[BLANK_AUDIO] [BLANK_AUDIO] [SOUND] The house will come to order. Members will take their seats, visitors will retire from the chamber, the sergeant-at-arms will close the doors. Members and visitors will please silence all elecronic devices. The prayer will be offered today by Representative Jones. [BLANK_AUDIO] >> Let us pray, Our Heavenly father, once again we have the blessed privilege to come before your throne of grace. We pray to your holy name and come with thanksgiving and reverence. As your word says, the fear of the Lord is the beginning of knowledge and the beginning of wisdom. Lord Father we ask for a special measure of wisdom throughout his body as we would collectively carry the mantle of leadership in our state. You've promised to grant wisdom from above to your people who would ask in earnest. Let us ask, for the wisdom from above is pure, sincere and full of mercy and good fruit. We pray that you would heal and preserve our state and nation such that we would bring honor and glory to you. The challenges we face are great but with God and only with God all things are possible. May our efforts be faithful according to your word and ultimately of eternal worth to the kingdom of God. We lift up every soul within the sound of our voice and beyond knowing that you are always there to meet their greatest need. As others may choose to pray in their own way I pray in the matchless name of Christ my savior. Amen. >> Amen. I pledge allegiance to my Flag of the United States Of America and to the Republic for which it stands, one nation under God, indivisible, with liberty and justice for all. [BLANK_AUDIO] The gentleman from Gaston representative Tobit is recognized. >> Mr. Speaker the journal from May 2nd has been examined and found to be correct. I move that it be approved as written. >> Rep Torbett moves that the journal from May 2nd be approved as written. Those in favor will say I, those opposed will say no. The I's have it and the journal is approved as written. [BLANK_AUDIO] [SOUND] Members, the Chair has been advised that we have two members that wish to rise to point some personal privilege at the beginning of session the Chair is going to grant that request. So for what purpose does the gentleman from Union Representative Horn arise? >> For A point of personal privilege. >> The gentleman may speak up the three minutes to a point of personal privilege. >> Thank you Mr. Chairman. As many of you know today is national teacher appreciation day, I would bet that each one of us if called upon to specifically identify Five people that have most impacted our lives, most vivid in our memory for creating who we are today, every list would include several of our elementary and secondary school teachers. Anyone who was chosen to teach, inform, support, guide, nature and most Importantly encourage the thirst and excitement for learning amongst students and peers has our utmost respect and veneration. Childhood and adolescents is a vulnerable time especially if a child is lucking a secure safe environment. Many children come to school The school with little more than hands jammed into empty pockets. Leads us to say such consequences can be devastating.
But such opportunities can also be exhilarating. For me our schools are the very fabric of our society. They are not just places of academic learning and examination They are often the only safe consistent place a child has in their live and it is where they are taught that they can cope with circumstances, that they cannot change. We all gratefully respect those who become teachers and stand in front of 30 children with a genuine desire to see them all All thrive, including those whose behavior sometimes overwhelms and cast doubt on their own ability. Each one us will always remember the teachers and professors who truly made a difference in our lives. They we'll also make a difference in the lives Lives of others, they did in me. I am and forever be grateful for their patience, persistence and confidence in my abilities to succeed. I hope to live up to those expectations. For me, everyday is teacher appreciation day. Thank you Mr. Speaker. >> Thank you Representative. The gentleman from Orange Representative Meyer is recognized to speak for three minutes to appoint a personal privilege. >> Thank you Mr. Speaker. Ladies and gentlemen I'm not quite the speaker or the Representative Churchill, Representative Fornes/g, it's simply like to share with you Statement that was also read in the Senates today, the Senate allows for senatorial statements we don't have the same exact provisions in our rules but here is what was said, thus it's also being shared in our chamber. Recognizing all teachers on National Teacher Day, whereas teachers mold future citizens through guidance and education Education while serving as listeners, explorers, role models, motivators and mentors. And whereas teachers encounter students of widely different backgrounds and work diligently to help them learn and impact their lives, and their families in ways that often extend beyond the classroom. And whereas people in the United States bean celebrating national teacher day in 1950 when Eleanor Roosevelt persuaded congress to set aside a day to recognize educators. And whereas the origins of the idea for a national day to honor teachers are unclear, some references say the advocacy of Wisconsin teacher and other references credit the efforts of a teacher in Arkinsaw/g for being the first to advocate for establishing a teacher appreciation day whereas congress declared March 7th 1980 as a National Teacher Appreciation Day, and whereas the national Education Association and its affiliates observed National Teacher Appreciation Day until 1985 where the National Parent's-Teachers' association designated the first full week of May as Teacher Appreciation week and then voted the following year to make Tuesday of that week National Teacher that day. And whereas during the observance of National Teacher Day it is fitting to reflect upon the lifelong lessons we learned from our teachers and to recognize the members of the General Assembly who are current or former teachers, and whereas in order to respect, recruit and retain quality teachers, our state and our country depend on providing teachers a quality education to all students are needed to provide that education. Therefore, teachers deserve our respect, recognition and appreciation, particularly during the observance of National Teacher Day on May 3rd 2016 as well as throughout the rest of the year. Thank you. >> Members the Chair would like to point out that two school groups from Pinygrowth Elementary School in Connersvile are here. If you would stand, the members would like to welcome you to the House chamber. Thank you for being with us today. >> [APPLAUSE] >> [BLANK_AUDIO] somebody from brown [INAUDIBLE] The gentleman from Carbo representing Lukas is recognized to speak for three minutes to aform a personal priviledge. >> Thank you Mr.speaker having served as a teacher and having worked with teachers as a career for about 34 years is a great honor to share with you my perspective on teachers. Teachers in my opinion epitomize Abraham Maslow's theory on self actualization. They do it because they love to help others but you know would be much more grateful and they would be much more grateful if we reciprocated
