Business interests advance in legislature

The Republican majority legislature moves quickly on bills that industry promotes.

Staff WriterMay 31, 2011 

— For decades, the consumer finance industry tried unsuccessfully to get the legislature to raise the cap on interest rates it can charge on its storefront loans.

But with a new Republican majority in the General Assembly, with a strong free-market, anti-regulatory outlook, an industry bill has gained political momentum this year.

"It's a new day for these companies," said Al Ripley, a consumer advocate. "They have very powerful friends in the House and in the Senate."

How powerful was evident Thursday, when the House leadership rammed an industry-backed bill through the House Banking Committee with a 15-6 vote, despite opposition from the commanders of North Carolina's military bases, the state's banking commissioner, and consumer and seniors groups.

The political climate is so favorable for business and industry that one veteran consultant, Carter Wrenn, has labeled it "The Gilded Age," for the 19th-century era when robber barons exercised vast influence over Congress and state legislatures.

Along with the state government budget crisis, the new aggressiveness by industry is one of the major themes of the legislative session. Consider the following:

The billboard industry has been seeking authority to clear more trees and other vegetation around its signs since 2006. A measure backed by the N.C. Outdoor Advertising Industry Association passed the Senate Finance Committee last week and is considered to have its best chance of passing in years.

The automobile insurance industry is trying to revamp regulation of its rates. Democratic Insurance Commissioner Wayne Goodwin says the insurance industry has been waiting for a more favorable political climate to change a system that has provided the lowest car insurance rates in the South.

Doctors, hospitals and insurance companies have pushed since at least 1997 for a law to restrict medical malpractice lawsuits that could be brought by patients. A measure pending in the state House includes a provision backed by the pharmaceutical industry that also would limit lawsuits over drugs that have been approved by the Food and Drug Administration.

Industry has tried for six years to limit the amount of money paid to injured workers. A bill that would limit most workers' compensation awards to 91/2 years is receiving serious consideration this year.

The cable TV industry, particularly Time Warner Cable, has sought for three years to restrict competition from cable systems run by municipal governments. This year a law passed. The push by various industries doesn't take into account broader efforts to reduce business taxes, a major effort to review regulatory rules that affect businesses and a major downsizing of the state's environmental agency.

Waited for a chance

The outpouring of business interest legislation is the result of pent-up demand after having seen many of their goals frustrated after years of Democratic control, said John Davis, a veteran legislative watcher.

"I think Republicans are natural allies of the business community," said Davis, who is editor of the John Davis Report, a Raleigh-based political newsletter.

Critics say that what is going on on Jones Street is far more than a balancing act. They think the Republican majority is giving business a blank check.

Among them is Wrenn, the former chief strategist for Republican Sen. Jesse Helms, who is now a consultant for trial lawyers, who often battle the business interests.

Although Wrenn describes himself as pro business, he said such efforts as a pharmaceutical industry-backed measure to bar lawsuits against drugs approved by the FDA go too far.

"I don't think that is right, and I don't think that it is conservative," Wrenn said. "You know the corporations have plenty of vices, too, like everybody else. Giving them carte blanche, whatever they ask for, that is not what conservatism is about."

Wrenn said the pro-business tilt of the Republican-controlled legislature is driven partly by philosophy, but also by the need for the GOP to solidify financial alliances with the business community for future campaigns.

More lobbyists register

Senate Republican leader Phil Berger said what is occurring is a philosophical marriage between the agenda of the business community and what many lawmakers personally believe - as well as what they heard on the campaign trail last fall.

Issues such as the reform of medical malpractice and workers' compensation systems, Berger said, "are directly related to the issue of job creation and the ability of the private sector to be competitive."

"We've always listened to them [the business community]," Berger said. "But we've not always had the ability to move legislation on those particular issues in the past."

Some industries have been waiting to move their agenda for a long time.

It may be one reason that the number of registered lobbyists has mushroomed to 804 from 655 during the last long session in 2009, according to the Secretary of State's office.

The consumer finance industry, for example, doubled the number of lobbyists working this session from four to eight, according to lobbyist registration records.

Military speaks out

Consumer finance companies have been attempting to raise the cap on the rates they can charge on loans of less than $10,000 since the 1990s. Finance companies such as Citi and American General can charge as much as 54 percent in interest rates and fees.

Under the legislation being considered, the loan amount would increase to $15,000 and interest rates could go as high as 100 percent, depending on the size of the loan.

The industry group, the N.C. Credit and Personal Finance Council, argues that rates have not changed in 28 years, while inflation and operating costs have increased.

But it was a tough vote for some military-friendly Republicans because for the first time in memory, the commanders of Fort Bragg, Camp Lejeune, and Seymour Johnson urged the legislature to defeat the bill, saying such loans preyed on unsophisticated service members.

"Who wants this?" said state Rep. Phil Haire, a Democrat from Sylva, at Thursday's House Banking Committee meeting. "Who is behind this?"

Revamping agencies

Industries are also helping reshape state agencies. A longtime industry goal of moving the Employment Security Commission, which is an independent agency, to the Department of Commerce is also part of the House budget. The business view is that Commerce, which is in charge of recruiting industry, would likely be more business-friendly. The shift was also in the budget proposal of Democratic Gov. Bev Perdue.

"It's another governmental scalp that some of the advocates can show their clients," said Harry Payne, a former ESC chairman and former labor commissioner.

Except for four years in the mid '90s when the GOP controlled the House, the legislature has been dominated by conservative and moderate Democrats.

The Senate, in particular, had been seen as a pro-business chamber. But it became less so,with the retirement or defeat of a number of pro-business voices.

"I would say that within the last 20 years business has generally been on the defensive in the legislature and has not had much opportunity to shape the agenda, as they appear to have this session," said Phil Kirk, who for 16 years was president of what is now the N. C.Chamber and who was a chief of staff to Republican governors Jim Martin and Jim Holshouser.

State ranks high

There is some evidence that North Carolina has a pretty good business climate, even with Democrats having controlled the legislature for decades. A survey of 550 CEOs released this month by Chief Executive Magazine listed North Carolina as the second best state for business in the country, trailing only Texas.

"North Carolina is not now and has not been an anti-business state," said Kirk, who is now director of Brady Energy Services in Greensboro. "Our governors, both Democratic and Republican, have all been pro economic development and pro jobs and worked hard to create a pro-business climate. However, the status quo is not how you stay ahead."

Researcher David Raynor contributed to this report.

rob.christensen@newsobserver.com or 919-829-4532

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