Reviewing North Carolina’s FY2017-19 Budget

Posted on July 12, 2017 by admin in Agriculture, Appropriations, Budget, Economy, Education, Environment, Government Reform, Health, Justice, Law Enforcement, Medicaid, Pension Reform, Public Assistance, Public Employees, Public Safety, Tax Reform, Taxes, Technology, Transparency, Transportation, UNC, Veterans

Planning your summer vacation and looking for some light beach reading? Joseph Coletti over at the John Locke Foundation has you covered with a comprehensive analysis of this year’s state budget:

A New State Budget Based On Time-Tested Principles

In his 1985 address to the North Carolina Foundation for Research and Economic Education (NC FREE), Gov. James Martin laid out three keys to a more conservative view of government. The first was to elect more conservative, business-oriented political leaders. The second was to reduce taxes at all levels. The third was to keep government spending in check and improve government productivity and efficiency.¹ These core principles reflected a broad agenda for sustained conservative reforms Martin and his political and policy advisers had developed months prior.²

Just over 25 years after Martin’s address, North Carolina voters elected a Republican legislative majority that elevated conservative, business-oriented political leaders to leadership positions in the General Assembly. Under their leadership and the leadership of their successors, they have passed budgets and advanced policies that reflect the conservative view of government Gov. Martin articulated decades earlier—the elimination and reduction of taxes on all North Carolinians, prudent spending and savings, and a renewed focus on improving government productivity and efficiency. The 2017-19 biennial budget continues that tradition.

With the support of two Democrats and the abstention of a third in the House, the General Assembly overrode Gov. Roy Cooper’s veto of a budget that largely continues the restraint needed for long-term fiscal sustainability. The spending increase is larger than the average over the past five years, but it spends less per person when adjusted for inflation.

The budget will spend $23 billion in state tax dollars in the fiscal year that ends June 30, 2018, and $23.6 billion the following fiscal year. It includes another $3.7 billion each year for transportation projects and sets the stage for another round of broad income tax reductions in January 2019. Overall General Fund appropriations will grow by $1.3 billion, or 5.9 percent, over two years. Such budgetary restraint means state government will take less, adjusted for inflation, from every North Carolinian.

Legislators also set aside $263 million for the Savings Reserve, state government’s “rainy-day fund,” in addition to restoring $100 million that had gone to relief for residents affected by Hurricane Matthew. They devoted $125 million to repairs and renovations of government-owned facilities. Provisions in the budget, and in a bill passed earlier this year, should make future funding of the rainy-day fund and state capital needs more secure.

On the personnel side, teachers will receive, on average, a 9.6 percent pay raise over two years, state employees will receive a $1,000 raise, and other state-funded salaries will also rise. Across all agencies, the state will pay $642 million, or 5.6 percent, more in salaries from the General Fund in Fiscal Year (FY) 2018-19 than in FY2016-17. Adding health insurance and retirement benefits to salary, total compensation climbs $967 million, or 6.5 percent. The budget also includes a provision (Section 35.21) to study whether the state is allocating compensation resources in the most productive way and addressing the unfunded liability for future health care costs.

Savings

When a government spends less than it collects in taxes, there is more opportunity to address unfunded liabilities or respond to natural disasters or economic downturns. Currently, the Savings Reserve Account contains the equivalent of about one month of state spending at current levels. That amount is still nowhere near the share of annual state spending necessary to weather a recession, but it is more as a share of spending than at any time in its history.

The General Assembly has created a mechanism to ensure the adequacy of the Savings Reserve Account, instituting mandatory transfers beginning in FY2018-19 and placing restrictions on how its funds can be used. The new law sets a lower bar of 15 percent of new tax revenue after tax law changes for the year if the Savings Reserve is below the threshold agreed upon by the Office of State Budget and Management and the Fiscal Research Division of the General Assembly.

The budget bill itself includes a provision, taking effect in 2019, to set aside 4 percent of total General Fund tax revenue in a single pool to cover capital investments, repairs, renovations, and debt service. This Capital and Infrastructure Reserve replaces the Repairs and Renovations Reserve, which previous law mandated to receive 25 percent of unreserved fund balances but which rarely did in past budgets. Paying for capital from existing funds without adding new debt, and making debt service the first priority for funds in this new reserve, should help North Carolina keep its AAA bond rating.

Low spending and an adequate rainy-day fund should mean less temptation to hike taxes when the next recession comes. The budget is not set to spend every dollar, and savings can offset some of any future unplanned reductions in revenues. If spending and taxes are predictable, people can make long-term plans. The reader may recall that sales tax hikes in the 2000s began as temporary. The first became permanent after repeated extensions; the second was kept temporary when the new Republican majority, overriding Gov. Beverly Perdue’s veto, let the tax expire in 2011. Regularly renewed temporary taxes were no way to run a state, and they seem unlikely to return in the next downturn if the General Assembly stays on its current path. A commitment to lower spending and to set aside savings provides needed fiscal predictability, consistency, and responsibility.