with a little more generosity in their pay and I know it's in our great desire to do just that. Whether we did it or whether we didn't our great teachers would still be on the job and they would still work to extract the very best from all of our students so thank you Mr. speaker >> For what purpose does general from [INAUDIBLE AUDIO] rise? >> For a moment of personal privilege. >> The speaker has the floor and may speak up to three minutes to a point of personal privilege. >> Thank you Mr. speaker and before I start I would just ask that the comments of Representative Horn/g, Meyer and cbe spread upon the record and request a journal and I would also like to recognize all the teachers who made it possible for all of us as legislatures to be here, to be able to serve our communities, to understand the different issues that we have to deal with and to pass on those opportunities to subsequent generations and so not only do I wanna thank all of those teachers who've done that for all of us but also thank all of you who have remembered that you to came along that trail and education and you will in the future provide the support necessary so that we can have great generations going forward. I also wanna make sure we thank all North Carolinian's who so graciously support education and support our teachers and our communities and on this national teacher day, we recognize those folks who are official teachers, who are retired teachers and and who are currently teaching in our different educational systems. >> Members without objection the remarks of Representatives of Horne, Maya, and Lucas will be spread upon the journal. Seeing no objection, so ordered. Members upon the motion of the members of [INAUDIBLE] county Representatives Howl, Mashur/g, Luky/g, and Maya, and in fact all members of the house, the chair would ask that all teachers, current and former who are present as members of the chamber, as legislators, if you'd stand so that we could recognize you. >> [APPLAUSE] >> And members, all of our guests in the gallery who are current or former teachers, if you stand so that we may recognize and thank you for your service. >> [APPLAUSE] >> Petitions, memorials or papers addressed to the general assembly with the hearse, the clerk will read. >> 083-16 the resolution to oppose sessional law 2016-3 house bill two. >> Noted, the resolution will be on file with our clerk's office. For what purpose does the general from [INAUDIBLE] Representative Luky/g rise? >> Speaker, I'd just ask that The remarks of [INAUDIBLE AUDIO] also be spread across the room. Without objection so, members the chairs please to introduce our notes of the day Ann Rynat/g from visat/g city. Ms. Rynat thanks for being with us [APPLAUSE] >> Well posting standing committees representatives bali/g Saying Hastings, Martin, Sesa/g and Soka/g chairs of the committee in finance are recognized to send forward a report that the clerk will read. >> Vali/g, Hastings, Martin, Sesa/g, Soka/g committee report [INAUDIBLE] technical changes Calendar persumed to read 36B >> Senator 726 our feed update payroll, calendar and without objection to the days calendar. >> The gentleman from Dome have an objected to Senate bill 726 The gentleman from lake his name is Stan is recognized for a motion. >> Mr. speaker I move that the bill 77 and 746 be placed on today's calendar for immediate consideration.
>> The gentleman from lake has moved the senate bill 726 to be placed on the calendar not with standing the Naming the objection from the gentleman from Durham. The gentleman from Lake does hos stand recognized to the voters motion. This is a [INAUDIBLE] and also another reading from tomorrow if I'm not mistaken we'll have plenty of time to debate it but we need the Move on with it. >> For what purpose does the gentleman from Durham Representative Michaux arise? >> To speak on the motion. >> The gentleman has the floor to debate the motion. >> Thank you Mr. Speaker, ladies and gentlemen in the house. This is a far reaching matter that's coming before us. It was in the This committee this morning and it's being put on the calendar today, and it shouldn't, we should have time to really examine it. There's one area in that is a far reaching area which deals with the taxation of some funds that are on a short sale that we need to talk about it with some folks at home The folks need to know about it. If you accept this bill and pass this bill as it is you are really putting a tax on some folks who can't afford it, who would not be in that situation had it not been for unfortunate circumstances. I'm just asking that we be given a period of time in order to discuss it not only our constituents, but with other folks in the community who might have a problem with this. >> For what purpose is the general for [INAUDIBLE] Representative Browley arise. >> To debate the motion to place the bill on today's calendar. >> The gentleman has the floor to debate the motion. With all due respect the single/g gentleman from Durham he is describing the debate that took place on this issue last year when it first came up. This IRC update merely maintains the status quo anti of the way the Internal Revenue Cord, or the way we conform with the Internal Revenue code. The only difference from the situation prior to this bill will be that those persons who have received monitory compensation for having been wrongly convicted, and incarcerated will not be taxed on the settlements they receive for the wrongful incarceration. The treatment of all other items in the Internal Revenue Code will not change from the way the were for tax year 2014. They will merely confirm that the way we did things in 2014 continued for 2015. 15 which returns have already been filed and we are simply confirming the letter advisory we sent to accountants in March that there would be major changes. >> Members of the chair would like to inform the body that the chair gave latitude to both the gentleman from Durham and the gentleman from Meckelnberg to delve into the content of the bill when in fact the question before the house is going to be, for the bill beyond today's calendar. The Chair will remind members, to the extend they can, to confine their remarks to, whether or not this bill should be considered today. Further discussion further debate on the motion from the gentleman from Wake. Seeing none, those favoring the motion from the gentleman from Wake to add Senate Bill 726 to today's calendar, will vote aye, those opposed will vote no. The Clerk will open the vote. [BLANK_AUDIO] [BLANK_AUDIO] The Clerk will lock the machine and record the vote with 61 having voted in the affirmative and 42 in the negative. The motion is adopted and Senate Bill 726 is added to today's calendar. We'll now resume with the report from the committee on Finance the Clerk will read. >> Senate Bill 729 various changes to revenue laws favorable. >> Calendar pursuing for rule 36B. [BLANK_AUDIO] Members without objection the Chair is going to move the introduction of bills and resolution to the end of today's calendar after we adjourn. [BLANK_AUDIO] Senate bill 176 the clerk will read. Senators Rucho, Raven and Tillman senate bill 726 an act to update reverence to the internal revenue code, and to decouple/g from certain provisions to federal protection America tax hikes act of 2015 general assembly of North Carolina enacts.
