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Morning Memo: Senate rolls out tax plan; ALEC keeps clout in North Carolina

SENATE LEADERS TO PITCH TAX PLAN: The long-awaited plan to overhaul the state's tax system will debut Tuesday. Senate Republicans want to slash the personal income tax from the highest 7.75 percent rate to 4.5 percent over three years and drop the corporate income tax from 6.9 percent to 6 percent.

In a video previewing a 12:30 p.m. announcement, Senate leader Phil Berger called it a $1 billion tax cut -- the largest in state history. The question is how to pay for it and the details are less clear, but Berger said it will involved taxing a range of services from haircuts to auto mechanics. (More details below.)

TODAY AT THE STATEHOUSE: Taxes won't take all the air from the N.C. General Assembly today. In committees, the governor's transportation plan gets a final hearing before going to the full House; a health committee considers a measure to limit what a doctor can do about sexually transmitted diseases, pregnancy and birth control without parental consent; and Senate lawmakers will consider (but not vote on) a proposal to allow armed guards in elementary schools who aren't necessarily law enforcement officers.

The controversial gun bill gets a third reading on the House floor and the Senate will consider a controversial state charter school bill similar to ALEC-sponsored legislation. (More on ALEC below.) Gov. Pat McCrory -- who promised to hold regular media availability -- will not take questions after the Council of State meeting at 9 a.m. today. It is normal practice but McCrory has shunned the media after the meetings just about every time since he took office. He lists no other public events on his calendar today.

***Thanks for reading the Dome Morning Memo. A big day in North Carolina politics ahead. Get the scoop below. Send news and tips to dome@newsobserver.com.***

FIVE BIG QUESTIONS FOR TAX PACKAGE

1. Will it be revenue neutral? Gov. Pat McCrory called for a revenue-neutral tax plan -- that is, it doesn't hurt the state's current spending ability or cut into the $20+ billion budget. But much speculation recently suggests the Senate tax plan may cut pending, throwing another wrench into the already delayed state budget process.

2. Who will bear the burden? Any tax plan will shift the tax burden -- the question is who will pay more and who will pay less? From early previews, it's clear corporations and wealthy estates would pay less. But what circuit breakers are built into the plan to protect the poor -- the most vulnerable population proportionally when a sales tax is applied more broadly.

3. Will the House and governor agree? For weeks, if not months, leading up to now, Senate and House Republicans have been negotiating a tax plan behind closed doors hoping to find a unified front. The last word is the House doesn't like the entire Senate plan. So is this plan the start of negotiations in the waning weeks of a legislative session, or a consensus that will move through quickly?

4. What is the fine print? The questions on tax reform outweigh the known quantities. Will it tax Social Security income? How will it handle business to business transactions? Does it change nonprofit tax deductions? Will it eliminate special interest loopholes? What exemptions will it keep? Does it change the tax on food or prescription drugs?

5. Will it happen and will it work? Two questions, wrapped into one idea: Few -- if any state -- in recent memory has accomplished major tax changes because public and special interest pressure was too great. Likewise, N.C. Republicans say it is necessary to improve the state's business climate, but a state's tax code plays a minor role in recruiting companies, experts say, and the state is already highly ranked as a business destination.

LOST HEADLINE: One thing that may get lost in the shuffle: Republicans have now given up their plans to eliminate income taxes in North Carolina. Senate leaders floated this idea at the start of the legislative session -- as did McCrory in the campaign -- but neither plan appears to eliminate either the corporate or personal income taxes.

THE CAMPAIGN VIDEO: The N.C. Republican Party is helping to push the tax plan, putting Berger --a potential U.S. Senate candidate in 2014 -- in a nearly four-minute video to describe the changes. The video is featured on a website produced by the state GOP called nctaxcut.com. Berger makes it sound easy -- and suggests paying for the plan is as simple as "holding the line on spending." Much of the proposed income tax cut is actually paid for by a broader sales tax applied to dozens -- if not hundreds -- of services that are currently tax free. It's still unclear how that will work. One question is whether the state party will pony up money to put ads on TV to campaign for the tax plan.

N&O LEAD STORY -- ALEC HOLDS SWAY DESPITE CONTROVERSY: Despite being shunned by many of its members amid controversy a year ago, ALEC continues to exert substantial influence in North Carolina. House Speaker Thom Tillis is a national board member, and former Rep. Fred Steen, the past state ALEC chairman, is Gov. Pat McCrory’s legislative lobbyist. A handful of measures sponsored by North Carolina lawmakers this session include language identical to ALEC’s template legislation. At least two dozen more bills match the organization’s priorities and intent, if not its exact language – everything from requiring voter ID at the polls and allowing private school vouchers to repealing the federal health care law and prioritizing energy exploration.

ALEC’s role in North Carolina makes it a target for critics, particularly the think tank’s cozy relationship with business interests, who play a prominent, but mostly behind-the-scenes, role in crafting legislation alongside the roughly 50 North Carolina lawmakers listed as members. "It’s a lightning rod organization because it has a decidedly conservative bent – there’s no doubt about it,” said Rep. Craig Horn, a Weddington Republican and ALEC member. Full story.

HOUSE OKs GUNS IN BARS: Guns would be allowed in restaurants and bars, on walking trails, and on college campuses under a bill that received tentative House approval Monday night with a 76-38 vote. The bill also increases some penalties for crimes committed with firearms. The bill expands the public places where people who have permits to carry concealed weapons can bring their handguns. Bars, restaurants, and other establishments would be able to prohibit guns by posting signs, and it would still be illegal to drink alcohol while armed. A bill allowing handguns in restaurants passed the House last year but stalled in the Senate.

