost associated with that amendment, maybe for staff. Mr. Tarte. This would reduce General Fund revenues for the 15/16 year by approximately $14 million. Representative Dollar. Well, Members of the Committee I would ask you to vote no on this amendment. I appreciate it
being offered but I think staff sort of cut to the chase as far as the budget is concerned, that's $14 million that we do not need to be putting toward this particular purpose. Representative Jeter. If someone forecloses or has a short sell on their home, the bank is we negotiate with that, with that is low as $20, 000 currently we are going to make impact tax on that $20, 000, my question to you is that same family had been declared bankruptcy, will then have to pay the income tax on that $20, 000? question for staff. Mr. Charlie Representative Jeter, we are still reliable for the income tax little a bit how is it comes out I can't say? Follow up Thank you I apologize Mr. Chairman. So the bankruptcy does not necessarily eliminate the liability per say. Mr. Charlie Ms. Griffin. I'm not sure I'd have to look at that in terms of. Mr. Chairman Representative Blast. I deal with this from time to time, if it's income that is discharged in a case under title 11 which is the bankruptcy code, it is not under federal tax law income from the discharge of indebtedness, so Representative Jeter is right as long as they file their occasion bankruptcy, then it's not counted as discharge of indebtedness in income, so there's no income Follow up The gentleman is recognized. So if I understand this correctly if you have a short sale and your debt goes down by $20, 000 you have to pay tax on it unless you declare bankruptcy. So if we don't pass this amendment, you almost encourage our citizens who probably have a struggle any way because they form a short sale, or a foreclosure to declare a bankruptcy. Which I don't think should be the message of this General Assembly. Representative Louis. I suppose this is in some way a follow up while Representative Jeter was just asking about perhaps to our staff. At what point did the Federal Government and therefore North Carolina decide to join them stop taxing motigate debt for giveness was this just part of short term stimulas package. Miss Griffin. Representative Louis I may not have heard the begging of your question but and I'm, I don't quite have it, but congress passed the mortgage debt relief acting 2007 as a result of the housing crisis and it was intended had temporally sunset on it under self have continued to extend that has continued to extend that and so last we North Carolina didn't conform to this and the third part continue to extend one more year this is only for the 2014 tax year. Follow up Mr. Chairman, so could we clear the idea the forgiveness of mortgage that originally bond about by [xx] and [xx] thing and North Carolina complied for a while but in fact did not comply for less tax this year, so this will actually be complying with something we didn't comply with last year. You're correct and the general rule is the forgiveness of debt is considered income just as the general rules of tax purposes. Mr. Chairman just to be clear did Mr [xx] said that the general rule is that forgiveness of debt is taxable? I believe the lady was saying that all debt forgiveness is considered taxable income with the exception of mortgage and [xx] under provision of this of federal to which we're not currently confirming. [xx]. Okay representative Stam.
Yes, I oppose the amendment, if you don't allow the taxation of forgiveness of debt then people can manipulate the tax code. So, I pay Bob Steinberg here and instead of calling it a payment or a wage, I lend it to him and then I just forgive the indebtedness later. That's why we tax this thing so that people don't, particularly rich people, don't use it as a dodge to not pay taxes. I don't particularly like the amendment because I don't think we ought to treat people who do this in 2014 differently than we do other years which going forward, and I don't like the idea of, as Representative Stam's mentioned of not classifying forgiven debt as income, but I will point out however though that so far, I think with the exception of the first amendment we passed, we're voting in the direction of busting the budget each time, and if we had voted for Representative Stam's last amendment we could have exactly paid for the last generosity we just passed plus this one. Further discussion further debate, Representative Connie is recognized, Just one more comment and I understand we're all talking about the revenue in here, that's what we're here for. And with our revenues up in the state and with the economy on the rise, I think we're called upon to be bold here, and I want to remind you that the citizens that are impacted by this budget that we're all voting for and developing are the people that send us here. And it's not for us, I mean we have to take into consideration all of the needs across the state, and I will say this is one year to stay in conformance with the Federal Government, and let these people that were hit hard by the bad economy, let them have that one year, and then we move forward it goes away. further discussion, further debate? So many as favor the amendment say aye Aye Those that oppose say no. No. The opinion to chair, the nos have it. Representative Alexanders recognized to send forward ASVXR 43 version. Thank you Mr. Chairman. The amendment is very straight forward, it'll have us to treat, as far as sales tax is concerned, yachts, private aircraft and auto mobiles exactly the same, and it would raise a little revenue to help pay for some of the things we've just done. Representative Louis. Yeah, I just had an inquiry to Representative Alexander if I could does the gentleman yield for a question? Yes. Gentleman yields Do you have any idea how much advertising revenue this is going to cost in 2016 if the Democrats can't run this against the Republican [xx] for the senate there's a big deal. Further discussion further debate? Mr. Chairman. Representative Dollar. What is the, can we ask staff to answer what is the fiscal impact? Mr. Tadd[sp?] Depending on when and I did this amendment if you did, this is about $35 million in increased revenue per office Followup? Mr. Chairman, if I understand so, this is a tax increase, is that, I'm I understanding it correctly? Who [xx] answer, it will be something about $35 billion in additional revenue per year. Followup? Okay, Chair would like to make an announcement consultation with the speaker, what we will do is run up to 645 we will recess the committee and we'll resume after they close the session unless we get through the rest of our agenda in 10 minutes. Representative Collins.