Taxes

Tax changes in the biennial budget are generally broad-based, with lower corporate and personal income tax rates, a higher standard deduction, repeal of the sales tax on mill machinery, and a reduction in the franchise tax for small companies. The budget also changes how taxes are reduced for families with children. Beginning in January 2019, income tax rates will drop for corporations and individuals, and the standard deduction will increase. Broad reductions in tax rates or increases in the standard deduction do not “give away” the state’s money, as some have claimed.³ Instead, lower taxes limit the ability of legislators to give money collected from some citizens to favored organizations or people. A larger standard deduction has a greater impact for those with less income and makes it less likely for wealthier taxpayers to try gaming the system with itemized tax deductions.

Unlike lower tax rates and a larger standard deduction, which reduce taxes for anybody paying the personal income tax, converting the per-child tax credit to a tiered tax deduction will mean slightly higher taxes (from $21.25 to $49.50 per child) for married couples filing jointly who have taxable income of $60,000 to $100,000 after all changes take effect. It seems likely that legislators will address this problem with larger deductions for that income range when they return in 2018, if not sooner.

A lower franchise tax reduces the cost of starting or growing a business in the state. More importantly, it does so without picking winners and losers. Reducing a tax for a wide range businesses, as opposed to granting special carve-outs or incentives, means energy suppliers, Hollywood studios, multinational companies, and recipients of taxpayer-funded grants in recent years are placed on equal footing with small-business owners.

Legislators could have reduced tax burdens in ways that provided more marginal economic gains, such as repeal or reform of the capital gains tax, but the changes they enacted are largely positive. Fortunately, the budget does not include a proposed increase in the mortgage interest and property tax deduction that would have had little benefit for most people or the economy.

The $529 million tax cut legislative leaders advertised mostly takes effect in January 2019, which means just six months of the lower revenue show up in the budget. Its full-year impact will be closer to $1 billion beginning in FY2019-20.

Transparency

Several provisions improve the ability of management, legislators, and the public to understand state government finances and operations, and to hold government accountable for performance.

While the budget provides no new funds for the Office of State Budget and Management (OSBM) to create a website that makes state budgets easier to understand and analyze, lawmakers reiterated their expectation to have a website by January 2018 and provided funds so the Department of Health and Human Services could remove Social Security numbers from its databases. The inclusion of personally identifiable information in financial databases was one of the factors that has kept more information on these programs unavailable online.

The N.C. Community College System keeps its money to plan an enterprise resource planning system that helps its institutions manage their finances and other business processes. The University of North Carolina System and the Department of Public Instruction each receive appropriations to begin planning similar systems to improve their respective fiscal operations. The statewide accounting system in the State Controller’s Office is also slated for an update with appropriations to begin planning and design.

Finally, some nonstate entities that receive government funding must now report to OSBM their planned activities and outcomes, though there is no follow-up check to see how they perform.

Education

The education budget fully funds enrollment growth and increases salaries for all school personnel. Teachers receive, on average, a 3.3 percent raise in the first year and a 9.6 percent raise over the biennium. Principals receive higher pay and have their salaries based on school size and performance. Assistant principals move to a new salary schedule that pays them 1.7 percent more than teachers with comparable credentials and experience.

A Joint Legislative Task Force on Education Finance Reform will evaluate paying for schools based on the needs of each student, rather than on multiple enrollment- and personnel-based formulas, which can simplify school funding while making it more responsive. The Opportunity Scholarship Program will receive its scheduled $10 million increase and has future increases over the next 10 years included in the base budget, so a new class of students each year can find private alternatives. The budget provides initial funding for education savings accounts (ESAs) that can be used to pay for multiple qualifying educational expenses, rather than just tuition at a private school.

The Superintendent of Public Instruction gains $700,000 to hire as many as 10 additional employees, while the State Board of Education loses both vacant and filled positions. The Board, which has filed suit to stop a state law granting more authority to the State Superintendent, will lose its ability to hire private counsel. The Department of Public Instruction will be audited and will have to cut $7.3 million by the end of FY2018-19 at the discretion of management.

The budget places renewed emphasis on early childhood education and career and technical education. It creates a new Associate Superintendent of Early Education and a B-3 Interagency Council to integrate early childhood programs and elementary schools. Additionally, the N.C. Community College System will assume control of the state’s apprenticeship program, which had been housed at the Department of Commerce.

Elizabeth City State University receives $4.8 million over two years to stabilize its operations. The Brody School of Medicine at East Carolina University will receive $4 million each year in recurring funds for the same purpose. Although they are categorized similarly, the differences in funding indicate differences in the needs of the programs.