REPUBLICANS DODGE VOTES ON GUN CONTROL MEASURES: Republicans used procedural maneuvers to shelve without debate amendments proposed by Democrats to remove the section about allowing guns on campuses, to require background checks at gun shows, to require trigger locks, to limit high-capacity magazines, and to increase penalties for drinking while carrying a handgun. Full story.

WITH GUN BILL ON FLOOR, LAWMAKERS SPONSOR CONCEALED CARRY CLASSES: The announcement sent last week to state lawmakers: "Representatives Tim Moffitt and Tim Moore are sponsoring a concealed carry class for all members/staff and their families or friends. Unfortunately due to unforeseen circumstances we will not be able to have the class in the Legislative building as discussed in prior emails. Fortunately, Pharoah’s at the Museum across the street has offered to allow the classes to be held in their restaurant. Pharoah’s will be selling food prior to the class starting during both class sessions. We will still have the classes on May 7-8th and 28-29th from 6-10pm and the class will cost $45 which includes all class materials, gun rental for qualification and hearing/eye protection when qualifying. The only additional cost will be ammunition to shoot during your qualification session held at the instructor’s farm in Clayton, NC. I’ve attached the form that they will need filled out prior to the class starting. Please turn in the form and your $45 dollars in check/cash to room 2119!"

MORE ARRESTS, LITTLE CHANGE FROM GOP LEADERS: Twenty-seven people protesting laws they said hurt children and poor people were arrested at the Legislative Building on Monday night in front of a crowd of supporters. This is the second protest in as many weeks organized by the state NAACP that resulted in arrests. More than 100 people filled the rotunda on the second floor of the Legislative Building to sing and pray. People blocking the gold doors to the Senate chamber were arrested, their hands bound by plastic ties, after they did not disburse when ordered by General Assembly Police Chief Jeff Weaver. Full story.

THE BIG NUMBER AND BIG QUESTION: 44 -- the total nummber of people willing to be arrested to protest the Republican legislative agenda. Does it help awaken apathetic voters to what is going on? Or does it galvanize the public view of the opposition in a way that helps Republicans?

INTERNET SALES TAX FACES TOUGH SELL IN CONGRESS: Traditional retailers and cash-strapped states face a tough sell in the House as they lobby Congress to limit tax-free shopping on the Internet. The Senate voted 69 to 27 Monday to pass a bill that empowers states to collect sales taxes from Internet purchases. Under the bill, states could require out-of-state retailers to collect sales taxes when they sell products over the Internet, in catalogs, and through radio and TV ads. The sales taxes would be sent to the states where a shopper lives. Full story.

HALEY BARBOUR TO ATTEND GOP CONVENTION: The latest Republican named as a headliner for the state Republican Party convention is Mississippi Gov. Haley Barbour. The former chairman of the national GOP will speak at a luncheon June 8 in Charlotte, the state party announced.

FOXX BUSINESS INTERESTS IN SPOTLIGHT: From Politico -- Anthony Foxx promotes clean mass transit on two fronts — as the mayor of Charlotte, N.C., and as an in-house lawyer for a company that makes eco-friendly buses. Now his dual roles could pose a problem for Foxx as the Senate considers whether to confirm him to head the Department of Transportation.Federal records show that DesignLine Corp., where Foxx works as deputy general counsel, has twice failed to meet its promises on contracts using stimulus money from DOT — the same agency President Barack Obama has tapped Foxx to run. Full story.

INSIDE SWEEPSTAKES STORIES: Columbia Journalism Review interviews AP reporters Michael Biesecker and Mitch Weiss about their coverage of the sweepstakes donations in North Carolina. Full story.

BILLS BOLSTER CHARTER SCHOOLS: From AP -- Local school boards would have the authority to create charter schools and form more flexible arrangements with district-run schools under a pair of bills in the North Carolina House. The bills, sponsored by a Republican lawmaker and supported by Democrats, are intended to help bridge the divide between public and charter schools, which even critics acknowledge are a fixture of the education landscape that's here to stay. Full story.

OUTGOING CHANCELLOR TAKES UNC POLITICS TO TASK: From WCHL rado -- Outgoing UNC-Chapel Hill Chancellor Holden Thorp blasted the UNC system of governance, saying it is driven by politics and entrenched stakeholders who don’t want to give up their jobs. In a WCHL News Special with Jim Heavner, he said that puts UNC at a competitive disadvantage. Listen here.

RICHARD BURR DOESN'T WEAR SOCKS: This is hardly news to political followers. But ABC 11 featured the North Carolina's senior senator in a segment about his footwear. Watch here.

BILL COULD HURT WATERWAYS: A measure before the N.C. legislature could wipe out ordinances that protect Mecklenburg County’s water-supply lakes and streams, local officials say. The bill is the third in three years aimed at lowering state, and now local, environmental rules to the minimum required by federal law. In doing so, local officials say, it removes controls that are tailored to local conditions. Full story.

McCRORY, FOXX, VINROOT, GANTT, MYRICK, KNOX TO SHARE STAGE: A public forum May 21 featuring four decades of Charlotte mayors. Current Mayor Anthony Foxx and former mayors Pat McCrory, Richard Vinroot, Sue Myrick, Harvey Gantt and Eddie Knox will come together on one stage to discuss their hopes and dreams for the future of Charlotte in this public event sponsored by the Charlotte Observer, PNC Bank and Central Piedmont Community College.


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