Just have a question I guess for staff although I don't know the within it public member will have to remember this, since me I remember back in the 1970s we did this or something very much like this and it completely shut down the vote bill in industry in North Carolina if I remember correctly. Is that not correct? [xx] further discussion, representative Stam. And the question to staff is whether that 35 million figure is just based on what it brought in last year was there any analysis of the effect from the last time we tried this? This is based on a data and impact of the cap. Follow up? 11 run I run I'd vote for it. Okay, Representative Collins Just one comment follow up to my question, first they can afford to buys an aircraft or boats, can afford to go to another state to bom so if we're going to tax some higher than everybody else's we're not going to sell then. [xx] Representative Rockie. I'm trying how to understand the logic of some of the comment, first Representative you're saying before you needed $40 million in revenue because you were upset about your expressed concern about the Research Development Tax Credit going through and you're concerned about the lawsuit. 40 million, here's 35 or maybe a little bit less depending on what happens, I understand that. My question is you seemed to have more concern here for people on the high end than people who are lower income people because remember lower income people are middle class by [xx] mobiles and they pay 3% without a cap and so we're not telling them about buying a Mercedes Benz they just have to buy a middle income car and they will pay the full fee their would be no cap on them. There is no cap they can pay whatever it is times 3% what we are saying is that when you buy an Aeroplane or a Yart you don't multiply by 3% you put a cap on it, where is the fairness their for the middle class when you tell the middle class that you got to pay the 43% and you tell the Yart and Aeroplane buyers that they have a cap, it's rhetorical or you can answer sir, I would like to answer that Rep. Collins is recognized. I thought I had already answered it we tried this once before and it growth the boat bill is I was living in Newburn at the time when this was passed the first time and they were working class boat builders who would put up jobs, those are the folks that I'm worried about. I'm not worried about the folks buying the boats, I'm worried about the folks building the boats. The definition standard is doing the same they've done before and expecting different results. And if we think we'll get different results this time and the people of North Carolina they want to buy boats and plains [xx] we are just fooling ourselves. Representative Sang Thank you Mr. Chairman, I'll just point out that we receive no tax revenue on boats build in North Carolina [xx] Representative Adams Representative Stanburg Thank you Mr. Chairman, the I come from boat building country and the boat building industry is just getting back on its feet after the last couple of years and I would echo the comments of some of the others as it relates actually is being punished here? The folks who can pay the tax this isn't going to make any difference to them in one way or the other but they won't be buying the boats here which means the boats manufactures will be who just began to people and start to really move forward I have two that are actually are expanding their businesses and those are folks that are going to be hurt by this. I don't want to go back again to where we were just a few years ago. Representative Hurger. Thank you Mr. Chair and just real quick comment I agree with what my colleague [xx] said on the house floor [xx] but I think instead instead of raising the tax up on boats and plains will slow the tax on cars. Further discussion, further debate Representative Hall. Thank you Mr. Chairman and just a few things when people vote they can make sure they have a factual basis that in here let's say that the tax that was in question regarding the boat building industry was a North Carolina tax in my understanding was a federal tax number one, number two, I did note that Representative Stem Barge said the boat building industry that happened many years ago, but the
boat building industry recently is just getting back on their feet so that tax went away and that did not bring back the boat building industry back. So I think we got a false equivalence in there and then and finally we have boats that are built in North Carolina but they are sold throughout the United States. So the question of where that tax is paid and who owes it is another item that we need to have a clear view of who is going to vote on this and vote based on the tax. Representative Warren. Thank you Mr. Chair I guess the question for the staff for clarification when the amendment reads the sell question for each aircraft or boats so my question is do bus boats qualify fontunes will those be subject to the tax? Yes a follow up. Follow up. So it's not just rich people will be subjected to this tax, but the average working Joe who, like my son who has a bask boat my family's considered buying a pone tune we will be subject to the tax too, so I don't think not voting for this is exclusive of has been port raid as something for the rich, but this will also be a heavy tax on the average citizen, and probably something that would cost him heavily when it comes to the recreational activity, so I'm not voting for it. Representative Loki. Mr. Chairman, just read very briefly, this only affects purchases more than $50000, so if you [xx] plus $50000, there's a 3% at the cap of $1500 and that means it's going to cost more than $50000 before this kicks in. So all your smaller pontoon, everything else, they are not identified as more than 150, 000. You have a boat. Do I? No sir. Neither do I cause a lot of them do cost over everyone is talking about, I just want to make that point. Unless it's above $50, 000, this doesn't bother you. Further discussion, further debate. So many as favor the adoption of the motion say Aye. Aye. Those opposed No. No. The motion fails. Representative Setzer is recognized to send forward Amendment ATM-14V2. Representative Setzer. We haven't done so[sp?] Yes, we're supposed to have put that one out. OK, alright. Chair apologies actually, I guess I didn't ask for it to be distributed. Does everyone have the amendment? representative Spencer is recognized Thank you Mr chairman the amendment is very simple, what it would do is eliminate the sales tax on the non profit fares that we have all across the state this is a small non profits fares not the large one and not the state fares here in rally and I would ask for your support. Further discussion further debate representative Slain. Thank you, Mr chairman just maybe question for staff what would be the physical impact be of this amendment? 200 and 10000 please staff verify that Okay staff is going to take a minute is there other debate representative Stem. In most organization people will debate longer about something they understand like $5 ticket than hundredths of million of dollars and if we pass the house defeated it last year so that's what the debate in the budget is going to be about it's about agricultural fears last year just as good just rolling back of task reforms. Further discussion further debate the question before the House or the committee is the adoption of the amendment ATM-14V2 now Representative set us, so many in favor of the deduction of the amendment say aye, aye, all oppose no, no, trying to vision on that, give a hands on all those voting aye 16, 17, 18, 19 I've got another team, try to
guess, keep you hand up please one Six, seven, eight, nine, 10, 11, 12, 13, 14, 15, 16, 18, 19 20, are you yes or no Harry. What do you get? Alright. Hands down, as many as opposed, please raise your hand. Okay, the no's were louder but the yes have prevailed. Hey guys we only got two amendments left, we might be able to vote this out and not come back. ADT49 Representative Hager. Thank you Mr. Chairman. What this bill does is, it basically levels the playing field for all renewable technology. It gives everybody, we had the solar under the Safe Harbor Bill we passed about a month ago which I think the governor has already signed it. This just gives all the other technologies, the same year to get all their ducks[sp?] in a row before we end the tax credit representative Jitter question for staff if I could Mr chair as I read the amendment it's says for all renewable will properly accept the property described in general statute 105-129-157E that's the Safe Harbor Bill. I guess ultimately my question is, thank you Representative Hager is solar is also going to get the same one year extension as the other renewables on this amendment, is that correct? Mr. Chairman if you please, I'll answer that Okay, I will be happy to ask my question Representative Burger I'm sorry the chair will be somewhat destruct if you have a [xx], Okay does the gentleman yield OK I do, thank you Representative Jeter now the speaker I can just discuss this I actually they get a little bit better because about the time within the same year they all have to have a percentage about the safe harbor bill finished by that days so that's a little bit better for [xx]. Further discussion for the debate. Representative Sam yeah, it somebody on page three on our fiscal note could simply tell me what the affect that this amendment will be on the fiscal note for new energy tax credit bottom of page 3 like what figures would be put in there instead of the 47 and 94 millions if the amendment passes. Mr. [xx] So I think it's. I may need a minute, whether it's a couple of things that they consideration about your question. The physical memo, the reference you're talking about shows the entire of extending the renewable energy credit for two years for solar and for four years for non-solar. There's already a safe harbor bill passed that accounts for 36 to 37 million of this in 1617 so this would result in significantly lower money than on this physical memo, I'm going to need a minute to get that together Mr. Chairman I think I could probably answer that a little bit if you give me a second I'd appreciate. Alright, do you have the number now or are you gong to calculate? I do know the number. Alright recognized. Thank you Mr. Chairman. The safe harbor bill is a 35% tax credit 7% spread over 5 years, physical note for safe harbor bill again 36.7 million per year which end up being around 175 million for the total save power bill fiscal cost. This in my opinion wouldn't change because Just still have the one year and this just goes out to the one year. The 36.7 is the first year, the first 7%, I'll just say probably bill with the additional of 10-3 add on there for the extension of all the other technologies. Alright. Representative Jeter. If my memory serves on the Safe Habor Bill, that exchanging for solar was only on projects that were 80% complete. Does this fix that issue? I think, well, the gentleman's questions are incomplete. Safe Harbor was 80% completed in money expended by