Two appropriations will make higher education more accessible. First, in-state students at Elizabeth City State University, Western Carolina, and UNC-Pembroke will pay $500 per semester for tuition, and out-of-state students will pay $2,500 through a new NC Promise program that will add $11 million in annual funds beginning in FY2018-19, bringing the total appropriation for the program to $51 million. Second, senior citizens will receive the opportunity to audit classes for free at any UNC campus. To help with accountability across the UNC system, the Board of Governors will receive an appropriation for staffing of its own, thus no longer needing to rely on the UNC General Administration staff to provide information and support.

Community colleges received $1 million in 2016 to develop an enterprise resource planning system (ERP) to manage operations and finance. The Department of Public Instruction received $29 million for business systems, including an ERP, and the UNC system received $10 million for data management and a new ERP. These systems are intended to share information with one another and with a statewide ERP at the Office of the State Controller that received $13 million in nonrecurring funds for the biennium. A 2015 presentation estimated the total cost of a comprehensive ERP system at $301 million with the promise that managers, legislators, and the public will be able to understand the cost of running the government and use it to gauge the return on their investment.

General Government

Legislators took $1 million in funding from the Governor’s office and $10 million from the Justice Department, made the Speaker of the House and President Pro Tem of the Senate primarily responsible for defending the constitutionality of state laws, and limited the ability of the Governor and Attorney General to hire private counsel for lawsuits.

Reorganizations include a transfer of the Human Relations Commission, which deals with housing discrimination, from the Department of Administration, where it was one of a hodgepodge of offices, to the Office of Administrative Hearings, the state’s regulatory court system. The Industrial Commission, which deals with workers’ compensation and other injury claims, moves from the Commerce Department to the Department of Insurance. And the Employment and Workforce Development Commission moves from the governor’s office to the Department of Public Instruction.

Health and Human Services

In the Department of Health and Human Services budget, the biggest news is what did not make the budget—a proposed expansion of Medicaid, the state portion of which would have been funded by a tax on hospitals and the federal portion of which would have grown the total federal contribution nearly 25 percent, to $13 billion a year. This unrealistic and unworkable idea was dead on arrival.

As mentioned in the education section, a new formal structure will connect early childhood education efforts in the Department of Health and Human Services and the Department of Public Instruction. Another 3,525 children will have slots available for them in the NC Pre-K program, thanks to a $27 million funding increase.

For children in troubled families, the budget includes provisions and new funding to further reform the child welfare system, with an emphasis on foster homes for children from state-recognized tribes. And there is also new funding to tackle the opioid addiction problem.

Justice and Public Safety

Although the Senate included language that would create a separate department for adult and juvenile corrections, the final budget keeps the structure of the Department of Public Safety intact. The North Carolina Commission on the Administration of Law and Justice report earlier this year recommended the state “raise the age” at which a person could be tried as an adult, to 18 for all misdemeanors and nonviolent felonies. This brings North Carolina in line with every other state. The budget appropriated $997,600 over two years to plan for these changes to take effect. It also recommended improvements in local courts. The budget provides funding for 96 new deputy clerks by July 2019 and 31 new assistant district attorneys to help improve access to the courts. Overall funding for Justice Public Safety increased $100.2 million.

Natural and Economic Resources

The Division of Environmental Assistance and Customer Service would have been eliminated in the Senate budget. It survives, but with fewer staff in its regional offices and without the Utility Savings Initiative, which is transferred to the State Energy Office. Shellfish and water infrastructure receive special attention and additional funding.

Despite years of research concluding that targeted incentives do not work, funding for Job Development Investment Grants (JDIG) and the One North Carolina Fund receive only temporary reductions totaling $13 million. A provision opens a new category for large facilities ($500 million and 1,750 employees) that can be financed through JDIG. Incentives for film productions remain grants, despite Gov. Cooper’s attempt to make them tax credits again, but funding each year will be more than $30 million, an increase from $15 million. The Commerce and Agriculture departments received more than $5 million to market North Carolina and food products to the rest of the world.

Transportation

Airports across the state will receive $132 million of the $7.2 billion for transportation funding over the next two years for capital improvements and repairs. The Ports Authority will receive a $10 million increase in funding and will be given more independence with its own fund under the Highway Trust Fund. Lawmakers continue to prop up the Global Transpark with $800,000 in appropriations over two years. Also in transportation, bridge preservation and maintenance of roadside environments receive dedicated funding, rather than being lumped together with other projects in the General Maintenance Reserve. The bridge preservation program reaches $85 million in recurring funding in the second year. Roadside environments, such as wildflowers and rest areas, receive $105 million each year.

Employee Compensation and Retirement Benefits

State employees besides teachers and principals will receive raises of $1,000 per year and three extra days off they can use at any time. Retired state employees will receive a permanent 1 percent cost-of-living increase in pension payments. No other changes were made to the pension system, as State Treasurer Dale Folwell initiates measures to change the internal operations of state investments on behalf of employees and retirees.

