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3 competing tax bills complicate overhaul effort

UPDATED: The complex effort to overhaul the state’s tax system became more complicated Thursday as three competing bills were presented to lawmakers entering the final month of the legislative session.

Senate Republicans, led by President Pro Tem Phil Berger, are offering the most ambitious legislation to expand the sales tax to more than 100 services, food and prescription drugs, in exchange for cutting personal income taxes from the highest rate of 7.75 percent to 4.5 percent. It represents an overall tax cut, phased in over the course of three years, potentially reducing state spending by more than $1 billion over three years.

But Senate Bill 677 is facing considerable opposition from special interests concerned about how it eliminates all existing tax breaks and from outside organizations who point to analyses showing that it would likely raise taxes on a majority of people in the long run.

In presenting his bill to a Senate panel, Sen. Bob Rucho, a Charlotte Republican, didn’t mention any tax rates – instead spending about 10 minutes lashing out at lobbyists who packed the committee room.

Clodfelter considering run for Charlotte mayor

A few weeks ago longtime Democratic Sen. Dan Clodfelter raised eyebrows when he said he might run for the Charlotte City Council. Now he might run for mayor.

"I'm very seriously considering it," he said Tuesday. "I've been getting a great deal of encouragement."

Clodfelter isn't the only one -- or only legislator -- looking at the race since incumbent Democrat Anthony Foxx said this month he won't run for a third term. Democratic Reps. Becky Carney and state Sen. Malcolm Graham have said they're considering it.

Clodfelter said he could make a decision by the end of the month.

"When people reach out to you," he said, "you want to think seriously about what they're asking you to do."

-- Jim Morrill, Charlotte Observer

Morning Memo: Democrat files first tax bill, McCrory concedes ground

UPDATED: DEMOCRAT FILES FIRST MAJOR TAX BILL: With a bipartisan list of sponsors, Charlotte Democratic Sen. Dan Clodfelter beat Republicans to the punch on tax overhaul legislation. Clodfelter filed a bill Thursday to lower personal and corporate income taxes, as well as the state sales tax with a more modest expansion of taxable services. One big proposed change: a flat income tax rate at 6 percent, instead of three-tiered structure now, as well as exempting the first $11,000 in income from taxation. Clodfelter said it would help all taxpayers but especially low- and middle-income residents.

McCRORY SAYS NO INCOME TAX ELIMINATION: Gov. Pat McCrory, who campaigned on a plan to significantly lower personal and corporate income taxes and possibly eliminate them, is now conceding ground. McCrory took his budget tour on the road Thursday to Wilmington. The Star-News reported: "Even though McCrory cited the state’s tax system as a disadvantage in competition with South Carolina and Virginia, he said it was not possible now to eliminate the personal or corporate income taxes as part of his upcoming tax reform proposals."

***It's March Madness -- in basketball and state politics. Read more Dome Morning Memo below. Send news and tips to dome@newsobserver.com. ***

Senate Democratic Caucus makes Blue, Clodfelter co-chairs

Democrats in the North Carolina Senate have named the following officers for the upcoming legislative session:   

 

Senator Dan Blue (Wake), Caucus Co-Chair 

Senator Dan Clodfelter (Mecklenburg), Caucus Co-Chair

Senator Ellie Kinnaird (Orange), Caucus Secretary

Senator Martin Nesbitt (Buncombe), Minority Leader

Senator Josh Stein (Wake), Minority Whip

Senator Gladys Robinson (Guilford), Deputy Minority Leader

Senator Floyd McKissick (Durham), Deputy Minority Leader

Senator Clark Jenkins (Edgecombe), Deputy Minority Leader    

The official senator

Bills get filed every session that their sponsors didn't mean as jokes, but get good laughs anyway.

This week, Sen. Dan Clodfelter, a Charlotte Democrat, introduced a bill intended to be funny.

He riffed off Sen. Richard Stevens' objections to naming official state trees, bugs, festivals, beverages and other symbols. Clodfelter's bill suggests Stevens, a Republican, be named the official state senator of his district.

"This act becomes effective 15 days after the official Irish potato festival of the State of North Carolina is held and expires at the end of the 2011-2013 biennium," the bill reads.

It has bipartisan support. Seven other senators, Democrats and Republican, are cosponsors.

New ethics law protects Charlotte

In wooing the Democratic National Convention, Charlotte will not have worry about running afoul of the gift ban, thanks to an exemption inserted into the new state ethics law.

In the closing hours of the legislative session, negotiators included language exempting “anything of value given or received in connection with seeking or hosting a national convention of a political party.”

The measure was suggested by Sen. Dan. Clodfelter of Charlotte, whose city is one of four finalists for hosting the Democratic convention in 2012, reports Rob Christensen.

Clodfelter said the host city will have to raise between $40 million and $60 million and he wanted to make sure it does not violate any gift ban. He said there were concerns raised last year when sponsors raised money for the Southern Legislative Conference held in Winston-Salem.

