The 2009 session of the North Carolina General Assembly closed on Aug. 11, taking 112 legislative days. There were 2,767 bills filed, with just over 600 becoming law.
Senate President Pro Tempore Marc Basnight said it best: “A job was done.”
In spite of a recession and 11 percent unemployment, taxpayers got a $1 billion tax increase and a budget that spends $19 billion. The General Assembly will spend another $1 billion in stimulus money courtesy of federal taxpayers.
The State Health Plan got a two-year, $675-billion bailout, including higher co-pays and deductibles for over 650,000 state employees and dependants. The budget cut 2,044 state positions, but 1,318 were already vacant.
Positive changes were made to the Beach Plan, a government-subsidized insurance program for homeowners that had faced a $74 billion unfunded liability. The fixes include capping insurance companies’ exposure at $1 billion, after which a 10-percent surcharge will apply to policyholders across the state; coverage is limited to houses costing $750,000 or less. By limiting the government’s role in the insurance business, the free market and competition between insurance companies should helpensure coverage and fair pricing.
The session clearly sent a mixed message to businesses. On the one hand, lawmakers raised the topincome tax rate, impacting small businesses and company executives. The General Assembly raised the corporate income surtax, sales and excise taxes, and imposed new online taxes.
Increasing the cost of doing business depresses job creation and economic recovery.
On the other hand, select companies got special breaks. Apple, an international computer maker with$34 billion in revenue, convinced North Carolina lawmakers to give it a $12.5 million annual break from state taxes. A paper plant in Martin County will get $9 million in tax money to upgrade its operations. A statewide smoking ban that initially would haveaffected every workplace instead focused on outlawing smoking in most bars and restaurants. Local governments now have the authority to pass even stricter smoking bans. A cement plant trying to start up near Wilmington got $4.5 million in incentives at the same time environmentally concerned legislators were trying to shut the company down.
Efforts to enact meaningful annexation reform didn’t pass. Cities will still be able to forcibly annex property owners, charging them taxes for services they may not want or need. A large coalition of citizens across the state will not rest until laws are changed to require a vote before property can be forcibly annexed.
A new program run by the N.C. Biotechnology Center, allowing large investors ($100 million or more) to pool money into a venture-capital fund for loans to biotech startup companies, ran into trouble. The program would be set up as a nonprofit with little oversight, passing out loans guaranteed with tax credits. It’s just another tax-funded incentive scheme with real constitutional questions. This one didn’t pass, but it will be revamped and considered later.
Efforts to take over four hydroelectric plants and 33,000 acres of land owned by Alcoa in Stanly County also failed. Federal licensing of the plants is still not final. Alcoa hopes to protect its 50-year investment, while state government is poised to intervene, condemn the property, take over the plants, and somehow pay Alcoa $500 million or more in compensation.
Over the interim, legislators will consider tax reform, try to grab federal stimulus money, comply with renewable energy regulations, and study issues in more than 50 newly created commissions. And when they return on May 12 to finish up the 2009-10 General Assembly, there will be new bills, new laws, more efforts to grow government, and again, a job will be done.
Becki Gray is vice president for outreach at the John Locke Foundation.