Health benefits for employees and retirees were complicated by a court ruling that higher premiums for retirees violated their contracts, even if those premiums were in line with changes for active employees. The State Health Plan’s governing board approved changes for 2018 that would charge $25 monthly premiums for employees who currently pay nothing, and increase premiums from $15 to $50 a month for employees with more comprehensive insurance. A budget provision makes new state employees hired in 2021 or later ineligible for state health benefits in retirement.

Conclusion: Good Times But Caution Ahead

The Republican-led General Assembly has had a good track record of assembling sound, fiscally responsible budgets. Its latest General Fund budget, while spending less per person adjusted for inflation than authorized for the current year, sets a long-term path for appropriations and taxes that may require a future course correction.

In April, we wrote that the Senate’s tax cut did not portend a looming crisis, but our analysis was based on General Fund growth of roughly 2.5 percent per year. Instead, the final budget grows 3.1 percent in the first year and 2.7 percent in the second year, and could go higher when the General Assembly makes budget adjustments in 2018.

The final budget also opens a hole in what had been a firm baseline for spending. Before 2013, the budget would automatically increase to cover the same services, just for more people at higher prices. The General Assembly fixed the baseline to maintain spending from year to year. A provision to include “adjustments for statutory appropriations and other adjustments as directed by the General Assembly” in the base budget opens the possibility of making future baselines more like the old system. The provision’s main purpose is to incorporate annual $10 million increases in funding for Opportunity Scholarships for the next 10 years, as mentioned earlier. It sets a troubling precedent, even though the funds support worthwhile programs, and the legislature should debate spending changes each year.

Taxes, meanwhile, may be $1 billion lower each fiscal year once fully implemented, but the cuts will not be immediate. The $529 million tax cut legislative leaders advertised mostly takes effect in January 2019, which means just six months of the lower revenue show up in the budget.

Despite our concerns, the potential challenges this budget could leave in the longer term are significantly different from the budgets passed between 2001 and 2010, when nonrecurring revenues were repeatedly tapped to cover recurring costs. Perhaps legislators will refrain from adding new appropriations when they return next year, keep the budget on track, and continue the conservative legacy of Gov. Martin. Today’s legislative leaders should continue the commitment to lower taxes, keep government spending in check, and improve government productivity and efficiencies.

Endnotes

“North Carolina Foundation for Research and Economic Education: Raleigh, December 3, 1985,” in Poff, Jan-Michael, Ed., Addresses and Public Papers of James Grubbs Martin: Governor of North Carolina, Volume 1: 1985-1989, Raleigh, N.C.: Division of Archives and History, Department of Cultural Resources, 1992, p. 219.
Hood, John, Catalyst: Jim Martin and the Rise of North Carolina Republicans, Winston-Salem, N.C.: John F. Blair Publisher, 2015, p. 181.
“Editorial: Still time to fix state budget into one that helps all North Carolinians,” Capitol Broadcasting Company. June 16, 2017.

The preceding article was written by Joseph Coletti, senior fellow at the John Locke Foundation focused on fiscal policy issues. It first appeared on their website on July 11, 2017 and reappears here with the gracious permission of the publisher. For a PDF version of this article, click here. For a historical and comparative analysis of the state budget, please click on this link and scroll to the bottom of the page to find “Appendix: Budget History.”

Freeing the Mimosa

Posted on July 10, 2017 by admin in Beer, Brunch, Business, Celebration, Economic Development, Food, Hard Cider, Jobs, Local Government, Municipal Government, Recreation, Spirituous Liquor, Taxes, Wine

Lawmakers in Raleigh passed bipartisan legislation at the end of June giving more authority to cities and counties to relax certain prohibitions on the sale of alcohol.

Senate Bill 155, the culmination of months of work, is catch-all legislation reforming more than a dozen alcoholic beverage control (ABC) laws. The final bill combined three different pieces of legislation, including House Bill 500, focusing on craft breweries, and House Bill 480, a tax compliance bill aimed at helping craft brewers.

But the main focus ever since the bill was proposed has been on a provision that enables local governments to pass their own resolutions, if they so choose, allowing restaurants, bars, hotels, and retail outlets (such as grocery stores) to begin selling their normal offerings of alcohol products (beer, wine and/or cocktails) beginning at 10 a.m. on Sunday mornings instead of at 12 noon.

The “brunch bill,” as it is often called, represents the latest reform to the state’s long-standing ban on Sunday morning alcohol sales. The legislation’s supporters hope to see a significant bump in summer sales (and tax revenues) as a result.

Blue Laws

“Many people don’t understand is why it is hard to enact laws related to alcoholic beverages,” commented Representative Chuck McGrady, the legislation’s lead advocate in the House. “In the not-so recent past, consumption of alcoholic beverages was a controversial issue.”

The limitation on Sunday sales was originally enacted in deference to morning church-goers as part of what are known as “blue laws” — referring to the colored paper they were once printed on — which were put in place to acknowledge that Sunday should be set aside for worship. Blue laws go back to the time before the founding of our republic.

