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House | July 30, 2014 | Committee Room | House Finance Committee

Full MP3 Audio File

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It was one that went in with a considerable discussion and the House had agreed , orr certainly the House Republic Caucus had agreed that the advertising would not move from 1 to 2% without provisions of the ?? Act and during those negotiations. Of course the Senate attacked this very publicly, very vociferously for some time. And the House in the compromising to working toward a compromise on the budget, relented on this, on this provision. Now in those discussions, the House discussed with this our Senate colleagues ways in which there could be some modifications to the ?? Act that we thought might delay some concerns. Those discussions were not fruitful for the purposes of keeping that in there. So we were willing to give I guess what I'm trying to say. But to offer this up with no provisions of the ?? Act seems to be very counter to a position that this House and certainly the budget negotiators have taken and I would have a grave concerns about this provision. [SPEAKER CHANGES] Representative Stamp. [SPEAKER CHANGES] Mr. Chairman, I have an amendment there on that provision that's being passed out. [SPEAKER CHANGES] You're recognized to explain your amendment. [SPEAKER CHANGES] This amendment deletes Section 26. Just to give you a ?? technical changes. Of course this isn't technical at all. But what is so amusing to me is it's in Revenue Laws. When this thing passed ya'll. Anybody who was here that day remembers we took second and third vote at the same time. When the constitution says Revenue Laws have to be on two different days and entered in the Journal. But the Court of Appeals said that the lottery wasn't even a revenue bill. And then the Supreme Court tied 3 to 3 so that's not a precedent.But the whole ??, the whole foundation of the lottery is that it's not a revenue bill which course we know is ridiculous. The effect of this language and I would almost sort of like it to go a floor vote because I would get a total of 25 minutes where I could take all of their ads and show you each of their lying and deceptive ads and in which way they're deceptive and wrong. And this House on a vote of about 100 to 8, voted to be honest about it. About 100 to 8. But what this bill would do would be to have twice as many lying and deceptive ads. So I and plus I got a transcript that I sent to many of you of the Senate Hearing on this, in which they just trashed this whole idea of raising the advertising limit as part of the budget negotiations. Now how much that was genuine and how much of it was hypocritical who knows? But I certainly think it would be completely wrong to include this in a Revenue Laws Technical Change Bill. [SPEAKER CHANGES] Representative Howard. [SPEAKER CHANGES] Thank you. First of all I would like to say that this amendment would have no effect on the current budget. The budget is being negotiated as we speak. And hopefully that some of us will see it in writing later today or tomorrow. But this provision has absolutely nothing to do with the budget that is moving forward today or this week. Second to that,the, I believe the conversation with the Senate, the disagreement was that there was lottery proceeds that was going to be used for a particular purpose. If my recall is right. It was the teacher's assistants. They were opposed to that. As probably they should be. We have passed the North Carolina Education Lottery. If you want to repeal the lottery. Then somebody needs to run a bill and repeal it. And take it away. We. It's here. The 2% in advertising is

Going to only allow the lottery commission to generate some additional dollars. And I will tell you that on the fund the finance side. And everybody that's on finance this year, everybody that's gonna intend to come back and sit on finance next year, we're gonna need additional dollars. There's no question about that. So I think we're putting our head in the sand. There are some people here that don't like the lottery. They didn't like it when it was first passed. They continue to talk, do certain things to, I would just encourage those, those persons to follow bill and repeal the education lottery. And see if you can, can just take it away if you don't like it. I will say those same people and I'm trying to be as respectful as possible certainly have their handout for opportunity scholarships and they are certainly taking money from every pot to enhance those opportunity scholarships. Folks you just can't have it both ways. And again, I'm gonna say this has absolutely nothing with the budget negotiations that are ongoing. There's no impact on the current budget as we will see it in the next few hours to vote on it up or down. That has nothing to do with it. But on, simply being on the note of caution, I, I again will tell you as Pryor Gibson would say you're gonna need every tool in every toolbox to sustain what you are getting ready to vote for this year. So I would just ask you to think about that and remind you again, we already have the North Carolina education lottery, which we are currently using for scholarships and for programs that we need. You're gonna need a whole lot more next year to sustain the budget that you're getting ready to pass. Thank you mister Speaker. [SPEAKER CHANGES] Thank you madam chair. Representative Martin. [SPEAKER CHANGES] Thank you very much mister Chair. This is the second time in just a few days that my colleague from Wake, the Speaker Pro Tem, and I have agreed wholeheartedly on something so, something, it's that end of session weirdness. [SPEAKER CHANGES] Yes, it's special. [SPEAKER CHANGES] And chairman Howard is now, chairman Howard has now invoked the Pryor Gibson which, which adds to the weirdness. But, but I, I would say that I would agree with Chairman Howard that without a doubt, that if you do want to get rid of the lottery that you do need to introduce a bill to do it and have a vote on that, but that's not what this amendment is about. You can agree that we need to have a lottery but still need, but still think that we need to run it in a proper way and in a certain fashion, and in my mind the gentleman from Wake's amendment does exactly that so I'll certainly be supporting. [SPEAKER CHANGES] Thank you. Representative Blust. [SPEAKER CHANGES] I have a question. It relates to the amendment and the bill. What are the considerations that go into preparing these type bills that seem to be more and more prevalent of catch all provisions stuck in, in a bill, how are they prepared? What are the parameters or requirements? How are the decisions made to put something in versus not put something in? Because I just have a lot of concern with them, I'm thinking we need, going forward, to start putting a name with provisions of these types so, so we know where everything's coming from, because we've had a long process, long general assembly, two years session, this is the short session, and I just like some information going forward as to how, how, how do we arrive at these bills? What goes in, what goes out? [SPEAKER CHANGES] Well that sounds like that's gonna have to be something for a future assembly to decide on the rule, and you know as I well, as well as I know there's nothing new under the sun here. But would staff like to answer that question how this bill is composed? I wouldn't think so, but thank you for your comments. Representative Dollar. Representative Dollar. [SPEAKER CHANGES] Thank you mister Chairman.

