General Assembly Gets Underway as Leaders Hint at Positions on Tax Reform & Incentives

The 2015 North Carolina General Assembly got underway last week with a largely ceremonial session, while and House and Senate leaders began hinting at the agenda they intend to pursue when they get underway in earnest on January 28th.

In a joint afternoon press conference, newly elected House Speaker Tim Moore (Kings Mountain) and returning Senate President Pro-Tem Phil Berger (Eden) outlined a set of legislative priorities that was heavy on economic development and job creation, and promised a session that would emphasize cooperation between the two chambers. A few highlights from their remarks:

  • Asked whether legislators would pursue additional efforts on Tax Reform, Berger indicated he favored a more cautious approach to any additional changes until a full picture of the state’s revenue had come into focus. Current projections from the lower personal and corporate tax rates adopted two years ago show a state revenue gap of as much as $200 million below projections — an admittedly small number in the context of a $20 billion budget. Berger said it was very likely that specific legislators would introduce bills to expand on past reforms, but wouldn’t predict how they would be received.
    Senate President Pro-Tem Phil Berger

    Senate President Pro-Tem Phil Berger

    “There’s a sense among a number of folks that we’ve made some big changes, and that we’re seeing some results,” he said. “We’re seeing some things that we like, and we’ve got some some things that we need to let a little more time go before we know exactly how we’re doing.” Speaker Moore echoed Berger’s remarks, while stressing that the House would only pursue tax changes that were revenue-neutral.

  • Speaking to the issue of state tax incentives for economic development, Berger hinted he would be open to considering specific proposals from Governor McCrory regarding the expansion of the Jobs Development Investment Grant (JDIG) program and the creation of a “closing fund” to lure companies to the state. The failure of the House in 2014 to pass a wide-ranging economic development bill (HB 1224) left the Governor and state agencies without a full complement of tools to attract new new jobs, and some business leaders have speculated that kept North Carolina from winning the race for the corporate headquarters of Mercedes-Benz.
    Speaker Tim Moore

    House Speaker Tim Moore

    Moore said he shared responsibility for the inability to pass HB 1224, but blamed other provisions attached to the legislation, not the economic development incentives it contained. “When I talk to my colleagues in the House, nobody loves incentives,” he said, “so the question is, what do you do to allow North Carolina to be competitive with other states. We’ve made some great strides the last four years by lowering our overall tax burden and passing regulatory reform, but we may, in certain instances, need some incentives.”

  • When asked about the still-breaking news of Chiquita’s departure from Charlotte, Moore described how, as a resident of Cleveland County, he watched South Carolina land major employers like BMW with a sense of envy. “You don’t know why companies locate, and you don’t know why they leave sometimes,” he said. “Anytime you hear of a company not coming here, you kick yourself and ask, ‘What could you have done better?'”
  • Berger was noncommittal on the topic of renewing the Historic Preservation Tax Credit, which expired on January 1st, but Moore suggested he might be open to the creation of a grant program as a replacement.
  • Both men supported the legislation passed last year to eliminate the local Privilege License Tax, in light of what they claimed were structural and collection abuses by various local governments across the state. They didn’t rule out revisiting the tax, however, and said they would review proposals as they were made.
  • Above all, both Berger and Moore reiterated the importance of addressing education, employment and regulatory reform to attract businesses to the state. “I’m committed to seeing us focus on economic development, job retention and job growth,” Moore said. “Those are the top three issues.”

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