Morning Memo: Senate expected to turn up heat on House budget

Posted by Mary Cornatzer and John Frank on June 18, 2014 

The heat outside today should be nothing compared to inside the Legislative Office Building. Room 643, in particular. That’s where state lottery officials will be answering questions about funding raises for public school teachers.

The House budget doubled lottery advertising to generate $106 million in new revenue needed to cover teacher pay raises. But a lottery commission report detailed by The News & Observer show lawmakers relied on a figure that overinflated the expected increase in sales by $47 million. Senators have their reservations about those numbers. So does Gov. Pat McCrory who said in an interview Tuesday: “I have concerns about the revenue stream projections. We have been raising several questions about it.”

*** For more of the governor’s thoughts below and more on NC politics in Dome Morning Memo. ***

TODAY IN POLTICS: The only event on the governor’s public schedule is a meet-and-greet this morning at the mansion with minority business owners and state construction project managers.

The House convenes at 10 a.m.; the Senate at 2 p.m. The agendas are light but committee meetings promise some sleight of hands with bills on the environment (goodbye wetlands protections?) and other regulations.

THE BIG STORY – AND THE BEST LEDE: “House leaders are OK with a quiet decision by the McCrory administration to pay some of the governor’s staff salaries with highway tax dollars, but the Senate has a different idea:

Nip it in the budget.”

The headline: NC House, Senate disagree over DOT tax funds used to pay McCrory staff salaries.

More from the story: The Senate budget shines a spotlight on unreported transfers of more than $267,000 from the state Department of Transportation to the governor’s budget, and it says the move will be tolerated for one more year only. The House budget accepts the money shift without mentioning it.

The DOT transfer was authorized last year by the Office of State Budget and Management. Legislative staffers told House and Senate budget committees they discovered it a few weeks ago. Read more here.

MCCORY PLEDGE: The governor spoke to real estate agents on Tuesday and got tough questions on host of topics.

• Charlotte real estate agent Maren Brisson-Kuester told McCrory that uncertainty about future changes to the tax code is creating fear in the market. The 2013 tax overhaul limited the mortgage interest deduction. McCrory said he opposes eliminating the tax break entirely. “It will be

in existence as long as I am governor,” McCrory replied.

• A real estate agent who said she was from “Filmington,” asked about his stance on extending the state tax credits for film producers.

McCrory said he did not support the current incentives program as part of his budget and offered a scaled back approach with more restrictions on which productions can claim credits.

“It’s not going to satisfy the needs of all people in the industry and it also irritates the people on my political right,” he said. “What I

call it is a reasonable, pragmatic proposal that is aligned with other industries that we give tax incentives to.”

MAKER RALEIGH: President Barack Obama, on a visit to Pittsburgh Tuesday, announced that 90 mayors – including Raleigh’s Nancy McFarlane – have committed to the “Mayors Maker Challenge” to increase the locations and equipment available for manufacturing. Also taking part from North Carolina are Mayors Lee Moritz Jr. of Conover and Miles Atkins of Mooresville.

Obama also announced he was using executive authority to allow entrepreneurs access more than 700 federal research and development facilities as another part of the effort to boost manufacturing. And he said that more than $150 million would be spent to support the Materials Genome Initiative, a public-private initiative that aims to speed up the development of advanced materials.

On Wednesday, the White House is hosting a “Maker Faire” gathering of people who are using tools such as 3D printers, laser cutters and desktop machine tools to design and build new products.

STAR POWER: Obama was to attend a a fundraiser on Tuesday for the Senate Majority PAC, which was started by advisers tied to Senate leader Harry Reid. The Democratic group takes unlimited donations and is supporting U.S. Sen. Kay Hagan’s re-election efforts.

#NCPOL — More political news from North Carolina.

THE MONEY STORY: “To retain workers in high-demand state government fields, a little-noticed fund provided pay raises this year to nearly 3,500 employees that totaled more than $7.5 million. ... The increases came amid a pay freeze for the vast majority of the 85,000 state workers, who received just one raise in the past five years at 1.2 percent. A roughly $1,000 pay hike is part of current negotiations as state lawmakers look to finalize the budget for the next fiscal year.

“A News & Observer analysis of the new data shows the pay hikes averaged 4 percent, or $2,500. The pay hikes were capped at 10 percent but two dozen employees got a bigger boost because they also received a promotion.” Read more here.

CHRISTENSEN – Art Pope, conservative groups disagree on film incentives. Read more here.

DATELINE DUKEVILLE, FROM AP: “The sweet tea served in the tidy kitchen of Joanne Thomas’ antebellum home comes with an ominous warning.

