@NCCapitol

@NCCapitol

Legislative agenda starts with tax reform, education policy

Posted January 26, 2013
Updated January 29, 2013

— The General Assembly has set out to remake the state's safety net programs for the poor and rewrite North Carolina's antiquated and exception-riddled tax code with one of the least experienced group of lawmakers in living memory. 

More than 100 of the 170 House and Senate members did not serve in state office just three years ago, marking the state's biggest legislative turnover since the 1970s. 

Many of these new faces are part of a Republican takeover of state government that swept away Democrats' century-long hold on power.  At its most ambitious, the Republican legislative agenda will alter everything from how the state takes care of its poorest citizens to how it regulates businesses. While there will be debate in each individual policy area, the GOP is really attempting a broader philosophical shift, observers say.

"It's a question of how we provide things we want and value," said John Quinterno, founder of South by North Strategies, a Chapel Hill company specializing in economic and social policy research.

Republican leaders say that the key to providing those things of value, such as public education and health insurance for the poor, is controlling costs and changing how taxpayers bankroll government.  

The State House of Representatives 2013 N.C. General Assembly Issue Tracker

Lawmakers held a one-day organizational session in early January to elect leaders and set their rules for the session. But the heavy lifting of legislating – drafting bills, crunching numbers on the state budget and negotiating compromises – begins Wednesday, when the session opens in earnest. There are no hard-and-fast rules that govern when lawmakers have to finish their work, although the current budget does expire June 30, but Republican leaders have signaled that they expect a fast-moving session that should end in May or June.

Those high hopes for a speedy conclusion seem reasonable now. Republicans have super-majorities in both the House and Senate, and after two years of laboring under a veto threat from Democratic Gov. Bev Perdue, they are working with Republican Gov. Pat McCrory. Both legislative leaders and the governor share an agenda that on its surface seems in sync.

For example, all agree that a remake of the state's tax code is in order. 

Tax reform agreements and disagreements 

"Everybody is talking about tax reform," Senate President Pro Tem Phil Berger said during a news conference with reporters earlier this month. "It's important for us because the current outline of our tax system is based on ... a 1930s economic model that is really not there. You've heard that from Republicans and Democrats over the years. We intend to move forward this time with a tax reform package."

For weeks, Sen. Bob Rucho, R-Mecklenburg, has been touting a plan that would eliminate the state's corporate and individual income taxes in exchange for raising the sales tax and applying it to more things. While that has been the most discussed plan, it has not been universally embraced, even by Republicans.

"There is no Republican proposal or plan," said Art Pope, McCrory's budget director. He said the outline Rucho is touting, which Berger backs, is only one of several options. Pope, who will advise the governor on what tax policy the state should pursue, said he worries that eliminating income taxes entirely could be bad for the state.

"To go there from where we are now is very difficult to do and has lots of impracticalities," Pope said. On the campaign trail, McCrory talked about the need to lower income taxes in order to be competitive with neighboring states, but he did not necessarily advocate for elimination of income taxes. 

It's also unclear how a House plan might look. 

"People always overestimate partisan conflict and underestimate institutional rivalry," said Ran Coble, executive director of the North Carolina Center for Public Policy Research. "There are still big differences between the House and Senate, and even the governor, even with those super-majorities."

As recently as 2008, Democrats held the executive mansion and both legislative chambers. Even with one party in control of most organs of state government – albeit with slimmer majorities than Republicans hold today – there were budget showdowns and public spats.

Both Berger and House Speaker Thom Tillis are said to be considering a run for the U.S. Senate seat now held by Democrat Kay Hagan. Neither legislative leader has directly said whether he will or won't run, but if both of them jump into the race, Coble said it would exacerbate the normal House-Senate rivalries. 

Some of those differences began to emerge last year. Tillis and House Republicans forcefully backed a plan to provide compensation to victims of North Carolina's eugenics program of the early to mid-20th century. The Senate refused to hear that bill. That was a small difference among many legislative accomplishments, but another sign that feuds are possible, even among lawmakers from the same party.

On the agenda

No list of pending legislative issues is likely to be complete. Lawmakers filed more than 2,000 bills during the past legislative session. Of those, 203 became law, with a handful of others passing as resolutions. However, there are some broad topics, such as tax reform, that are likely to come up and dominate the political news this spring.

Pat McCrory inauguration On the Record: Republican agenda will drive legislative session

Early in the session, legislative leaders in both chambers say they will pass a bill to require voters show identification when they go to the polls and to repay $2.4 billion borrowed from the federal government in order to pay unemployment claims. Along with McCrory, legislative leaders will have to decide whether North Carolina should run its own federal health care exchange under the Affordable Care Act and whether to expand the Medicaid program to cover up to 500,000 more people, as allowed by that federal law.

"There are major financial implications and human implications regarding this decision," McCrory told the North Carolina Association of County Commissioners on Friday. 

Lawmakers are also expected to push forward with changes to the state's education system. In particular, Berger said, the Senate would push plans to give schools more flexibility to hire and fire teachers and reward better performing teachers or those who take on tougher assignments. 

"You will see a renewed effort in that field," said Berger, R-Rockingham. 

Berger and others, including House Speaker Pro Tem Paul Stam, also said cutting back on regulations issued by state agencies would continue to be a legislative focus.

"I hope, by the end of the session, we'll have the craziest rules whacked down," said Stam, R-Wake.

He offered the regulation of those who braid hair for a living as one licensing standard that ought to be struck down. He said lawmakers make also try to loosen rules on food trucks. 

During his opening-day speech, Tillis, R-Mecklenburg, pointed to another possible area for action.

