Contentious issues to dominate legislative session

by Molly Parker, Wilmington Star-News, May 10, 2014.

State legislators come back to Raleigh Wednesday for the start of the short legislative session, where the primary aim is to balance a two-year budget in the face of a Medicaid shortfall.

But other major issues are brewing in the background, including whether lawmakers will extend incentives for the film industry that play a major role in Wilmington's backyard and how policy makers will tackle water protection in wake of the coal-ash spill in the Dan River. Pay raises for teachers and state employees also is on the docket, and heated debate over the state's energy policy is expected, among other issues.

Here's a look at some of the big-ticket items before the legislature that will affect Southeastern North Carolina:

BUDGET

The main purpose of the so-called short legislative session is to tweak the two-year budget passed during last year's long legislative session. What happens with the budget is the backbone of crucial issues facing Southeastern North Carolina – such as the extension of the film incentives, whether there is new funding for beach nourishment and dredging, and how much or whether local teachers and state employees will see their pay increase.

But there's an elephant in the room: Medicaid shortfalls, coupled with botched revenue projections. The N.C. Department of Health and Human Services said it was unclear how much more money it will need for the health program for the disabled and needy above what was budgeted.

FILM INCENTIVES

One of the most highly anticipated short session debates affecting Southeastern North Carolina is whether incentives for the film industry will be extended beyond their scheduled sunset date at the end of the year.

The film incentives, beefed up by the Democratic-controlled legislature in 2010, allow film companies to recoup 25 percent of their qualifying expenses. Prior to this juicing, the state's film industry was languishing, and some fear any structural changes will send the industry packing for a more favorable state. Yet others believe that the incentives are big on star-powered glitz and glam and light on economic benefit. Various studies differ in their takes on the matter.

HISTORIC PRESERVATION TAX CREDITS

Also caught up in the debate about whether to incentivize or not are historic preservation tax credits, which like the film incentives are scheduled to sunset at the end of the year. In Wilmington, there have been more than $46 million in historic preservation tax credit projects completed since 1998, of which about $38 million was for commercial projects.

Under the state program, which piggybacks on a federal credit, commercial users receive a 20 percent credit and residential users a 30 percent credit on all expenditures. The residential credit has a $25,000 threshold.

Gov. Pat McCrory said he supports the program but wants to redefine it. Detractors say special carve outs in the tax code stymie efforts to create an overall business-friendly environment.

ENVIRONMENT

One of the most controversial and pressing issues lawmakers will take up in the short session is dealing with the fallout of the Duke Energy coal-ash spill in the Dan River, which sparked a federal probe. There are coal ash ponds located in 14 places throughout the state, including the Sutton Plant just north of Wilmington.

Environmentalists say the massive spill that drew national attention should serve as a wake-up call to others living near the power utility's coal ash dump sites. Though McCrory, a former Duke executive, has been criticized for what some see as a too-cozy relationship with the power company, the governor has outlined a legislative plan to address the coal-ash ponds.

ENERGY POLICY

North Carolina, a retirement mecca, is one of the fastest growing states in the nation, and Southeastern North Carolina, particularly Brunswick County, is home to a burgeoning population. All those extra people translate into a growing need for energy. Some say it's time to look for home-grown solutions such as fracking and offshore drilling, and lawmakers are primed to consider controversial new energy policies during the short session.

TRANSPORTATION

North Carolina is on the precipice of a perfect financial storm when it comes to paying for roads and bridges as the state's primary funding source, the gas tax, makes up a dwindling piece of the transportation funding pie and gridlock in Washington threatens federal funding.

Because people are driving less miles and more fuel-efficient cars, the revenue source that has been in place since 1921 is not bringing in enough money to support road projects and improvements. That means lawmakers will have to address transportation funding sooner rather than later or further gridlock with ensue and the state's ability to attract major industry will dwindle, state transportation officials say.

Education

This legislative session should bring a dose of good news to teachers and state employees – and their wallets – as the governor and other top leaders all seem to agree that a pay raise is in order.

McCrory is pushing for a 2 percent pay raise for teachers, in addition to a longer-term solution that revamps the way teachers are paid. That long-term plan would base pay on a number of factors: experience, credentials, performance, market competition and leadership roles. McCrory has said his plan would reward star performers, particularly those serving hard-to-fill niches. He also proposed a $1,000 pay hike for state employees.

The General Assembly's Republican leadership has expressed support for teacher and state employee raises without giving a specific endorsement of the governor's plan.

COMMERCE PRIVATIZATION

 Some of the state's job recruitment and retention functions may go the private side. The state has created an N.C. Partnership for Economic Development, to work in tandem with state government, but enabling legislation for Commerce to transfer some of its functions to the partnership stalled during last year's long session. Lawmakers are likely to tackle once again a proposal that could transfer to the partnership such areas as sales and marketing, international trade and travel and tourism.

The N.C. Film Office, which helps bring film employers to Wilmington and other locations, also could be transferred – a move with which not everyone agrees.

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