Members before we begin debate the chair will remind the members that this is a roll call bill which means the bill ill be up for consideration on second reading only today. Should the bill pass today it will be on the third reading tomorrow. For what purpose does the gentleman from Meckelnberg Representative Burly rise? >> To explain the bill Mr. speaker. >> The gentleman has the floor to debate the bill. >> Well actually most of the explanation has already taken place. Every year recently it seems congress waits until the Christmas season or early January to do the changes to the Internal Revenue Code. Last year we debated it for quite a while and finally finished our debate of the 2014 changes in the summer after people, had already filed a lot of their tax returns. And where we did not conform and they had followed the IRS code they were required to file amended returns. This year we took up the issue of the Internal Revenue Code changes fairly early in the Revenue Laws Study Committee, and agreed to make only the change mentioned earlier for those receiving payments for wrongful incarceration. We had previously conformed to changes in the Internal Revenue Code in only one aspect and today is an appropriate day to mention it. Teachers who buy supplies for their classroom out of their own pocket are allowed to deduct $250 from their adjusted gross income. They're allowed this deduction whether they automize or not. It's one of my favorites because my daughter is a teacher and every year she is able to claim it. I file her all the form 1040s specifically to do that. We have continued to do that for teachers. This year we've also made a change for the wrongfully incarcerated otherwise the bill makes no changes to North Carolina tax law. I recommend the bill to your consideration. >> Members upon motion from the gentleman from Transylvania County Representative Whitmire, the Chair is happy to extend the gallery to Cody Hanson. Mr Hanson if you're here would you stand, let us welcome you. >> [APPLAUSE] [APPLAUSE] >> For what purpose does the general from Durham Representative Luebke arise? >> Speak on the bill. >> The gentleman has the floor to debate the bill. >> Thank you Mr. Speaker and members of the house. This Senate Bill 726 you can debate some of the changes, whether they are right or wrong. I mean there are a number of good questions to be debated. I wanna focus on the issue of the short sales and the fact that under this bill that we will be taxing people on that discrepancy there in terms of their indebtedness that we be charging taxes on that. Note that the federal tax code does not tax that. That the federal level has recognized that there are many people who are still caught up in the mortgage crisis. And we have unfortunately decided not to go along with the federal government on this issue, we haven't decided to tax people. And my concern is that we are taxing many many people in the middle class who are caught up in this mortgage debt issue. And I just didn't understand really as a body why we ought to be doing that. There surely ought to be some opportunity for people who are in difficult financial straits to not be taxed on that amount. And we really can do so and it was interesting this morning cuz the bill did just come up this morning, and I had the impression from the discussion in the finance committee that for most members it was the first time they'd seen the bill. So it was not something that had noticed or given that it was on the weekend that a lot of people had [UNKNOWN] so we didn't have a lot of debate in the community but the issue did come up about whether who is benefiting from this. And as I say I maintain that there is not many people from the middle class were hurt by this. It was noted that it is the way it is now. And now it goes up to you can have the exclusion up to$ 200 million under the federal law. And they said it will terrible if we did something like that for the wealthy. If you went up to 2 million dollars well I don't think the wealthy need tax breaks in here, you've had me speak on that before so I said to my colleagues, well then just bring it down to a level that you think will hit the middle class. I said that even though I was struck by the fact that we're looking at a fairly minor issue,
$8 million, still $8 million think of the teachers you can pay with $8 million. But I still thought about things we were not concerned about as a body about the wealthy taking advantage of our tax good. We have a situation where if you buy a fishing boat, you pay the full 3% sales tax but if you buy a yacht, you pay at a lower effective sales tax rate. So when it came to buying yachts versus fishing boats we were prepared to help the wealthy. So I think that's one little example of how this body has been helping the wealthy. So it;s remarkable for me that today there was a great concern that this was up too high. That the this $2 million assumption was just too high. So I turned and said to the colleagues on the committee when I spoke, find me the amount that you wanna do, that you think is fair, that will not have the wealthy benefiting from it, I'm with that, wealthy do not our help. Well there was silence, no one wanted to put it forward and I mean on the Republican side and on the Democratic side. No one wanted to put forward and made it to help the middle class. I think we should be doing that. I think it's a mistake to go forward as it is and I'm voting against the bill, well, to the extent there are others who feel the way do, hope you'll vote no as well. Thank you. >> For what purpose does the gentleman from Wake, was the gentleman seeking recognition, chair apologizes. >> I was. >> For what purpose does the gentleman from Wake rise? >> To debate the bill. >> The gentleman has the floor to debate the bill. >> Good deal we've passed the same thing many years in a row and this issue has come up not just first today, but last year, the year before Before the year, before the year, before. And here is the irony, If you had a law that said you could lend Representative Cleveland, a million dollars, and then forgive the million dollars. It would be a way that he could get the million dollars tax Tax free. And that's what would happen if we had that as a general law but we don't. The federal government, the state government forever has tax forgiveness of indebtedness. Then we come to the great recession and due to this particular circumstances the federal government Had an exclusion of that for your primary residents loan forgiveness and they did that from 2008 I believe through 2016. And we did it from 2008 I believe through 2014. People in that situation still get the federal Federal reduction of task based on forgiveness of indebtedness, and the state amount of tax is much less. But here's the irony. Representative Luebke suggested in finance that we at least go up to 250,000. Now being from Durham, Representative Luebke is a great defender of the poor and the middle Middle class, and only on two issues has he deviated from that. This is one, the other is the long term header senior of finance from 2002 through 2009 he always was trying to increase the state sales tax rate which is highly aggressive. And I know he was forced to do it Do it by whoever was in charge, but never the less he led that fight. But on this one what he proposes is a gift to mostly wealthy people, and I'm not against giving things to wealthy people. But if you wanna to give things to wealthy people it should be you doing it representative Dickson not the state of Of North Carolina. He suggested that 250,000 in finance. Well, to forgive 250,000 means you probably got a loan of at least a million. And if the loan was a million, your house was probably worth at least one and a quarter million. We are not talking Talking about the poor or the lower middle class we're talking about million and a quarter homes here.So if this comes up again tomorrow I just hope we'll put the quietus on this debate. It is the same thing we did last year. The accountants have been begging us,please Please, please, please get that IRC update passed quickly so we can finish these returns. We'll pass it tomorrow so the Senate can pass at a two day bill tomorrow and it will hopefully be law by Thursday. Thank you very much. >> For what purpose does the lady form Franklin, Representative Richardson arise? Thank you Mr Chairman. To debate the bill. >> The lady has the floor to debate the bill. >> On behalf of the bill that we're looking at based on the presentation that was done by the member, I think it's agreeable that this is teacher appreciation week and that we are allowing them to carry $250 on their tax as a deductible item for supplies and materials