the end of the year for 65 megawatts and smaller, while larger than 65 megawatt was 50% completed and expended by the end of the year. Mr. Chairman, I think I've a. Is that correct sir? It actually gives the solar right, by the time the index comes, solar only has to be finished 80% anything below 65 megawatt and 65% for repaying both 50 megawatt vice versa. All the other projects had to be finished by that date, so it actually gives solar an advantage. Okay. Mr. Todd has calculated an answer for us, the gentleman's recognized. See, this is on the [xx], Representative Stan, this will reduce revenue by approximately $ 7 million for a five year period, beginning the 16/17 fiscal year and there is an understanding that the 37B and that the safe harbor is all ready taken into account [xx] is saying. So you taking this amendment will reduce this revenue is by approximately $7 million per year, for five years, beginning in 1617. Representative [xx] Thank you Mr. Chairman and I guess my questions are for the amendment sponsor because I'm not clear and I'm sorry I don't have the amendment before me and it's Mr. Jeter's question as well, You stated that it's actually much better for solar, can you Explain a little further for me because I din't quite understand. Yes sir. Thank you Representative. If you remember the safe harbor bill it says that I think that anything below 65 megawatts, by the time by 1117 has to be at 80%. So it doesn't have to be completed just at 80%. Anything above 65 megawatts only has to be 50% completed by 112017. This bill keeps that intact so you don't have to be finished with the solar project by 112017, 80% and 50% respectively for larger projects. But this does hold all the other technologies that have to finished by that day. It has to be 100% completed by that day for all the other technologies. So, it actually gives solar a little bit room and the fact that you can still have 20% not completed by 1117, and 35% not complete with any of those projects over 65 megawatts. Thank you. I've heard some comments from staff and I'm going to as Miss Fennel to. I though it might be helpful if I just gave a whatever view of the amendment, what the amendment basically does is it will allow the renewable energy credit to be extended for everyone for an additional year through 2017, but what it does is it accommodates the renewable energy Safe Harbor bill that was already passed for the general assembly and signed by the governor on 430. So for renewable energy to get the credit it will have to comply with the provision of the safe habor bill, and it will have to be 50% or 80% complete depending on the capacity as Chairman Brawley and Representative Hager described. So that is the full effect of the bill. It is exceeding it for all for a year, but for solar they will have to have additional requirements in order to comply with that extra year. Are there any questions for Miss Fanel? Representative Sternberg. Thank you Mr Chair I'm totally confused and I would like to ask the amendment sponsor a direct question if I may? does the gentleman yield? I do only for direct question. Thank your Mr chair and thank you representative Hagar as I understand then doing that if this amendment passes I say it is my understanding who will sum here will know it, I don't know what I'm understanding but if this amendment passes that will have moving forward an negative impact on our wed energy project that we have a lot of the marveling this two one county is over and issue North Carolina and both it allow the boxing champ that is in double need to get started is that the case that this would have in terms of our participation that this would have a negative impact on those yes or no thank you, thank you with somebody you know the purchase and can answer just yet to know, number one is John Bill birthday day two by legislature everybody know that, second is the if everything is care for years and if we know this piece was in, the house bill 97, in by the end of this year so everyone will be done so far Will be when about to inspire because the extensive of the renewal credit ends this year. This is the amendment right here the PCS House Bill 97, push it out to 4 years I brought it back to right under the safe harbor
bill for the same year the safe harbor bill gets. Okay I just don't want to make announcements, speakers can delay the session. We're having so much fun he doesn't want us to have to quit to come back later. Did you want to be recognized to speak on the amendment Representative Luckey? Right, Representative Jeter. I know that I'm not the brightest bob in history the world and I apologize. My wife tells frequently. I guess my thought process, and I'm going to walk through this and I want to do this out loud. Just try to understand what I'm talking about. Sounds like to me what we're saying is for swan, poultry and all those other renewables we're going to extend that for an year, as it's currently done. For solar we're not, we're going to let them live with the safe harbor language, which says they have to be 80% complete or 60% complete based on other things, if we are actually doing a true one year extension then solar would for lack of that thaere term being better of if they didn't have the siphon language and they just got one year extension as one appropriate [xx] I'm I correct in that option, Miss Presnel, Okay, for renewable energy [xx] that generate was So well, they will have to comply to with greater requirements under the safe Hababel enable the 50 or 80% completion by the end of 2016 and those provisions will not apply to all the other renewables Follow up. Representative