In 1716, the colonial assembly of North Carolina first adopted the “Sabbath Observance Act,” which prohibited profanity, prostitution, and other sketchy activities on Sunday, writes NCpedia author Harry McKown. These laws took a variety of forms over the centuries, with both local and state versions, including a 1741 act that called for “suppressing profanities, immorality, and diverse other vicious and enormous sins.”

More recently, North Carolina’s “Sunday Closing Laws” were instituted in 1961 to restrict even general commerce on the Christian holy day. It was later overruled by the state Supreme Court as being too vague and inconsistent.

Other laws have been instituted over the years restricting Sunday alcohol sales. Originally, the prohibition extended to the entire day; in 1981, a law was passed to allow Sunday alcohol sales to start at 1 p.m.; in 1993, sales were permitted to start at 12 noon. With passage of this year’s reforms, unless local governments vote to change the time to 10 a.m., alcohol still cannot be purchased between 2 a.m. and noon. North Carolina’s ABC stores will continue to remain closed on Sundays.

With the Senate Bill 155 now law, North Carolina joins 47 other states that allow some form of Sunday morning alcohol sales.

Opting-in

The bill was signed into law on Friday, June 30, and went into effect immediately as a local “opt-in” law, shifting the responsibility to city and county governments which must now pass local resolutions authorizing Sunday morning sales in their communities.

A local resolution of this nature would constitute what’s called a “police power ordinance,” and local governments can pass such resolutions without holding public hearings (which are permitted but not required). Under General Statute 160A-191, cities are required to hold public hearings only when passing ordinances that restrict business activities on Sunday, but not for ordinances that expand them — which the “Brunch Bill” clearly does.

Regarding the term “police power,” Trey Allen of the UNC School of Government writes, “the term stands for the broad authority the General Assembly has delegated to cities and counties in G.S. 160A-174 and G.S. 153A-121, respectively, to enact ordinances governing ‘acts, omissions, or conditions detrimental to the health, safety, or welfare of [their] citizens and the peace and dignity of [their jurisdictions].’ (It also includes the authority to define and abate nuisances.) The police power underlies ordinances involving matters as diverse as loud noises, dangerous animals, door-to-door solicitations, overgrown vegetation, and business regulation.”

When a county’s governing board passes this sort of ordinance, it does not apply to any incorporated municipality located in that county; the rule, contained in G.S. 153A-122(a), is that a county ordinance can only apply to unincorporated areas of the county. Incorporated municipalities (towns, villages and cities) must pass their own local resolutions authorizing Sunday morning alcohol sales. (For expert guidance on how cities and counties can adopt a local brunch bill ordinance, see “Sunday Brunch Ordinances” by Norma Houston of UNC School of Government.)

Many of North Carolina’s municipalities have already shown an interest in passing local “brunch bills” and the new law has sparked a Twitter advocacy campaign with the hashtag #FreeTheMimosa.

Asheville. The Asheville City Council has a brunch provision on its July 25 meeting agenda;
Atlantic Beach. The coastal city of Atlantic Beach has announced the passage of their brunch bill resolution on July 3;
Carrboro. The City of Carrboro wasted no time in in becoming the first to adopt a brunch bill resolution. “The ink was barely dry after the governor signed the bill into law before the Carrboro Board of Aldermen called a special meeting” voting unanimously on July 3 to allow alcohol sales starting at 10 am. on Sundays, reports Spectrum News. “There was very little discussion. We were all really excited when it became evident that we would be able to pass this ordinance,” board member Jacquelyn Gist told WRAL;
Chapel Hill. The City of Chapel Hill has indicated an interest;
Charlotte. The City of Charlotte could vote a resolution at their July 24 meeting following committee review of the proposal;
Durham. The City of Durham has indicated an interest;
Fayetteville. Fayetteville has put a measure on its August 3 agenda and Mayor Nat Robertson says he hopes to have it legal there by September 1. “It’s common sense to me,” Robertson said.
Guilford County. In Guilford County, Republican Commissioner Justin Conrad said that he would support the board in allowing earlier Sunday sales. “I work in the tourism and hospitality industry and understand the benefits of this bill for restaurateurs, as well as increased tax revenue for our county,” Conrad told the High Point Enterprise. “With the third-largest airport in North Carolina with a large commuter presence, I think it would make sense for Guilford County to allow these sales.” Fellow Commissioner Hank Henning of High Point agreed saying, “I would vote to opt in. The government needs to get out of it altogether, in my opinion. It’s something you are legally allowed to do with the age requirements.”
Hendersonville. BlueRidgeNow reports that the Hendersonville City Council approved a brunch bill resolution by a 4-1 vote during its July 6 meeting, where the item was quickly added to the agenda. Their resolution became effective immediately;
Hillsborough. The City of Hillsborough will consider adopting a resolution at their July 20 public hearing;
Huntersville. The City of Huntersville has indicated an interest;
Mecklenburg County. The Mecklenburg County Board of Commissioners plan to take a vote on a proposed resolution Tuesday, July 11. The county resolution only applies to the unincorporated areas of the county, so cities within the county (including Charlotte) would have to pass their own brunch bill resolutions (see above);
Raleigh. On June 30, News & Observer reporter Andy Specht Tweeted about Raleigh’s interest in getting a head start: “I asked Mayor Nancy McFarlane when the Raleigh City Council might vote to allow early Sunday alcohol sales and she said, ‘As soon as we can!!’” How soon is now? Raleigh’s city council voted 7 to 1 on Wednesday, July 5, to allow Sunday morning alcohol sales, CBS North Carolina reported. So far, many of the state capital’s restaurants are getting on board.
Surf City. The coastal town of Surf City announced the passage of its brunch bill resolution on July 5.