that they buy in their classroom. But in the future I certainly hope our teachers can look forward to the General Assembly appropriating funds so that this an become a zero deductible item on their tax return. Thank you. >> For what purpose does the gentleman from Wake Representative Jackson arise? >> To speak on the Bill. >> The gentleman has the floor to debate the bill. >> Thank you Mr. Speaker. I wanna follow up on Representative Stan's comments about debt forgiveness. And tell you that as someone who's up in the special proceedings at Wake county all the time, I don't see a lot of me in the half dollar homes in the Wake county being foreclosed. That is not the type of home that I see being fore closed. From what I see is $100,000, people who've lost their job, whose unemployment was cut from 26 weeks to 13 weeks, who've had a medical emergency or filed bankruptcy. And who are in homes that probably were not worth what they originally paid for them, really through no fault of their own. Say the IT system was very complacent. They let this happen back in the late in that they use however they wanted to use to appraise this houses. They can't do that anymore they have to pick from a list. But it used to be that the show the bank wanted to loan you $100,000 for your first house purchase he called Bob at the appraisal shop. Bob got all his business if somehow Bob knew exactly what that house needed appraise for it needed appraise for $100,000 of your purchase. You would be amazed how many appraisals came in exactly what they needed to be. So that's what happened. Several years later we've had a downtime in the economy and this And these homes are being foreclosed on. These people are losing their homes. They're now becoming renters again, often times with bankruptcy, a lot of debt. And then on top of that, they're gonna get a tax appeal from the state of North Carolina. Now I disagree with Representative Brawley in that nothing's changing. We have to task this Each year. And then so if we don't pass this decoupling this year, then they won't have to pay the tax. And so what we are doing is passing a tax increase for at least a segment of our population. The segment of our population who will be foreclosed on or who were foreclosed on and had a debt forgiven In 2015. The second part I'm not gonna address the donations to charity out of the RA. But the second part I wanna talk about is PMI, Private Mortgage Insurance. There used to be a way of doing business in the loan industry where you borrowed 80% of the value of your first Home. You took out a second mortgage, a home equity line. Usually it was at a variable rate of interest, and you did that so you could avoid paying PMI. And then PMI became tax deductible. And so what that did was it made it easier just to do 100% loans or 95% loans Because the PMI was going to be developed just as the interest and in fact the federal government treats it like interest in that on the true thing disclosure representatives and they show you what your effective APR and you will present this in this radius they figure the PMI is into that, cuz they notice the cost of this Loan just as interest is the cost, so people bought this houses and they figured out if I become a owner for the first time what I'm I gonna say and a lot of people figure out that well with my pain that's a $1000 dollars and pay is $700 a month in interest I'm gonna save $150 Hours a month on interest and a tax bill and that only helps interest on my tax bill and that will help me make ends meet but what this field does is take that it and say even for those who will not be in foreclosed this portion of your interest expense and it is created as an interest expense for both federal tax purposes and for all the closing documents I've ever seen and the decision will no longer be able to take this So that's the tax increased to these people who haven't even lost their homes and I just wanna make sure that's clear to everybody we'll do the. >> Purpose is a gentleman from Nash representative Collins rise? >> Representative Jackson will deal with your question. >> Will the gentleman from Lake Gill, gentleman from Nash. >> I do. >> I apologize, I try to wait till [INAUDIBLE] got all your points there Ask you a question you said that the houses that you're concerned about are those that have had $100,000 mortgage or something and eventually the people got upside down and were forgiven a certain amount. What would you say that would be a reasonable cup for people in that situation with $25,000 that certainly wouldn't take $250,000 which is the only figure we've heard and I really refer to it and
I really wanna hear your opinion on that. >> I just think that question as long as [INAUDIBLE AUDIO] cuz I know the purpose sometimes people saying, look I have a genuine question and I appreciate that. I think there is a line there and I don't know where the line is honestly I did not read this bill until two O' clock when the cactus and someone told me we were sent an email that it's been added on the calendar and so I get that and so I tried to read, I tried to listen to the bates and focus I know I spoke last year on the depth forgiveness provision. I do understand the concern about multimillionaires who had $10 million homes, I totally understand that somewhere between the multi million dollars and the first time home buyer, the $100,000 I think there's a line that we can agree on. If somebody wants to work on that between second and third reading, I'm certainly willing to talk to anybody after session. Thank you Mr. Chairman. >> For what purpose does the gentleman from Orange Representative Meyer rise? >> Thank you Mr. Speaker, I'd like to debate the bill. >> The gentleman has the floor to debate the bill. >> I rise in opposition to this bill, in parts to build on the arguments some of my colleagues have made in criticizing this bill but just to point out that broadly the places where this bill decouples North Carolina tax policy to federal tax policy are places where federal tax policy has been set up to benefit middle class people and therefore our decoupling is going to be a tax increase to middle class people compared to what would have happened if we had gone with the federal federal guidelines. This includes the short sales provision, this includes the mortgage insurance provision that Representative Jackson just spoke to. This bill also decouples from federal guidelines, the ability to deduct any expenses you had for higher education. A policy that has important place in the federal level to try and help more working class families be able to send their children to get a college degree. Finally the piece of the bill that decouples the deduction for giving an IRA contribution to charity not only makes it harder to give to charity but likely means that charities will receive fewer contributions. So with those four policies as a part of this bill, I cannot vote for it and I recommend that you vote against it as well. >> Mr. Speaker? >> For what purpose does the gentleman from Wake Representative Stemmer/G rise? >> Will Representative Meyer yield to a question? >> Will the gentleman from Orange yield to Wake ? >> Yes sir. >> He yields. >> Representative Meyer, Representative [INAUDIBLE] appropriations chair that if the bill fails we'll have about 150 to 200 million less fewer dollars, would you suggest cutting the governor's budget for teachers by say $150 to $200 to pay for your vote? >> I'm sure that if this bill fails all of us will work together to find some other ways to make sure the teachers are taken of. >> For what purpose does the gentleman from Durham representing in the shawl arise.To speak on again, the gentleman has the floor to debate the bill. >> And I just won't repeat everything that everybody else said,but just take this into account.If you run into a problem, you have a mortgage on your home of $100,000 and a balance on it on $ 100,000. You run into a problem, you lose your job Your wages go down, anything could happen to you that you would have financial emergency. Your house is foreclosed on and the bank-man sells the house for $80,000 which leave the bank being owed $20,000. That $20,000 the bank will then send you a $1099 saying that's the money that you made on that deal. However, the bank can take that $20,000 or portion of that $25,000 as a loss.You got to pay on that whatever kind of gain you wanna call it that forgiveness tax is what it is. Because you are not able to meet what was there. I mean it's just common sense folks that you don't want to pay tax on money that you really don't have. That somebody else gets credit for. And we can work this thing out to a point, I think where everybody cannot, if we have a little time to do it. I don't why we're in such a big hurry to do this. This is why I try to hold it up for at least a little bit so some folks can have an opportunity to go back and structure something that will need all sides of this, that' s why I have to vote against.