Jeter do you wish to follow up. I guess my concern is in and I appreciate Representative Hager has been great to me, this whole process and I'm not trying to be difficult but I understand that in the safe habour language, [xx] and culture without the 100%, but we're saying there are no longer applicable to the substitutes, so the safe language they get a year extension [xx] no matter what. Is that correct? Yes, that's is correct but for all we knew is they give a one year extension with you one way you can [xx] within the no sort of procedure you have to jump through to get that extension [xx] string extensions Follow up Follow up So, yes I understand this correctly. Everyone Nobel gets one a one year extension with no [xx], no cabiarchs, no strings and sailor gets safe harbour Yes, so all is extended except for solar with no strings and then [xxx] Yes, Representative Stein Thank you Mr. Chairman, I too is probably as equally confused. And my question would be for representative Heager, if he'll accept another direct question and part of our confusion is knowing your past support of solar and solar renewable. I just want to be sure that through the past amendment we're supporting those renewable industries. We're all actually supporting the deal that we all made that representative Gida and representative Miletson our [xxx] was involved in supporting the deal we made with those folks and the fact that we're in the same bill we had to go back and change once they figured they had made a bad deal earlier. So we actually changed the bill as it passed in house bill 760, so we are just making sure actually this is another modification from that bill actually. So this will be the second or third modification from that deal but we're willing to make it and for Jeter's question swine and everybody else wasn't covered under Safe Harbor just solar. So that's kind of why they got in the deal we made to get safe harbor pass two is part of that whole big deal this actually is included in that, and as this is put forward now. To extend it four years for everything else in two years of solar is a violation of that deal we made. We all put a deal together, we all set at the table. Representative Jeter was involved in it he can probably would agree with me. So we're just trying to maintain the same deal, try to keep everybody from going crazy at this. Because there are other things I'm sure that we can go after, but we're not because we're staying with the deal. Follow Mr. Chairman. Follow up. This just commentary Representative Hager I was absent for the deal so when we say we I just want to point that out. I appreciate that unfortunate Representative Jeter was negotiating for you guys. Further discussion further debate the question before the committee is the adoption of amendment PD 49 V5, so many as favor of the adoption of the amendment say aye.
Oppose no. The opinion of the chair. Raise your hand for aye Thank you Mr. Chairman and this amendment is last but not least, and if we can get to order Mr. Chairman. Will the committee come to order please. The gentleman is recognized. Seriously wait till they're have finished with their conversation, it really is disrupting, honestly. Representatives Saine. Thank you Mr Chairman I appreciate it. I said this is last but not least because it's about restoring the earned income tax credit. The earned income tax creditis just that, it's a tax credit for those to earn income. It's for working lower income people, lower middle class, poor people and it provides them a credit pricesly because their income is so low that they cannot make a living without a tax credit. Ours is based on the federal tax credit those who follow this issue know that President Reagan was a big fan of this, to make it by-partisan, President Clinton got behind it too but the real follow up. Representative [xx] do you wish to follow up. I guess my concern is in this ammendment restores something that we had for five years in the late 2000 and I would recommend, ask you that you support this amendment. Representative Adams thank you Mr. Chairman, well if we want to look at this against the frauderal programme I think we`re looking at something between 20 and 25% fraud [xx] number three, redistribution of wealth, the programmes are behind, I think like 40% of the people who made it eligible for this actually got it I mean what else could go wrong Representative Zucker Thank you Mr. Chair and the history of those of your state is quite accurate I would just like to say that I've done research on this and The US Department of The Treasury has audited this program at the federal level, just about every year since it began. And last year that North Carolina have their end income tax credit repaid out in approximately $112 million, it's what representative Adams alluded to the fraud when he first was being audited in the early was about 29% and last study I read for 2012 that the verified [xx] rate had dropped down to 25%, so that'd mean and I have no reason to believe that North Carolinians are more fraudulent or less fraudulent then any other state across union so I'm extra the national rate of fraud to North Carolina, I will branch to that, the 25% of the 112 million is $28 million, and even if the numbers 20% I still have great problems with a program that has this much verified fraud and voting for that. Now, I respect the House members coming to vote no on this. Representative Stam. Even if there were no fraud, there is a huge difference between the federal program and the state, when [xx] introduce it it was to offset, daycare taxes that working poor pay the