Some municipalities are not so enthusiastic, however. Nags Head commissioners took up a brunch bill proposal at their July 5 meeting and voted it down with a 2-3 vote, the Outer Banks Voice reports. Instead, the board opted to hold a public hearing at their August 2 meeting before taking a final vote on the matter.

Craft brewers, Home Brewers, and Distillers

Some other provisions in the 17-page ABC Omnibus Bill loosens regulations for craft brewers, home brewers, and distillers:

Home brewers of wine are no longer restricted to having their products be a “native” wine that has its alcohol content produced by natural fermentation;
Beer brewers can now sell “crowlers” — 32-ounce cans filled with fresh craft beer from the source and sealed on-site (can + growler = crowler);
Beer taprooms have the option to sell liquor and mixed drinks;
Farmer’s markets are added to the list of places where a winery may offer free tastings and sell its wine by the glass or in closed containers;
Distilleries can give free tastings at trade shows, festivals, and other events; and
Distilleries can sell up to five bottles of spirituous liquor per year at the distillery to consumers who takes a tour of the distillery. In 2015, Gov. Pat McCrory signed House Bill 909 into law which allowed distilleries to sell each customer one bottle per year.

North Carolina already has 45 operating distilleries and 22 more in the pipe, according to The North Carolina Distillers Association, which has spent years asking the state legislature to reform the Prohibition-era regulations on distilleries.

Other Provisions

Some other provisions of SB155, according to the Asheville Citizen-Times, that are now state law:

Even in dry counties, farms that produce barley and other grains, hops, and fruit can use their own products to brew beer for on- or off-premise consumption with the proper permitting and local approval;
Retail businesses can now sell wine for on-premise consumption with proper permitting, even if they don’t serve food;
Breweries are no longer limited to selling their own products, and may now obtain permitting to serve liquor;
Brewers can now legally offer tastings of beer in their breweries, as well as give out free samples on brewery tours. This was common practice before, but now it’s expressly laid out as legal; and
Homebrew competitions are now expressly legal.

NC is Best State for Starting a Business

Posted on July 6, 2017 by admin in Business, Economy, Regulatory Reform, Tax Reform, Unemployment Reform

Study: North Carolina is best state for starting a business

by Danielle Chemtob, TBJ News Intern, Triangle Business Journal

Entrepreneurs and business owners need look no further than the Tar Heel state to set up shop — North Carolina came out on top in a new study of the best states to start a business.

The study, conducted by Fit Small Business, cited the state’s labor market and taxes as driving an ideal environment for business owners. Fit Small Business, out of New York City, says it provides research to help small business owners make wiser decisions.

The researchers used data from the U.S. Bureau of Labor Statistics, the Kauffman Foundation and the Small Business Administration to rank states on seven categories — access to capital, startup activity, taxes, cost-of-living, labor market, quality of life and cost of starting a business.

The study took corporate, individual income, unemployment insurance, property and sales taxes into account, ranking North Carolina 11th nationally for tax rates. At 3 percent, North Carolina’s corporate tax rate is the lowest of any state levying a corporate tax, according to the Tax Foundation, and is set to be reduced to 2.5 percent beginning in 2019 after to the North Carolina General Assembly’s latest budget.

Raleigh’s educated population and its high-quality research facilities earned it the top spot among cities statewide for starting a business. More than 40 percent of Raleigh’s population over 25 held at least a four-year degree, compared to just over one-third of Americans nationally.

The state’s startup activity also ranked highly — a category that took the rate of entrepreneurs and the survivability of business into account.

The preceding article first appeared in the July 3rd edition of the the Triangle Business Journal. Click on the link to read the full article.

We hold these truths to be self-evident

Posted on July 4, 2017 by admin in Celebration, Civics, Culture, History

IN CONGRESS, July 4, 1776

The unanimous Declaration of the thirteen united States of America,

When in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.

Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security. Such has been the patient sufferance of these Colonies; and such is now the necessity which constrains them to alter their former Systems of Government. The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States. To prove this, let Facts be submitted to a candid world.

