N.C. could see rollback in regulations

adunn@charlotteobserver.comNovember 10, 2012 

General Assembly leaders are laying out a business agenda they say is an extension of the work they did in the past legislative session, the first under Republican control in more than a century.

But with Republican Pat McCrory entering the governor’s mansion, the next two years could include wholesale changes in regulations and taxes.

“We will continue to look for ways to make North Carolina more competitive regionally and nationally from a business standpoint,” said Jordan Shaw, spokesman for House Speaker Thom Tillis.

He said Republicans would tackle the broad issues of rolling back regulations, simplifying the tax code and helping small business. But he said it was too early to get into specifics.

“A lot of the specifics on those types of issues will be worked out through the legislative process,” Shaw said.

The party’s agenda has the support of the North Carolina Chamber, one of the state’s largest business lobbying groups. Chamber President Lew Ebert said he welcomes “the opportunity to move more aggressively on pro-growth, pro-jobs issues with fewer vetoes.”

Republicans won’t necessarily need the support of Democrats, but many members of the minority party support the concepts of efforts to boost business. The details, however, are likely to be more contentious.

“I have a wait-and-see attitude,” said Democratic state Rep. Rodney Moore, who represents Mecklenburg County. He was endorsed by the N.C. Chamber, and said business isn’t necessarily better off because of Republican control of state government.

“When it comes to business and growing employment and those type of things, it really shouldn’t be a partisan divide. If it’s going to be good for the state and good for the businesses, then partisanship should not be an issue.”

Here are a few areas likely to see changes.

Regulations

The General Assembly passed several bills in the last session aimed at slowing the creation of new regulations. Now the attention will turn toward rolling back regulations already on the books.

“We stopped or slowed down the regulatory machine and made it more rational,” state House Majority Leader Paul Stam said. “But we still need to look at a thousand regulations that have not been examined. I see that as a major focus of the 2013 session.”

These will range from rules made by the Department of Environment and Natural Resources to the Department of Commerce, but Stam said lawmakers are depending on business owners to let them know which regulations they’d like to see reconsidered.

Republicans also might take a look at what activities should be regulated by industry licensing boards.

“Business is being strangled by laws and regulations that don’t make sense,” Stam said.

Tax rates

An overhaul of the state’s tax system has been discussed for years, but Stam said he expects Republicans to push through the first steps this session.

The basic idea: Lower overall tax rates – personal and corporate – by eliminating loopholes, exemptions and deductions.

“These are the taxes that people look at to decide whether or not to start, to build or to come,” Stam said. “We have got to get those marginal rates down (and) competitive.”

The discussion also will entail extending sales tax to services, but Ebert of the N.C. Chamber said that can be tricky because taxes on business-to-business services could add to the overall tax rate they pay.

McCrory did not discuss closing tax loopholes during his campaign. Outgoing Lt. Gov. Walter Dalton, who lost to McCrory in the governor’s race, criticized the plan on the campaign trail, saying taxing services could disproportionately hit lower-income people.

The concept of tax reform is supported by Democrats as well, including State Treasurer Janet Cowell. The details, however, will be hotly debated even among Republicans.

One potential holdup would be shrinking tax revenue projections that would shift the focus to budget cutting.

Still, “I would be very surprised if we have no reform at all in the next session,” Stam said.

Unemployment insurance

North Carolina finds itself with a nearly $3 billion debt to the federal government after the state depleted its unemployment insurance coffers during the recession and slow economic recovery.

The solution will involve a plan to pay back the debt and to avoid getting into the situation in the future.

“That’s probably the single biggest economic development cloud hanging over the state,” Ebert said. The North Carolina Chamber is in favor of issuing bonds to pay back the debt and scaling back future benefits to jobless people.

A Republican-led task force is expected to put forth its recommendations soon.

Incentives

The aspect of economic development incentives likely to get the most critical look is the upfront grant program used to lure new businesses to the state, provided they meet job-creation targets.

In the Triangle, incentives were used to get a Durham company, Semprius, to build a solar cell manufacturing facility in Henderson, and to persuade Red Hat to relocate its software company to downtown Raleigh rather than out of state.

McCrory criticized incentive programs in his campaign, though he said in interviews that he would use them to attract business.

Republicans, though, have long been critical of using upfront incentives. Stam said he’d rather the money be used for developing industrial parks in rural areas or workforce training programs.

Republicans are not all on the same page as to what to do with incentives. Ebert of the North Carolina Chamber said they’re necessary as long as other states are using them.

Dunn: 704-358-5235 Twitter: @andrew_dunn

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