they don't, North Carolina then collect those taxes. It's not an offset, it's just a further discussion further debate? [xx] Representative Lipinski is recognized for the second time. Thank you Mr. Chairman. It is really very important for us to not plea that just because someone finds some fraud in one group, that their is no fraud through the entire tax code. The whole idea that some how working people are more fraudulent than people on the upper end, just seems to be not defensible. And as far as what is it people are needing in terms of help, they are paying sales taxes, they are paying fess, they are paying property taxes through their landlords, they are paying for many many things, and if they were to have this tax credit, they could spend more out more money into the economy. It is a fair thing to do we do not much around this general assembly for the only 20% and I ask you to think about that lower for 20% and this time, give them a break and support this earned income tax bill, thank you. Representative Collins I beg to differ with the last comment we do think about lot of 20% a lot I do think them every time I vote to try and keep our electricity rates lower or get then even lower and not devote to give tax credit to people like the Bank of America and Blue Cross, Blue Shield about the tax credit we just decided to extend another four years but anyway, beyond that, what we have done for the lowest 20% is lower since I have been here as low as state sales tax by 16% and raise the 0% tax bracket. Now I looked it up and the in my two counties only benefited from the [xx] about a total of $115-120 a year. What we've done rolling back taxes and gives it much more benefit than a $115 dollars a year and so I'm going to vote against this amendment Further discussion, Representative Hall. Thank you Mr chairman and once again, I want to put this vote into perspective for everyone and we just heard that because people have gotten tax relief in North Carolina, they should not get any further tax relief, and it seems that the only time we have that kind of standard is when we deal with the least of these. If we eliminated out tax code for anyone committing fraud or failing to properly or fully report, then, we'd have a larger percentage that would be reflected. So I would hope the people would vote based on the benefits of this policy and helping small business and keeping revenues in the communities so we can move our small businesses forward and give our citizens a chance. Many folks $100 or $250 is nothing to them. I have a large percentage of people who are in my district we have a 20% chance poverty rate whether people belief it or not in the city of Durham and in Durham county, and so while many of us may sit here and be in a position of privilege, 120 out of 10 million, this type I'm sorry, go ahead sir. This type efforts on our part to provide an opportunity for the list of these will go along way in helping North Carolina small businesses recover, something that we need to concentrate on as well. Representative Dollar, Mr. Chairman, I apologize for [xxx] the point but I do think that it should be noted that it is not just tax policy in which we deal with the least of this, we do with the least of this, we deal with the least of this in our appropriation policy and we have been and we will be spending in this forthcoming budget a considerable amount of money for low income individuals in terms of health care, in terms of education, in terms of public safety it is a very wide range and that we invest money in that the state has that benefits all as in certainly benefit those citizens who have lower income, and I think that we don't actually got to record that Representative Roys. Thank you Mr. Chairman I'll be very brief, just wanted to make the point so the echo on what Representative Collins stand to say, we in the [xx] round of tax reform increased the standard
deduction for most of our followers where another way to say this deduction is 0 % right, there is a a lot of money you can earn in North Carolina, before you have to pay taxes for a follow that was married file in jointly it was $6, 000 it's now 15 you can now earn 15 tax free in our state what that translates into if you use the 5.8% tax rate is about $405 that's four times the amount of the average EITC. I take great issue with the fact that we have not and continue to strive to better the lives of the working families in this state, and to increase their ability to fully participate in our economy. I think we need to do more things than let him keep more of the money that they earned. I certainly I'm open to that but the earned income tax credit is not the way to do it. Further discussion further debate. The question before the committee is the adoption of amendment ASV 42. Right restore EITC so many as favor the to the amendment say aye. Aye opposed no. No the no's have it. Were awaiting on reproduction of one more amendment so they're making copies now that will be brought forward by Representative Jeter at this time I'll recognize debate on the bill as amended. If anyone wishes to begin comment. Representative Lucas. I was waiting for others to pipe[sp?] up but it seems like a lot of people just are happy to go home or at least go to session. Mr Chairman. Yes sir I'm sorry. Mr. Chairman and members of the committee, one of the biggest things we have in North Carolina is the shortage of funding for public education that is a reality. That reality can be seen by publication funding over public education funding over the last