He has refused his Assent to Laws, the most wholesome and necessary for the public good.
He has forbidden his Governors to pass Laws of immediate and pressing importance, unless suspended in their operation till his Assent should be obtained; and when so suspended, he has utterly neglected to attend to them.
He has refused to pass other Laws for the accommodation of large districts of people, unless those people would relinquish the right of Representation in the Legislature, a right inestimable to them and formidable to tyrants only.
He has called together legislative bodies at places unusual, uncomfortable, and distant from the depository of their public Records, for the sole purpose of fatiguing them into compliance with his measures.
He has dissolved Representative Houses repeatedly, for opposing with manly firmness his invasions on the rights of the people.
He has refused for a long time, after such dissolutions, to cause others to be elected; whereby the Legislative powers, incapable of Annihilation, have returned to the People at large for their exercise; the State remaining in the mean time exposed to all the dangers of invasion from without, and convulsions within.
He has endeavoured to prevent the population of these States; for that purpose obstructing the Laws for Naturalization of Foreigners; refusing to pass others to encourage their migrations hither, and raising the conditions of new Appropriations of Lands.
He has obstructed the Administration of Justice, by refusing his Assent to Laws for establishing Judiciary powers.
He has made Judges dependent on his Will alone, for the tenure of their offices, and the amount and payment of their salaries.
He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance.
He has kept among us, in times of peace, Standing Armies without the Consent of our legislatures.
He has affected to render the Military independent of and superior to the Civil power.
He has combined with others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation:
For Quartering large bodies of armed troops among us:
For protecting them, by a mock Trial, from punishment for any Murders which they should commit on the Inhabitants of these States:
For cutting off our Trade with all parts of the world:
For imposing Taxes on us without our Consent:
For depriving us in many cases, of the benefits of Trial by Jury:
For transporting us beyond Seas to be tried for pretended offences
For abolishing the free System of English Laws in a neighbouring Province, establishing therein an Arbitrary government, and enlarging its Boundaries so as to render it at once an example and fit instrument for introducing the same absolute rule into these Colonies:
For taking away our Charters, abolishing our most valuable Laws, and altering fundamentally the Forms of our Governments:
For suspending our own Legislatures, and declaring themselves invested with power to legislate for us in all cases whatsoever.
He has abdicated Government here, by declaring us out of his Protection and waging War against us.
He has plundered our seas, ravaged our Coasts, burnt our towns, and destroyed the lives of our people.
He is at this time transporting large Armies of foreign Mercenaries to compleat the works of death, desolation and tyranny, already begun with circumstances of Cruelty & perfidy scarcely paralleled in the most barbarous ages, and totally unworthy the Head of a civilized nation.
He has constrained our fellow Citizens taken Captive on the high Seas to bear Arms against their Country, to become the executioners of their friends and Brethren, or to fall themselves by their Hands.
He has excited domestic insurrections amongst us, and has endeavoured to bring on the inhabitants of our frontiers, the merciless Indian Savages, whose known rule of warfare, is an undistinguished destruction of all ages, sexes and conditions.

In every stage of these Oppressions We have Petitioned for Redress in the most humble terms: Our repeated Petitions have been answered only by repeated injury. A Prince whose character is thus marked by every act which may define a Tyrant, is unfit to be the ruler of a free people.

Nor have We been wanting in attentions to our Brittish brethren. We have warned them from time to time of attempts by their legislature to extend an unwarrantable jurisdiction over us. We have reminded them of the circumstances of our emigration and settlement here. We have appealed to their native justice and magnanimity, and we have conjured them by the ties of our common kindred to disavow these usurpations, which, would inevitably interrupt our connections and correspondence. They too have been deaf to the voice of justice and of consanguinity. We must, therefore, acquiesce in the necessity, which denounces our Separation, and hold them, as we hold the rest of mankind, Enemies in War, in Peace Friends.

We, therefore, the Representatives of the united States of America, in General Congress, Assembled, appealing to the Supreme Judge of the world for the rectitude of our intentions, do, in the Name, and by Authority of the good People of these Colonies, solemnly publish and declare, That these United Colonies are, and of Right ought to be Free and Independent States; that they are Absolved from all Allegiance to the British Crown, and that all political connection between them and the State of Great Britain, is and ought to be totally dissolved; and that as Free and Independent States, they have full Power to levy War, conclude Peace, contract Alliances, establish Commerce, and to do all other Acts and Things which Independent States may of right do. And for the support of this Declaration, with a firm reliance on the protection of divine Providence, we mutually pledge to each other our Lives, our Fortunes and our sacred Honor.