[BLANK_AUDIO] >> For our purposes a gentleman from Richmond Representative Goodman arise. >> To ask representative Szoka a question please. >> Does the gentleman from Cumberland yield to the gentleman from Richmond. >> I do. >> He yields. Representative if had you had been in the mortgage business and you can help me understand this short sale business a little bit better. So if I could give you a hypothetical if you say Ball horn got a mortgage say it was $250,000 mortgage and you You decided you wanted to sell your home and moved to California. And as it turns out the market in your neighborhood had declined and your house, you can only get an offer for $100,000 for say you still had $150,000 mortgage. And the best deal you can get on your home is $100,000. On a short sale you couldn't sell that home or without short sale you couldn't sell that home unless you paid the bank off is that correct? >> Yeah it is correct. In your example if there is a remaining balance for $150,000 and all I could get from the market was $100,000. I have a couple of choices. I could sell it for $100,000 and then pay the bank $50,000 or whatever assets I have. And if I didn't have those assets then the loan isn't gonna close. What a short sale is, the bank allows you the seller to sell the property that lower Lower then the appraised value of the house. And by doing so they are acknowledging a debt a loss, and in your example a loss of $50,000. Which as far as I know the banks do write that off, but they've lost $50,000. So that is what a short sale is it's like a gift of $50,000 in your example to that seller. >> Follow up >> Will the gentleman from Cumberland yield to an additional question from the gentleman from Richman. >> I do. >> He yields. >> So there is no foreclosure in this particular example? >> That is absolutely correct. The foreclosure is when the borrower decides to stop paying and there's a long legal procedure which I'm sure all the attorneys here in the assembly could go into. But that's a long, formal procedure, when the borrower has stopped making the mortgage payments. If you're underwater in a house and you continue to make the mortgage payments, you can stay in your house as long as you want. until you pay it off. Thank you Mr. Speaker. >> Representative Szoka. >> For what purpose does the gentleman from Nash, Representative Collins arise. >> To debate the bill. >> Gentleman has the floor to debate the bill. >> I just like to present the other side of what some of our colleagues have been presenting a lot of times the situation we've talking about has occurred when someone took out a mortgage for a house, and then as the real estate boom went along later took out another mortgage for a bigger amount to take care of the equity in the home and use that money for something else. And then eventually the real estate bust came and now the person owes more than the house is worth and so eventually they decide to make a business decision, say it's not worth to pay this mortgage on this house. It's not worth this anymore and whatever they still owed on it versus what the buyer could get for it is the difference. That's the money they got forgiven that we're talking about. I live on the other side of that coin and probably a lot of you do too. I bought a house in the city in which I live in 1999. Didn't take an adjustable mortgage so I could pay as little as possible and keep the debt up. I have been paying a fixed rate mortgage just like a lot of you folks have. I have paid that house off now and if I tried to sell it today, I'd have to sell it for about 25% less than what I bought it for back in 1999. And nobody is gonna give me a tax break on that loss. I'm not asking the state of North Carolina to provide me money on that loss. So think about that. Most of us are in a situation where we're talking about giving a break to a few people who many of them kinda manipulated or took advantage of the situation that was going on in the real estate market back in that point in time. And they kept a little too long and got burnt. And the rest of us who didn't do that are not asking anybody to make up our losses. So I don't have quite as much sympathy in this cause as some of our colleagues do. Because a lot of us did the right thing during the whole situation, paid our bills and not asking the state to bail us out. For what purpose does the lady from New Hanover Representative Hamilton arise? >> To ask a question to the bill sponsor. >> Would the gentlemen from Mecklenberg yield to the lady from New Hanover >> I yield. >> He yields. >> Thank you Mr speaker. Representative Stam mentioned a few minutes ago that if we don't implement this new taxes that we could be faced with a 150 to 200 dollar million hole in our budget. And I'm curious if you can help me understand how,
we would have a hole in our budget this year if we don't implement the tax that we are currently are collecting anyway. >> Well let me challenge the question but answer why there would be a hole. Because what we have done is, we've had people filling taxes based on the assumption of what is the deductible and what is excludeable. if we go back and retroactively change that, that would mean that all of the returns that were filled for counter year 2015 and those that are yet to filled because they ask for an extension where they take advantage of that it would also be an effect for the current year as well. So that this this tax preference items that were not used before the exclusion for example in the home mortgage interest would a difference of $16 million. There are some other factors in and the total the total amount of money it would cost us for the 2016 Budget year/g 91,500,000 for 16/17, 205,400,000. So there would be almost a $300 million difference for the two years in budget numbers based upon changing the taxes that would be owed based upon the treatment of those tax preference items. >> Follow up Mr speaker. >> I yield. >> Does the gentleman yield to an additional question he yields. >> So we are going back in time now this is, we're going back to 2015 to charge? >> No ma'am we are not charging anything. What I'm saying is that under the tax laws that were extent that we collected taxes the way we had for 2014 and 2015. The federal government changed the underlying assumptions of the federal taxes. We have not conformed to those changes. If we do we would be going back and changing the taxes retroactively to reduce the taxes owed. So I guess you would call it as retroactive tax cut for these particular items. >> Last follow up Mr Speaker? >> I yield. >> The gentleman yields. >> Thank