“It’s made with bottled water,” says Thomas, a spry 71-year-old. “But the ice comes from our well.”

For more than 80 years, the Thomas family has lived on a farm that abuts three pits containing 6.1 million tons of ash from the coal-fired boilers of Duke Energy’s Buck Steam Station. Built in 1926, the plant towers over the Yadkin River an hour's drive from the Charlotte headquarters of the nation's largest electricity company.

Since 2011, Duke and North Carolina environmental regulators have known that groundwater samples taken from monitoring wells near the Thomases’ home and others in Dukeville contained substances – some that can be toxic – exceeding state standards.

The state could have required Duke to implement a cleanup plan to prevent spreading contamination. That never happened, state regulators said, because they weren't certain whether coal ash production was to blame or if the substances were naturally occurring.” Read more here.

#NCSEN — The headlines from the U.S. Senate campaign trail.

CHANGE OF STRATEGY FOR KOCH BROTHERS, FROM POLITICO: “During a closed-door gathering of major donors in Southern California on Monday, the political operation spearheaded by the Koch brothers unveiled a significant new weapon in its rapidly expanding arsenal – a super PAC called Freedom Partners Action Fund. ... It’s an evolution for billionaire industrialists Charles and David Koch. The vast network of political nonprofit groups they helped build has mostly funneled its unprecedented political spending into issue-based campaigns that usually slam Democrats for supporting big government but seldom explicitly ask voters to support GOP candidates. That’s expected to change under Freedom Partners Action Fund.” Read more here.

TWO PINOCCHIOS FOR CROSSROADS AD, FROM THE WASHINGTON POST: “This advertisement from the pro-GOP group Crossroads GPS is almost like an oldies record of top tunes lambasting the Affordable Care Act– and it has the same dated feel as well. Just about everything in this ad has been called into question before ... Unlike wine, tired talking points don’t age well. None of these claims are outlandish, but they miss important context and details. In the past they have earned Two Pinocchios, and that is what this ad earns as well.” Read the details here.

HAGAN TILLIS TRADING BLOWS, FROM THE ASHEVILLE CITIZENS-TIMES: “Republican challenger Thom Tillis and Democratic incumbent U.S. Sen. Kay Hagan are trading blows over Hagan’s support of President Obama and Tillis‘ penchant for insensitive comments.” Read more here.

#NCGA – A roundup of news from the N.C. General Assembly.

MORE NC PRIVATE SCHOOL SCHOLARSHIPS CONSIDERED, from AP: “North Carolina legislative leaders are considering locating extra money so all children who applied and qualify for taxpayer money for tuition at private or religious schools can receive it.

House Speaker Thom Tillis and Senate leader Phil Berger signaled their interest in locating more funds for the “opportunity scholarships” while speaking Tuesday at a rally organized by a school-choice group in front of the Legislative Building.” Read more here.

SENATE APPROVES FAST TRACK FOR NEW CHARTERS, from the Charlotte Observer: “The N.C. Senate unanimously approved a bill Tuesday that would create a fast-track review process for successful charter schools that want to clone themselves and chains that want to expand their presence.

The bill, which now goes to the House, clarifies that the independent public schools must comply with public records and open meeting laws. It was recently revised to include the fast-track plan.” Read more here.

SENATE PANEL: CLOSE ASH PONDS, from the Charlotte Observer: “The N.C. Senate’s agriculture and environment committee endorsed a measure Tuesday to close Duke Energy’s 33 coal ash ponds in the state despite Duke’s plea that the 15-year timeline might be too short.

The committee gave the bill a favorable report on a unanimous voice vote. It goes to the Senate finance committee on Wednesday and, if favorable there, to appropriations on Thursday.” Read more here.

FROM THE NC INSIDER: Film industry workers in Charlotte and Wilmington appear in a new video urging House Speaker Thom Tillis to fight to extend the current film incentives program this session. The video, circulated online, features shots of film crews from three productions currently filming in the state “Sleepy Hollow” in Wilmington and “Banshee” and “Max’ in Charlotte. Workers say they are North Carolina residents, taxpayers and voters. The video may end up airing on television in some markets this week. “These ads reinforce the industrys original message: we want to keep film jobs in North Carolina and appreciate the speakers support,” said Katy Feinberg, a spokeswoman for the N.C. Production Alliance, which is pushing for extension of the existing film incentives.”

QUICK LOOK — More headlines from across the state.

• Wake school board says teacher raises could force budget cuts. More here.

• National labor leaders arrested at latest ‘Moral Monday’ protest in Raleigh. More here.

• General Assembly tests McCrory’s pledge on medical examiners. More here.

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