“We wanted to make sure the money raised doesn't count as a gift to a political candidate,” Clodfelter said. “It was a belt and suspender sort of thing.”

'Citizens United' bill has lower threshold for reporting

The bill meant to change the state's election law to comply with a U.S. Supreme Court decision allowing corporate expenditures sparked a fierce partisan debate in the Senate.

The bill strikes the parts of the state law that prohibited corporate and union election expenditures. Those prohibitions are now unconstitutional. The bill also requires corporations and unions to disclose their activities.

First, Sen. Neal Hunt, a Wake County Republican, moved to exempt nonprofit, 501(c)3 corporations from the requirement, since as Hunt said such corporations are prohibited by federal law from engaging in electioneering.

Sen. Dan Clodfelter said that amendment would give nonprofit corporations a license to break the law since they wouldn't have to disclose any information about their illegal electioneering.

Sen. Clark Jenkins, a Tarboro Democrat, raised the stakes with a substitute amendment that lowered the threshold for electronically reporting expenditures from $10,000 to $5,000. That amendment passed, which not only shot down Hunt's effort, but made the requirement tougher on nonprofits.

Other Republican amendments failed until Sen. David Hoyle, a Gaston County Democrat moved to cut off debate.

"We've had enough of this," Hoyle said.

The bill cleared the Senate 28-18.

UPDATE: Post corrects that the lower threshold refers to requirements for filing disclosures electronically.

Senate approves plan to delay, study high speed Internet by governments

The Senate overwhelmingy approved a bill Monday that would put a hold on local government efforts to offer broadband service to residents.

The bill calls for a committee to study the logistics and necessary rules for allowing governments to get into the Internet business though a private provider. Currently no rules regulate how local governments should handle Internet service. Water, power, telephone and other similar services offered as a utility by local governments are heavily regulated.

Opponents of the moratorium said Monday night that the only way rural areas of the state are going to get high speed Internet service is to allow governments to allow it.

"We need broadband and I don't think we need to put some handicap on getting it to our communities," said Sen. Bill Purcell, a Scotland County Democrat.

Supporters of the bill fought efforts to strip the moratorium, which would last until the end of next year's legislative long session. The idea is to give lawmakers a chance to create a framework for the service.

"It's not irrational, unreasonable or improper as a matter of public policy to say, 'Let's just take a deep breath and get the rules written and get them on the statute books before everybody runs off the cliff," said Sen. Dan Clodfelter, a Charlotte Democrat.

The bill cleared the Senate 41-7 and will now go to the House for consideration.

Senate gives nod to tax breaks for five businesses

The Senate gave preliminary approval Thursday to a set of tax incentives meant to lure or encourage expansion for five companies in the state.

Sen. Dan Clodfelter, a Charlotte Democrat, said the five companies — two data centers, a turbine maker and a paper plant, would amount to a $1.6 billion investment in the state. He told a Senate committee Wednesday that the state would have to give up $9 million in taxes next year and $14 million in the following year, AP reported

The lost tax revenue is worth the investment and jobs created by the new business, Clodfelter said.

"You must spend the money in North Carolina before you qualify for the incentives," he said Thursday. "This is a fairly concrete response to negotiations that are going on with Commerce and five companies that say they are considering locating or expanding in North Carolina."

Sen. Ellie Kinnaird, a Carrboro Democrat, said incentives have questionable value and would not attract business as well as investments in education and cultural amenities. 

"We are shifting our tax burden onto you and me and our constituents," Kinnaird said. 

Sen. Bob Rucho, a Mecklenburg County Republican, said the most effective way to lure business would be for the state should lower its overall corporate tax rate.

"The corporate tax system has been a real anchor on our ability to e competitive in the states and across the globe," Rucho said.

The bill passed 39-4. It requires one more vote in the chamber before it moves onto the House.

Shakespeare revised: Tax all the lawyers

The state's largest teachers association has a way to fill the budget gap: tax the lawyers.

That money should be used to replace cuts in school funding, the N.C. Association of Educators said in its most recent bulletin.

The association argues that there's no tax on hiring a lawyer to write up a will or other legal document, but the state slaps 8 percent on the purchase of legal software to do it yourself. Lawyers' fees are among the services, many of them geared toward wealthier taxpayers, that go untaxed, the group said in its most recent bulletin.

NCAE is backing efforts by some legislators to include various services under the sales tax. Sen. Dan Clodfelter, a Charlotte Democrat, and others are pushing a tax modernization plan that includes a variety of services. (For example: there's no tax on lawn service but there is if you buy a lawn mower to cut your own grass.)

"Sensible tax restructuring, saves a generation of students from overcrowded classrooms, compromised instruction, and broken promises to our communities," said NCAE Vice President Rodney Ellis.

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