you Representative Broley/g. You're speaking of the short sales. Does this affect PMI as well? The- >> This is everything that's in it because this bill, it determines to what we conform and do not conform for all of the changes in the IRS code. The mortgage interest would be $16.2 million. And for what purpose does the lady from Orange Representative Insko/g arise? >> To debate the bill. >> Lady has the floor to debate the bill. >> Thank you Mr Speaker. I'm concerned that we would always assume that somebody who refinanced their house was doing it to Take advantage rather than for real good reasons. A lot of the people that were lured into home mortgages in the late 2000s couldn't afford those mortgages. But they were approved for mortgages they couldn't afford and they were given mortgages that were either no interest or low interest for the first few years. Then when those higher interest rates kicked up and they couldn't make their payments, they were offered the opportunity to refinance at a higher rate so they could pay off the old mortgage. Again and get a new one at a higher rate. So they were naive but they trusted the industry. It was fraudulent. They weren't always frivolously spending their money. Most of those people are hardworking people who were trying to move into the middle class or move move up in building their own equity. So I just wanted the two sides to this story, thanks. >> For what purpose does the gentleman from Cumberland Representative Socker/g rise? >> To debate the bill. >> the gentleman has the floor to debate the bill. >> Ladies and gentlemen I've been taking notes on some of the discussion and I hopefully don't have to ring a bell but I'll just like to point out some facts for you. First it's been stated there wasn't a lot of debate on this but we had a debate in Finance we're debating it right now Now and even more importantly than that last session , for those of us who were here which was the majority of us , we debated this at
length, and finance we did have a second reading which we debated, we had a third reading which we debated, so I find that the interesting thing that people think that we haven't debated this enough, I'm gonna just an issue here about being caught up in the mortgage Crisis and let's go back to what the Federal government started this deduction to begin with. Because part of the 2008/2009 this deduction didn't exist at the Federal government level. Representative Stan accurately told everybody here, what the process was for that. I mean it was Up until the mortgage process. Then a decision was made at congress, that their had been problems in the mortgage process and a lot of people got caught up in the 2/28 3/27 mortgages which gives you a lower teaser rate with the hopes to people with poor credit, in the hopes that they would increase and raise their credit in the next two years and then refinance into Mortgage today at a lower rate. I can't tell you for a hundred percent that all those loans have washed out of the system, but I'm in the mortgage banking industry and I watch these numbers, and is my opinion that most of those mortgages have been washed out of the system a long time ago. 3/27 means was for three years then adjustable. 228 fixed for two years then adjustable. The last year this were offered was 2008, so they go up to 2011 in contrary to what was just said. What happened is people who were not able to refinance to a lower rate, they wouldn't qualify cuz either their debt income ratio was too high or their credit hadn't been fixed. So the scenario that we heard from Representative Insco/g it didn't happen. It simply doesn't just happen, it didn't work like that. Those folks were foreclosed down, and those loans have been washed out of the system so to think that this is still still a continuation of the mortgage crisis in 2008-2009 is simply not true. It was stated that this is looking out for the middle class. I heard one representative making this a class issue. Folks, this isn't a class issue, this isn't an economic issue There's one word that sums up all of these and it's called risk. When you buy a house you take a risk, it might go up, it might go down in value. When you go to the stock market and buy securities, the value might go up in which you sell it and make a profit or it might go down and you'll lose money. A house is an asset like anything else. A house is an asset. There is inherent risk in every financial transaction that you take. hen you deposit money in the bank, he bank might go out of business, we have FDIs insurance for that. So it's just not a class issue, it's basic economics that somethings you buy, if you make a bad decision, it might go down in value. So it's our job to validate bad decisions made by residents of the State of North Carolina. I don't think it is. Do people lose their job sometimes? Yes, do people have illnesses which suck up all their money in their accounts? Yes. Do bad things happen to good people? Absolutely. Is it our job to save every person from every bad thing that happens? I don't think that is why this legislature exists, and I'd challenge somebody to tell me if that's what our job is. And several people have done what I consider demonizing other people, I've heard I've heard oh couldn't find an honest appraiser, the banks were bad, mortgage guys are bad, I mean really, are we really gonna go there? I guess we did go there and I'm sad to have heard those statements because while there are bad appraiser or there are bad loan officers or there are bad bankers, also bad attorneys, bad welders, bad everything. Okay? You can't stand here today or you shouldn't stand here today and make an argument on the other side of what I'm arguing. To say well it's because this whole class of people, this whole industry did something wrong. That just doesn't make logical sense to me. [BLANK_AUDIO] I'd like to talk about PMI for a minute. In today's world there is only four types of loans that you can get. Forgive my government back, there is a PA loan which is 100% loan it has no monthly mortgage insurance, a USDA Loan and the role housing developing program and that's 100% loan that does have monthly mortgage insurance. FHA loan we put down three and a half percent of your money as a down payment and you also pay upfront MIP that the has multi mortgage insurance. Those are all backed by the government. The only other type of loan there is your standard Conventional Conforming Loan. Where if you put down 20% there is no PMI. If you put down anything less than that for a first time home buyer you can put down as little as 3%.