"We must protect our workers and their right to work, and we must send the very clear message to businesses already in North Carolina and those considering expanding here that North Carolina will continue to be the least unionized state in the nation," he said, garnering one of the biggest applause lines of the day.

North Carolina is already a right-to-work state by law, but Tillis said after his speech that it is possible lawmakers could push forward with a constitutional amendment.

85 Comments

This story is closed for comments. Comments on WRAL.com news stories are accepted and moderated between the hours of 8 a.m. and 8 p.m. Monday through Friday.

Oldest First
View all
  • Terkel Jan 30, 11:32 a.m.

    "Our country says we guarantee Life, liberty, and the pursuit of happiness, not anything else." Raleigh Rocks I

    Slight quibble: the Constitution acknowledges that we all have the RIGHT to L,L + PoH. It does not guarantee them. It does not agree to provide them to anyone.

    The Constitution provides the framework for a republic where we are free to achieve as we wish, within legal limits. It does not say that some private citizens shall support others.

    "Providing for General Welfare" doesn't mean ka-ching for babymamas and illegals, it means acting in a way that furthers the republic. For example, PASSING A BUDGET so businesses can resume their attempts to thrive in spite of the Dictator.

    As someone so rightly stated yesterday, taxes are levied to keep govt operating, NOT as some kind of "social justice" corrector or redistribution scheme.

  • Terkel Jan 30, 11:20 a.m.

    0bama proposes legislation, Rucho "touts" it. Nice.

  • jackjones2nc Jan 30, 11:12 a.m.

    Raleigh Rocks 1 - Although your positions typically lack substance and viability, they are entertaining and fairly appropriate considering the level posting here. You might just give ole' Glen Beck a run for his money! Good luck!

  • ykm Jan 29, 5:48 p.m.

    luna All of the items you listed: I am taking those profits home with me or investing in training, new equipment, marketing, etc. All involve people. All increase demand. Put those two together and ya got jobs. So reducing taxes and allowing you to do more of whatever it is you do is meat on the table for others. Have at it.

  • lunarmodule Jan 29, 3:50 p.m.

    Thanks for the economics 101 lesson, RR. No really. I guess I could have stopped at Econ 101 and never made it to my degree in Economics. But trust me, like a true capitalist, if lower taxes increase my bottom line, I am taking those profits home with me or investing in training, new equipment, marketing, etc. In fact, I will look for the best return on that extra money and it may or may not be extra people. I'm not going to hire people to sit around just because I've got extra money in the bank. The point is that there are a lot of variables that influence whether I hire people. Taxes aren't even in the top five.

  • Raleigh Rocks 1 Jan 29, 1:02 p.m.

    jack, Like the current tax rate does not hurt the middle class, and when Obamacradletogravecare kicks in...man the middle class will get it then.

    Not sure how letting me keep all my money will hurt, but Im not a lib, libs want to take my money. Conservatives want you to keep it. If I make 50K, let me take home 50K and not 40K.

    Moonman said, You can cut my taxes to the bone...that won't make me hire more people if I can't meet OR GENERATE (Caps by RR) demand for our services...

    I remind you I said..When the taxes are low, AND the economy has stability. Cant take half of my quote to make a point.

    But, Lower taxes will increase your bottom line, which puts you in a position to hire, so you CAN GENERATE more demand. Higher taxes will lower your bottom line, may make you lay off, or not hire all together which makes it more difficult to create the demand. Econ 101

    Oh, and No there was not a demand for another Mexican restaurant in north Raleigh.

  • mep Jan 29, 12:29 p.m.

    Texas has NO State income tax.... only sales tax... and is projected to take in more than it will spend ($5.5 BILLION worth)... so Gov Perry is suggesting the State send refund checks to all its citizens. So who says we NEED a State income tax to generate enough revenue? And a flat sales tax is the only true fair tax there is. Fair being everyone pays the same. If the purpose of taxation is to fund govt operation, and the govt is to treat each and every citizen as equals.... then a flat sales tax is the only way to do it.

  • Plenty Coups Jan 29, 12:13 p.m.

    just a name-"The line for out-of-state teachers coming into NC is long. Most are coming from union states where they can't find jobs."

    Please tell that to my local elementary school where they've had a substitute teacher in the special needs room for the last few months.

  • Plenty Coups Jan 29, 12:11 p.m.

    raleigh rocks-"plenty...thats just bull man."

    Actually, it not. I can and will prove it. Teachers who make more than 50 thousand will have to have a lot of years in the profession or will have to have an advanced degree above a bachelors. Wake County also adds to the the low pay with a 12% supplement. Most counties in NC don't supplement nearly that amount if at all. Here is the 2012/2013 teacher pay grade. It takes 32 years for a teacher with a bachelors degree to hit 50 thousand per year. What the salary schedule doesn't show is that NC teachers are still working on 2008 pay grades, so that a 5th year teacher, instead of making 31,220 is actually only making the starting amount, 30,800. Then there's also the decreased health care but I won't get into that beyond mentioning the $300 +30% ER co-pays.

    Check it out for yourself.(page 2)

    http://www.ncpublicschools.org/docs/fbs/finance/salary/schedules/2012-13schedules.pdf

  • jackjones2nc Jan 29, 11:51 a.m.

    Radical Republican policies like increasing regressive sales taxes to offset progressive income taxes will harm North Carolina's economy very quickly. Incrasing financial burden on the middle-class indisputably reduces spending, and our richest simply don't "spend" enough to drived the whole economy. I'll waive any points on morality as most Republicans wouldn't understand.

More...