News: CJ Exclusives

House Revolt Crashes Incentives Bill

Measure pushed by Tillis, Berger, McCrory fails in bipartisan vote

Twenty-eight House Republicans bolted party ranks Tuesday, joining 26 Democrats to defeat an economic incentives program that some labeled “corporate welfare.” It was a rebuke to House Speaker Thom Tillis, R-Mecklenburg, Senate leader Phil Berger, R-Rockingham, and Gov. Pat McCrory, all of whom championed the legislation.

The 47-54 vote against House Bill 1224 signaled that the end of the meandering 2014 “short session” of the General Assembly could be nigh, arriving perhaps as early as today.

The GOP leadership split on this bill, with Tillis, the Republican nominee for U.S. Senate, supporting the measure along with House Rules Committee Chairman Tim Moore, R-Cleveland, and House Finance Committee Co-Chairman David Lewis, R-Harnett.

Speaker Pro Tem Skip Stam, R-Wake, and Majority Leader Edgar Starnes, R-Caldwell, opposed the legislation. Also in opposition were the Finance Committee’s senior chairwoman, Rep. Julia Howard, R-Davie, and Co-Chairman Mitchell Setzer, R-Catawba.

First-term Rep. Michael Speciale, R-Craven, made an impassioned plea for members to oppose the bill. Speciale spoke about watching House sessions from the chamber’s balcony for 14 years, watching Republicans argue against “walk-around money” for special incentives to politically favored businesses.

“I thought, ‘Oh, if only the Republicans could be in charge — and that’s what a lot of the state thought — if only the Republicans were in charge, they would fix this,’” Speciale said. “They would quit taking money out of my pocket and give it to someone else.”

Speciale said Republicans now were being asked to support “the very thing that we argued year after year after year [against]. … The only thing I can say is, Please think about what you’re doing here.”

Rep. Michele Presnell, R-Yancey, urged her colleagues to support the incentives package, arguing that it was needed to help the Evergreen Packaging paper mill in Canton to convert its energy source from coal to natural gas.

The company is under pressure from federal regulators to shift away from coal as a means of reducing pollution.

“These jobs are real, real jobs,” Presnell said. “If we lose these, we are going to be the poorest of the poor.” Presnell argued that the change in state law allowing for money to be used to help the conversion amounted to providing infrastructure to the Haywood County area.

“”This is going to bring infrastructure, natural gas to the mountain counties,” Presnell said.

Through a complicated process, H.B. 1224 was linked with a couple of companion bills that would have provided local school boards with more teachers assistants (House Bill 718) and changed the qualifications for television shows, movies, and commercials produced in the state to get film incentives (House Bill 189). The two companion bills would have been considered if H.B. 1224 had become law, but it didn’t, so H.B. 718 and H.B. 189 were not taken up.

The entire legislative package also included provisions addressing unemployment insurance confidentiality and modifying local sales tax laws.

Two members of the Wake County delegation, Democratic Rep. Darren Jackson and Republican Rep. Nelson Dollar, argued against the measure.

Jackson, who referred to the bill as a “corporate welfare bill,” argued that the House leadership should honor its commitments, saying that the leadership had given its word that H.B. 1224, which had not been brought to the full chamber for a vote, would not come up again.

“We should have been out of here two weeks ago when we had a chance,” Jackson said. “That’s when House leadership made a commitment to me personally that [H.B.] 1224 was dead. A promise around here apparently does not mean what it means when I give someone my word.”

Jackson continued: “Leadership took a knee beside my desk and told me this bill was dead. … People should honor their commitments. When they don’t, we descend into chaos. And that’s where we’ve been the last two weeks.”

Dollar argued that the bill would put Wake County in a bind as it tries to address transit needs. He noted that the measure would have required Wake County residents to increase sales taxes by 0.75 cents in 2016 or lose the taxing authority entirely. “We don’t need to have our hand forced,” Dollar said.

Sen. Bob Rucho, R-Mecklenburg, said he was disappointed the House didn’t approve the bill. “[H.B.] 1224 was an important piece of legislation,” Rucho said. He referred to the economic development incentives in the bill as transitional legislation designed to help recruit industry as the state works toward eliminating personal income taxes.

“A transition is always required,” Rucho said. “You’ve got to make yourself competitive until you have a 0 percent personal income tax.”

Rucho said that he would like to have seen the sales tax changes as well. The legislation would have given most rural counties, which do not have any use for a 0.25 percent sales tax for transit, more flexibility in the way they use sales tax revenues. “We gave them the flexibility to use that one-fourth percent referendum for general purpose use,” Rucho said.

Tillis and Berger Tuesday night announced a deal had been struck on provisions cleaning up Duke Energy’s coal ash containment ponds. The compromise measure is set to be taken up in both chambers today. Unless other bills are added to the legislative agenda, the chambers could adjourn the session later today.

Barry Smith (@Barry_Smith) is an associate editor of Carolina Journal.