For most folks it starts with 5%, 10%, 15% and that is based on credit score. Which again credit score is a measure of risk. A credit score is a measure of the probability that a person will miss a payment on some account that is reported to the credit bureau in the next 90 days. Which means if you have an 800 credit score the probability of you missing the payment is like zero. If you have a 520 credit score the probability is extremely high. high because you are probably already missing payments. So PMI is offered graduated at 95% you can't get PMI [COUGH] unless you have a 720 score. Excuse me yeah a 720 score. So that again is set by the federal government and is lending nature see/g. So it's a choice to get into a house. If people don't have 20% down and that's the only loan that they can get, and they have enough for a down payment, then they choose to pay PMI. Again it's a choice. We have the pre-market works working here folks. You can't legislate risk out of life, it just doesn't work like that. I think that this bill makes a lot of common sense. I think we're past the mortgage crisis where that made sense to do it. I don't know why Congress keeps extending it. I can't answer for them. I can only answer for myself and as for myself, I'm gonna vote yes for this bill just the way it is. [BLANK_AUDIO] >> For what purpose does the lady from Orange Representative [UNKNOWN]. >> Thank you Mr. speaker to debate the bill. >> Lady has the floor to debate the bill. >> Thank you Mr. speaker. Let me just clarify that I actually agree with the statement that has been made recently and that is are we really going to go there. My point was in saying that we should [UNKNOWN] all the poor people because they've spent their frivolously and I appreciate the comment that there are bad actors everywhere. There are bad actors everywhere along the people who are now being foreclosed or losing their homes are doing so because a lot of their own businesses have gone [INAUDIBLE] and their wages have stagnated or gone down. People can afford to live with the same Standard of living that they lived at now. We are not taking care, we are not bringing in jobs that pay people well, we're not providing the supports that they need to move up into the middle class. Our middle class is getting smaller. So this people drop out of the middle class , they're gonna have a harder time paying their bills and they're gonna lose their homes. That's not All of them didn't do anything wrong. [BLANK_AUDIO] >> Floor purposes gentleman from Wake Representative Jackson [INAUDIBLE]. >> To speak the second time. >> The gentleman has the floor to debate the bill a second time. >> Thank you Mr. Speaker. Yeah actually I did go there There. And I went there with good reason and I think the economic downturn in the resulting foreclosure process, that what's happened in our country I think bears that out that there were a lot of bad actors, a lot of them are sitting in federal penitentiary right now. There's a lot of condo projects in areas along our coast that are full of Foreclosures because of these problems. In my district, I have a lot of neighborhoods that are, if not a majority or a very high minority of the houses in the neighborhoods have been through full closure and it's become a rental neighborhood. So yes, I did go there. Unequal tax treatment, we already have Have that. If you buy a house and you sell it for a gain, it is tax full over a certain point depending on whether you were married or not, in fact it gets maybe $250,000 or $500,000 of a gain is not deductible, I mean not taxable if you would in the house two of the last five years. But if you lose money on the sale of the house, if you bought your house in 1999 and you sell it, you don't get the claim of the [INAUDIBLE] for the loss like you do with stock losses. Stock losses, you're allowed to offset your start gains by $300,000 a year and you're allowed to carry over the lose to the next year You're not allowed to do that if you sell your home on your own. So we already have an uneven tax treatment between gains and loses of tax property. Second thing I would like to say about full closures is a about the processes, the full closure situation we have from the late 2000 is no where near over. The put of it that That is over are the people who were doing bad things and were speculating and they were buying two and three homes. And so they were the first ones to walk away. I don't see how it's different for somebody who was full closed
in 2013 and somebody who was Who've made their payments for an additional two years, who struggled and tried to stay in the house and made their payments two more years and then got full closed on, how you can say it's fair to make that a tax full gain in 2015 but it wouldn't have been if they just walked away earlier in 2013 That argument makes no sense to me. We are still seeing the full closures. The way county court house from special proceedings on the 12th floor happy to take in [INAUDIBLE] for two of the files any day, I can pull them out, you can see the value the houses. We're still suffering, I was in there yesterday morning and they were doing hearings for closure hearings and it was full Of people with small [INAUDIBLE]. Who did not appear to by their look to be extremely wealthy and lose their million dollar home. They were people who were loosing their house and actually they were trying to argue for more time. So I'd ask you not to treat them in the same way. >> For our purpose as a general from [INAUDIBLE] Representative Stam arise. >> Speak the second time. >> Gentleman has the floor to debate the bill a second time. >> Briefly, we talked a lot about that section. Section two is section 179 expencing/g and that's lets say three quarters of the tax change in this bill. So if you go Vote no, you are voting for a tax cut of about 150 million for people who do section 179 expensive/g. But I might ask representative Jackson to tell us who those people are. But they are not the people on the 12th of the [LAUGH] [INAUDIBLE] court house, so if you want to vote no we will write this Up as a big [INAUDIBLE] relief act for wealthy people. >> Further discussion, further debate? If not, the question before the house is the passage of senate bill 726 on its second reading. Those who favor passage will vote ii, those opposed will vote no. The Clerk will open the vote [BLANK_AUDIO] The Clark will lock the machine and record the vote with 67 having voted in the affirmative and 42 in the negative. Senate bill 726 has passed its second reading and will remain on the calendar. Members at this time it's the Chairs pleasure to ask all the padges/g to please come come to the front of the chamber, line up across the front of the chamber. [BLANK_AUDIO] [BLANK_AUDIO] The chair would invite the pages to come to this side of the chamber too if they'd like. Pages on behalf of Speaker Moore/g and Speaker [UNKNOWN] it's my pleasure to welcome you to the House of Representatives This week. We appreciate that you're here to learn and to assist us in the legislative process. If you will, when the clerk calls your name would you raise your hand and take one step forward to help the members be able to identify you. The clerk will introduce the pages. >> James Whit/g. [UNKNOWN] county John iii Wayne county. bbb Joe Cashman/g, Brunswick county. Timothy Cashman/g, Brunswick county. Madison Gallaway, Rutherford county. /g Tyler Gentry, Union County. Ashley Harris, Pitt county. Kendall Moore, Cumberland county. Spencer Patton, Randolph county. Emily Wilder Blake county. [LAUGH] >> [UNKNOWN] Wilkinson/g Wake County. >> Members, again the chair is pleased to welcome our pages who are here this week. For those of you who may not be aware of this, one of the projects that the pages now work on during the week is they develop bill And ideas that they like to discuss and debate themselves. And on Thursdays after we adjourn, the pages assume our desk and debate various issues. The chair has had the privilege to watch it more than once and the
