Welcome to the Valentine’s Day edition of Legislative Update

(not to be confused with the Friday the 13th edition).  

So far in 2015 one member abandoned the Democratic caucus, several high ranking Republican committee chairs have been demoted, red  velvet ropes keep your Government Relations Team at arm’s length  from anyone we may hug or hit, and Moral Monday demonstrations  now happen every day of the week. In short, there is no love!  

But we love love.

So we scoured the NC statutes and are pleased to report that

we do, indeed, have “love” in North Carolina – in fact “love” appears  seven times – in license plates that proclaim our love for animals,  the state song, salute to the state flag, adoptions, and the statute differentiating types of bail bonds.  

We also looked up “hate”. 

The result:  Love = 7.  Hate = 0.  Not bad.

The General Assembly has still not hit its stride. Several weeks into the 2015 session and we have very little bill movement and very few committee hearings. March contains bill introduction deadlines so we expect the pace to pick up.

This week we learned from economists at the Legislature that currently revenues continue to lag behind projections. Chief Economist Barry Boardman expects a $271 million shortfall in the current year budget. Republicans suggest April tax filings may help while Democrats complain that the recent tax cuts are deeper than originally thought.

Are Senate Republicans Raising Taxes?

Senate Bill 20, filed in the Senate as an Internal Revenue Code update bill, rolled out with a surprise new “Part II” that deals with motor fuel tax changes. We pay the motor fuels tax at the pump with every fuel purchase. The rate of that tax is adjusted every 6 months, according to the price of fuel – if fuel is up, the rate goes up; if fuel is down, the rate goes down. This new section proposes a 2.5 cent cut in the state’s gas tax and adds a new minimum rate floor that would keep it from falling even lower. In June, however, the gas tax is expected to go lower than the proposed minimum rate floor, so the tax reduction included in the bill would ultimately have the effect of being a tax increase later this year. Supporters of the bill argue a minimum rate is necessary to ensure the Department of Transportation’s primary revenue source is less volatile and more reliable, in order to keep up with both the need to repair roads and the growing economy. Under current law, the formula sets the tax as the sum of 17.5 cents plus either 3.5 cents or 7% of the average wholesale price, whichever is greater. The new legislation would change the formula, setting the tax at 17.5 cents plus either an additional 17.5 cents or 9.9% of the average wholesale fuel price, whichever is greater. The bill passed the Senate on Thursday, but we’re hearing House Leadership doesn’t agree with the tax reduction talking points. Stay tuned.