Representing Delaware:
George Read, Caesar Rodney, Thomas McKean

Representing Pennsylvania:
George Clymer, Benjamin Franklin, Robert Morris,
John Morton, Benjamin Rush, George Ross,
James Smith, James Wilson, George Taylor

Representing Massachusetts:
John Adams, Samuel Adams, John Hancock,
Robert Treat Paine, Elbridge Gerry

Representing New Hampshire:
Josiah Bartlett, William Whipple, Matthew Thornton

Representing Rhode Island:
Stephen Hopkins, William Ellery

Representing New York:
Lewis Morris, Philip Livingston, Francis Lewis, William Floyd

Representing Georgia:
Button Gwinnett, Lyman Hall, George Walton

Representing Virginia
Richard Henry Lee, Francis Lightfoot Lee,
Carter Braxton, Benjamin Harrison, Thomas Jefferson,
George Wythe, Thomas Nelson, Jr.

Representing North Carolina:
William Hooper, John Penn, Joseph Hewes

Representing South Carolina:
Edward Rutledge, Arthur Middleton,
Thomas Lynch, Jr., Thomas Heyward, Jr.

Representing New Jersey:
Abraham Clark, John Hart, Francis Hopkinson,
Richard Stockton, John Witherspoon

Representing Connecticut:
Samuel Huntington, Roger Sherman,
William Williams, Oliver Wolcott

Representing Maryland:
Charles Carroll, Samuel Chase, Thomas Stone, William Paca

Today is the 241st anniversary of the adoption of the Declaration of Independence. For some little-known facts about the Declaration, be sure to read this interesting piece from CNN.

Education Spending in the State Budget

Posted on June 30, 2017 by admin in Appropriations, Budget, Dan Forest, Education, UNC

Lieutenant Governor Dan Forest lays out the facts on public education spending contained in the General Assembly’s 2017-2018 Biennium Budget.

House Overrides Budget Veto

Posted on June 29, 2017 by admin in Appropriations, Budget, Cooper, Economy, Education, Speaker Moore, Tax Reform

With a bipartisan majority of 76 to 43, the North Carolina House of Representatives voted yesterday to override the governor’s recent budget veto. The budget, now state law, enacts another round of middle-class tax cuts, a fourth consecutive teacher pay raise, and a record-high savings reserve.

“The governor chose partisanship over the people of North Carolina when he rejected middle class tax cuts and a fourth consecutive teacher pay raise,” said House Speaker Tim Moore. “But the General Assembly has delivered these priorities to North Carolinians without his support.”

North Carolina’s rapid economic growth, job creation, revenue surpluses and record savings — results of fiscally responsible budgets for the last seven six years — are among the best in the nation. When Republicans took the majority in 2011, North Carolina suffered with a $2.5 billion structural deficit, was saddled with an additional $2.7 billion debt, had the highest taxes in the southeast, and more than one in ten people were unemployed.

According to the National Association of State Budget Officers’ Fiscal Survey of States, two thirds of other other states faced budget shortfalls in 2017, while nearly half were forced to make mid-year budget reductions because of stagnant revenue collections.

In contrast, under Republican leadership, North Carolina has paid off its debt and secured $1.8 billion in savings reserves. Since 2011, the General Assembly lowered the sales tax rate, the income tax rate and the corporate tax rate — moving our state from 44th worst to 11th best in the nonpartisan Tax Foundation’s State Business Tax Climate Index. Additionally, the Republican-led General Assembly has passed dozens of pro-growth regulatory reforms since 2011 that have made a major impact on the state’s positive economic and fiscal outlook.

Targeted tax relief for the less fortunate

The General Assembly’s tax relief removes 95,000 low-income North Carolinians from any income tax liability. The General Assembly’s budget increases the percent of total tax liability for those making more than $100,000, and lowers the percent of total tax liability for those making less than $100,000. Republicans have tripled the zero-tax bracket for married families since 2013, helping those who earn the least the most. Tax relief has consistently produced record savings and budget surpluses this decade, contrasting the deficits and debt that resulted from four sales tax increases by Democrats last decade.

Teacher raises and investing in education

The 2017 state budget increases public education spending by over $700 million from the previous biennium.

North Carolina has had the fastest rising teacher pay in the nation since 2014, according to PolitiFactNC and National Education Association data. The 2017 state budget is the fourth consecutive teacher pay raise delivered to North Carolina educators by the Republican-led state legislature, which also increased total educating spending by hundreds of millions of dollars every budget cycle since 2012.

The General Assembly also provides supplement incentive programs for North Carolina educators including Teach for America, Salary Supplements for Highly Qualified Graduates, the Teacher Assistant Tuition Reimbursement Program and the N.C. Teaching Fellows. UNC System President Margaret Spellings voiced support for this year’s budget, saying that it “signals greater investment in and strong support for the University,” furthering “accessibility, affordability and efficiency, and student success.”

Saving for a rainy day

Despite the governor’s claim that the budget is “the most fiscally irresponsible budget” he’s ever seen — a somewhat puzzling claim, given the shape the state was in when his party controlled the legislature — this year’s budget also saves a record $1.8 billion in its rainy day fund, the highest amount North Carolina’s history.

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