ideas and the enthusiasm is truly a breath of Fresh air. And the chair would invite all the members who are able to stay to watch them to do so, but at this time members would you join me in welcoming our Pages for this week. >> [APPLAUSE] [APPLAUSE] >> The pagers may return o their station. Notices and announcements. >> For what purpose does the lady from Mecklenburg Representative Connie arise? Thank you Mr Speaker. This is a reminder for all of you that have been involved with county government, whether you've served before or you have a strong interest in the county government. The county coalition coccus will meet 10 minutes after session in room 14 Yeah, 1425. Thank you. >> For what purpose does the gentleman from Wake Representative Dollar arise? >> Point of personal privilege. >> The gentleman has the floor and may speak up to three minutes to a point of personal privilege. >> Thank you Mr Speaker, members of the House recently My seatmate had the wonderful experience of celebrating another birthday and we have been continuing to celebrate it over a number of days. And I do want to report to you her age. She works with numbers and she works on the appropriation committee And she gave us a figure, we verified it with the central staff, with physical research and it is confirmed, yes she is still 39 years old. Happy birthday Rep Johnson. [APPLAUSE] [APPLAUSE] For what purpose does the gentleman from Craven Representative Speshaly arise? >> To change my vote on the active calendar from no to yes. >> The gentleman from Craven wishes to be recorded as having voted I I on the motion grant. >> Add senate bill 726 to the calendar. So ordered. For what purpose does the gentleman from Moore Representative Boles arise? >> Announcement >> The gentleman has the floor for an announcement. >> JPS appropriations were made in the morning at 8:30. Regular room, I think it's 421. >> For what purpose does the lady from Surry Representative Stevens arise? >> A moment of personal privilege. >> The lady has the floor and may speak up to three minutes to a point of personal privilege. >> One, Representative Boles' JPS will meet in 4:15. My point of personal privilege was to follow up follow up on what you said today Mr Speaker, I happened to run in last week while the pagers were having their mock legislative session. Those kids were incredible and I would invite any of you to come. I happened to roam in, did't even know what was going on because I was gonna take my page to lunch. But I stayed for another 30 or 40 minutes, I was allowed to be the Speaker and those kids were impressive. So if you could get the chance, and I'll bet you anything they'd let you serve as speaker and watch them. Thank you. >> For what purpose does the gentleman from Union Representative Brody arise? >> Mr Speaker, that I change my vote on the amendment to 726 to I please. where the vote to calendar, yeah right that's for those yes. >> The general from union will be recorded as having voted aye on the motion to add senate bill 726 to the calendar. >> For what purpose does the gentleman from Dublin Representative Dickson arise? >> For announcement >> Gentleman has the floor for an announcement Member of the appropriation committee on agriculture, nitro and economic resources will meet in the morning at 8:30 and 4:21 LOB. >> Members of chair were also announced that, they previously announced making of the rules, calendar and operations the house committee which was scheduled for 3:30 will take place immediately upon the adjournment of session. For a purpose of gentleman from Durham arise? >> A question, Mr. speaker, question to the chair? >> The gentleman may state his inquiry. >> Thank you, who would have known what time we're gonna have a session tomorrow. >> Representative Hall/g the Chair would advise the gentlemen to anticipate a 2:30 session. >> And also a request an announcement. >> The gentleman is recognized for an announcement. >> Thank you Mr speaker.
Democratic congress will meet one hour before session tomorrow In the caucus room and then request the Chair >>The gentleman would state his inquiry. >>Mr Speaker I'd ask that the house adjourn in honor of all the great teachers working in North Carolina public schools this afternoon session. >> The Chair thanks the gentleman and the Chair would Anticipate that that is indeed what the house would do. What purpose does the gentleman from Rutherford Representative Hager arise? >> For announcement. >> The gentleman has the floor for an announcement. >> Thank you Mr speaker Republicans will caucus tomorrow 12:30. We'll send you the room number when I know it. [BLANK_AUDIO] >> For what does the gentleman from Gaston Representative Torbit arise? >> Ask a Representative from Durham a question, that would be Representative Hall. >> Would the gentleman from Durham Representative Hall yield to the gentleman from Gaston? >> I be glad to yield consult with my staff to provide any response. >> Thank you Representative would Would you be pleased and happy to understand that the information you just provided the Chair about the adjournment that was already written at the top of my sheet right here. I wanna know if you be happy about that? >> Thank you Representative Torbett I appreciate the ability to continue to mentor you and you're doing an excellent job. >> [LAUGH] [LAUGH] >> Further notices and announcements? Seeing nine Representative Torbett the gentleman from Gaston is recognized. >> Thank you Mr speaker I move that the house be now adjourned in honor of all all North Carolina teachers. Subject to committee reports re-referral of bills and resolutions, introduction of bill and resolutions to reconvene Wednesday May 4th at 2:30 repeat 2:30 pm. >> Representative Torbett had moved seconded by Representative Cotham, that in honor of all North Carolina teachers the house do now adjourn subject to receipt of committee reports the re-referral of bills and resolutions and the introduction of bills and resolutions to reconvene May 4th at 2:30 pm. Those in favor favor of the motion to adjourn will signify by saying aye. >> Aye. >> Those opposed will say no. The ayes have it and the house stands adjourned. [BLANK_AUDIO] [BLANK_AUDIO] [BLANK_AUDIO] [BLANK_AUDIO] introduction of bills and resolutions, the clerk will read. >> Representative Stephens, hose bill 1015, North Carolina legal education assistant funds. >> Committee on appropriations. >> Representatives A. Moore, Labrinth, Quagmir and Stanburg, house bill 1016, educational training centers funds. >> Committee on appropriations. >> Representatitive Burrow house bill 1017 the annexation? >> Committee on local government and favorable committee on finance. >> Representative Luis, house joint resolution 1018, confirm commissioners of banks. >> Committee on rules, calendar and operations of the house. >> Representative G. Martin and Tobbeth, house bill 1019, retirement of the house principle clerk. >> [BLANK_AUDIO] committee on rules, calendar and operations of the house. [BLANK_AUDIO] [BLANK_AUDIO] [BLANK_AUDIO] [BLANK_AUDIO]
[SOUND] Represent Louis chairman for the committee on rules calendar and operations of the house. House joined resolution 1018 confirm commissioner of bikes for the favorable report calendar 36 b, senate joint resolution 789, confirm Lion's grey utility's commission, calendar 36 b, senate joint resolution 750 confirm Chris Lader/g industrial commission