State House, Senate clash over 2015-16 budget
RALEIGH — The N.C. House has passed a spending plan of $22.1 billion and sent it over to the Senate for further discussion. This measure included economic incentive funds that have been the subject of great dispute between the two chambers, for a very long time.
The House plan includes $57.8 million into the JDIG (“Job Development Investment Grant”) program for this year, which would reward companies that create jobs – subject to guidelines of the grant
In our area, Rep. Bob Steinberg favors these funds being used to bring in a major manufacturer such as an auto plant. He understands that the Senate has a different view of how to achieve job growth, but as he told me, “We need these jobs today, not several years in the future.”
The economic conditions that the Senate favors will inevitably be achieved. But until then, job growth is the most important consideration for his district. So he is working as hard as he can to fulfill that obligation to his constituents. As Steinberg put it, “tomorrow is here today.”
Look for education spending to increase. Teachers will receive raises as previously promised and the proposed budget also maintains funding for teacher assistance textbooks and digital equipment. According to the NC Department of Public Instruction, the new budget will increase spending above the growth and enrollment. This means that per-pupil cost of $5,400 per student should increase. Education officials project student enrollment throughout the state to increase by 17,000 pupils next year.
According to published reports, every schoolteacher is guaranteed a minimum salary of $35,000. These raises will also be funded, meaning that the state would spend $169 million more than last year on teacher compensation.
However, the North Carolina Association of Educators is not satisfied. Apparently, no increase is ever enough for that organization!
The budget would also extend renewable energy tax credits, albeit at a reduced amount, from 35 percent of a property’s total cost to 20 percent. The extension would be two years for solar and four years for wind energy.
This was a compromise between the various factions.
Rep. Howard Hunter III is in favor of these credits and did not want them to be reduced because solar projects have been a major economic growth creator in his part of the state. Solar energy has only come to Pasquotank County in recent months, with more planned for the area. Wind energy is still being fought by some elements within the Pasquotank community, although approved by the county commissioners several years ago.
The House budget would provide commercial properties with a credit that would be no greater than $4.5 million on investment up to $20 million. Residential properties would get a similar credit on expenses more than $10,000 up to a maximum of $22,500.
When asked about wind energy, Rep. Steinberg says that not only does he support this industry, but he is all in, despite many of his friends and supporters who oppose development of the 20,000-acre Desert Wind project on the border between Pasquotank and Perquimans counties. Each wind turbine will require 40 truckloads of concrete, but the property taxes and other financial considerations, are worth it as far as he is concerned.
Finally, we spoke with Rep. Steinberg about the transportation issues in the current budget. Again, as before, the Senate has a much different approach to economic incentives, as we have reported previously.
The Senate has opposition to popular tax breaks and other disagreements with the House, says Steinberg. He is more optimistic that the Senate will eventually pass the economic incentive package, commenting that even though a Volvo plant has been lost to South Carolina, there are other good prospects for landing a new vehicle manufacturing plant in North Carolina.
He hopes any future plant will be no further from his district than Edgecombe County so that employees from his district can compete for those jobs. He stated that funding for water and sewer related projects through grants and other programs plus the restoration of Historic Tax Credits are in the budget. You may recall that Historic Tax Credits were used in the upcoming project to renovate the Hinton Hotel in downtown Edenton, turning the structure into a place, which could transform Historic Edenton into a full-service vacation destination.
In a related matter, the General Assembly repealed the privilege license last year, which was a tax collected on businesses for the “privilege” of operating their business in their city or town. But efforts to allow the cities and towns to impose that tax continued. State legislators eliminated the tax after concluding that it was unusually high for some towns or cities.
In this case, Elizabeth City would lose approximately $240,000. To make up this shortfall, the City Council recently deliberated the possibility of passing the a 2.5 cent property tax increase to make up the difference — again placing the burden on taxpayers rather than looking for cost savings.
Reps. Steinberg and Hunter said there’s been no conversation about re-instituting privilege licenses by some of the larger cities, which will be losing millions of dollars in revenue. Again, there are substantial differences of opinion regarding broader tax policy between the House and Senate leaders. Therefore, what form replacement revenue may take is completely unknown.