four years is not adequate for our school system. If you doubt that go talk to your school administrators, talk to your teachers about how funding is inadequate. And why that matters here is that in this bill we've not taken any opportuny to recognize the need for more public education funding. By looking at things such as the increased deduction the increased reduction of the corporate income tax, and ask ourselves whether we couldn't rather than having the trigger kick in with 100 million or whatever it will end up being. Rather than having that come up that we think in terms of how we can have more money in this committee ways in this committee which can help public education, and other needs in this State. So the failure for us in this committee to bring a long more revenue to help Chairman, Dollar and others in the appropriations committee is a major shortcoming of the bill beyond number of the amendments that should have in my judgement be passed. But the underlying point never came up in discussion. Which is that, revenue is needed in order to fund their public schools adequately. We do not have enough revenue, this was the place to do it. I'm sorry I can't support this bill. Representative Dollar. You know I appreciate gentleman's concern but I would point out since appropriations for education were mentioned, that among the things that are in the bill and the draft that was put up today, $100 million for average daily membership growth, $35 million dollars for raising starting teacher paid a minimum of $35, 000, $ 65 million to meet teachers around the state, additional money for 2% I think it's probably more than $100 million for to an increase for all teachers and that's just what we are looking to do this year I think you
can add up those numbers and see substantial and on top of that, we have money for digital and of course the education chairs will lay out this package into the scarcity in detail to more gent remind the gentlemen that during his time in leadership that the education budget was cut by billion dollars and K12 I mean right it has been there in the numbers and it was only those leadership that we are able to restore that billion dollars, so even though other may but rather look out the other numbers dont back it upniw in Finance at that time when that was done we were getting ready to go into a very deep reces but I think that people ought to recognise the full scope of the picture what has been restored over the course of the last four years, and what we're preparing to invest this week in terms of the house budget, which education will be very substantial. Further discussion further debate? Representative Mayer. Thank you Mr. Chairman, I'd like to ask the bill sponsor a question. Representative Sane, can you explain why the increase in North Carolina medical examiner autopsy fee, is necessary and why it's appropriate to this form of fee to cover what we think will be appropriated with? Representative Mayer thank you for the question and as you know this bill is a combination of many ideas. I don't know that I have the answer for you, so I'd prefer that staff, Mr. Chairman, if they have any type of commentary on that please. Thanks for the reference to the autopsy fees that will be Miss Thomas, Miss Thomas I'm sorry could you repeat the question, Gentleman repeat the question Rep. Meyer, I can repeat the the question let me amend the question slightly because am not sure it is a question I'm concerned that given the answer that Miss. Thomas already gave my question earlier question which is seeking a little bit of knowledge about this the increase of fee here is going to be put upon counties than it will bring money into our general revenue fund but it's going to comment the expensive tax payers in the county tax base we've already put allot of burdens on to them, I know we would like to do some things to improve the effectiveness is of our medical examiners state wide what I'm curious about why is the best way to increase the effectiveness of our medical examiners to do it through this type of fee with that type of burden unto local counties just to clarify that the medical examiners fee does not come to the state that increase does not come to the state the increase fee is being payed directly likely to the 450 individuals medical examiners around the state, Follow up, Mr Chairman So again my question for the bill sponsor is why I want this bill to be payed by counties I will change again rather than out of the general fund or another type of the expenditure Rep. Meyer I indicated that this is a combination of many interest and [xx] recall the conversations we had around it, I just cant recall it, I'm certain through my colleagues would step up to my coach years Rep. I've got Warren Rep. Dollar if you go ahead and take that one Thank you Mr. Chairman I think the sureness of your question is this is an exciting fee it's an fee structure to pay for this and this is is being increased and in the increasing structure so that we can appropriately cover the cost and so that we can make sure that the quality these examinations are appropriate. I think there was quite a bit of coverage about problems in the system and this is part of one of the fixes. If folks are concerned about counties, please be assured that when you go back and you look at all the details of the budget, you will find that this budget treats the counties very kindly and sends a number of dollars in the health and human service areas and some other areas to the county counties to support a variety of initiatives. Representative Collins.
I think if I remember this is showing, it looks like me a negative 110, 000, I think the state through the DHHS pays a lot of these fees. Is that not correct? This is showing a negative negative for us. This is not money we're making, this is money we're paying. Representative Jeter is recognized to send forward an amendment ADT50 V2, does everybody have the amendment? Representative Jeter. It's a really good amendment, but I with all the confusion over eruption[sp?] in of Hager's amendment and with all the discussions he and I have talked on solar over the past three weeks. I would classify ad nauseum, this just is clarifying that says everybody gets a clean extension for one year on the renewable energy tax credit. So that no one has to play by the Rules of Safe Harbor, no one has the contingencies. Everybody gets a one year clean extension for renewable energy taxpayers. Is there a further discussion on the amendment? Representative Jones. My question for staff is, is there any fiscal impact of this amendment? I assume there would not be in the first year perhaps, but after that there would be. Yes, if you turn into the Fiscal Memo it might help to walk you through it. If you're there at that table where you see the renewable energy tax credit shows of $47 million cost, in 16, 17 or about 37 of that is already taken into account and availability because of the safe harbor provision that was enacted. So if you pass the bill to include the residual amount of solar as you're referring to and also the non-solar, that the impact does not change in 1617, the impact changes in the out years significantly. It would be down to $44 million per year starting in 1718 instead of 94. Is there a follow up? Can I follow up on that? Okay, follow up. So what you're saying is if this passes it significantly reduces the cost to the state moving forward? Correct [xx] yes it does Rep. Steinburg. Thank you, Mr. Chairman. Rep. Jeter, You're taking another stab at Rep. Hager's efforts here with this bill moving forward in terms of renewable energy and helping to curb our involvement and future projects and so forth in the East, and that's where does the gentleman yield for the question? I'd be happy to yield for the accusation I have spent the past three years of my tenure in this building doing everything I can to help renewable energy industry. I have met with people across this state, I have done everything I could. If people actually look at the facts of what is and over the last month and not recognize what is played out and they think that somehow I'm harming this industry then I question the ability serve in this bill. Follow up, further discussion further debate? The question is the adaption of, sorry Representative Hall Thank you Mr. Chairman and just brief comment, I appreciate everyone taking time this evening and even staying late. We seem to have lost sight of something that important here in North Carolina though as we make an effort to bring the whole estate forward. I talked briefly before about The question of poverty and we talked about tax relief and unraveling tax relief and we've got the 35% of people who're paying more in taxes or the folks who can least afford it, but we seem to have washed that away. But poverty state consist in the North Carolina from 2013 till now. 18% of our state is living in poverty and we've the 11 passed poverty rate in United States, and so we could more, we decided not to do more. We've the 12 has child poverty rate. We could do more but it appears we're deciding not to do more for those North Carolinians. 1.7 million North Carolinians that I'm talking about that are
depending on us to do more for them. We got. Is the gentleman debating the amendment or the bill? The bill. We're on the amendment on the solar energy piece Thank you Mr. Chairman if you want me to finish my statement or you want me to come back and do it. go ahead and finish. Okay, thank you Mr. Chairman I appreciate it. We have 45th poverty rate in Rural County in 2013 and now we have 45 counties in poverty, who are continuing in poverty and we aren't doing what's necessary here to get the resources North Carolina needs to move this 1.7 million individuals forward. So, I appreciate your time on this finance plan and I hope that we can address those 1.7 on million of North Carolinians at some point in this process. Further discussion on the amendment Representative Stein, This is a question cause there was a confusion earlier, Representative Hager, is this something that you're agreeable to sir? I'm still thinking about it. Further discussion, further debate the question before the committee is the adoption of amendment ADT50V2. So many that favor the amendment say I I opposed no No The decision of the chair, the no's have it. The no's seem to have it, the no's do have it the amendment fails So, at this point further discussion further debate. Mr. Chair [xx] Yeah, I'll accept that so many as favor the amendment, please raise your hand. We all agree? Alright. Thank you, so many as opposed please raise you hand. The amendment fails 15 to 21. Further discussion further debate. Representative Shyn is recognized for a motion. Mr. Chairman I know that the PCS has amended the adopt by the committee and we refer to the appropriations Representative said that the house bill, the committee substitute for house bill 97 as amended be rolled into a new committee substitute staff is allowed to make grammatical, technical correction reporting back to the floor with the sir refer to appropriations, so manay favor of the motion say aye, aye, oppose no, the opinion of the Chair the motion. I'll all in favor of the passage of the house committee substitute for 97 please raise your hands thank you, those who oppose please raise your hand. The vote is 19 of favor, 16 against the PCS is adopted we are adjourned.