I would, of course, support the Stam amendment, and just to clarify, because I may not have been clear earlier with how I see the interplay with the budget, is obviously the provision as indicated, as I understand it, wouldn’t necessarily, I don’t know whether it would necessarily impact this, the availability later on, some time this year, let’s assume that it wouldn’t, as has been stated. My discussions were really more in terms of the issue itself. I mean, because obviously we have gone through this issue. The decision of the House was that if we were going to move forward with increasing doubling the lottery, and that’s basically a cap that right now is about 17.5 million, it would move it up to about $35 million, in the ability to advertise. And that’s separate from the marketing budget, of course, for the lottery. Without the honest lottery act, or at least some provisions of that, that was not necessarily a position that the House was willing to take, and maybe we will find out. The Senate seemed very clear, in fact I don’t’ know how much more clear they could be, they were certainly opposed to including any provisions whatsoever from the honest lottery act. Also, in the open budget discussions we had, we had several of the full Chairs of the Senate that expressed opposition to whether there was honest lottery act in there or not to the increase. I have real concerns with moving it up to 2% without any of those protections being put in there. And I would, just to clarify, not that I don’t think it’s substantive to the amendment, but to clarify, when we had the provision in previously in the House budget, it was, the money’s just going in to the same line items that it had gone into in the past. The classroom teacher line item. Now, the TA’s are now separate line item within the budget within the compromise, but obviously that’s with no additional lottery money, per se. Obviously not from this provision. But again, I would request committee members to vote for the Stam amendment. Thank you. [SPEAKER CHANGES] Representative Starnes [SPEAKER CHANGES] Thank you, Mr. Chairman. Well I was here when we voted on the lottery, and I voted no. But the lottery is here and it’s a fact of life. And even though I was opposed to it and didn’t like it, the sky didn’t fall down. And so, the lottery is here, and if it came up for a vote today, I would not vote to repeal it, because it does generate a certain amount of revenue, and we benefit from the revenue. And we all know that we’re going to need additional revenue next year. And in the year after. And as long as the State’s in business, we’re always going to need money. But I’ll tell you, I think there, we need to be wise in the way we raise the money. If you, what, I don’t like the lottery advertising. I don’t like to see ads on the television. I don’t like the billboards, but it’s a fact of life. If you’ve got a product, then you have to advertise it to sell it. But if you, when you travel to other states, and you check into the motel room, and you got the television on, and almost immediately you see lottery advertisements. You know, in these other states, they don’t have the restrictions on advertising that we have. And their airwaves are bombarded with these lottery ads. And I don’t like it, and I don’t want North Carolina to look like these other states. So Representative Howard, we need the money, but we can find it another way and I’ll be supporting the amendment. [SPEAKER CHANGES] Thank you, Representative Robert Brawley. [SPEAKER CHANGES] Thank you, Mr. Chairman. Either staff or the sponsor of the proposed committee substitute, maybe Representative Dollard answered my question a while ago, but is the 8% pot and the 2% pot two different pots, or is the 2% inside of the 8%? [SPEAKER CHANGES] Miss Everett. [SPEAKER CHANGES] Mr, Chairman, if it’s Ok, Timothy from fiscal will be able to address that question. [SPEAKER CHANGES] Please [SPEAKER CHANGES] Thank you Mr Chair, to answer your question the 8% is the total cap, and that 2%, and that 1% is currently within that 8%

So, right now there’s roughly 4.5% of that 8% cap contained both administrative and advertising. So, if it went from 1% advertising to 2% advertising and administrative expenses stayed the same, you would expect to see around 5.5% of that 8% cap taken. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] Thank you. Just a comment on the . . . I appreciate that, it makes me feel a little better about the provision but, it still works out the same, that if we increase this 2%, we are taken 1% of that lottery money away from education and that does affect future budgets and what this state does. [SPEAKER CHANGES] Thank you. Representative Jonathan Jordan. [SPEAKER CHANGES] Thank you Mr. Chairman. I have a question for staff. At the beginning of the summary the last sentence there says, of the 4 changes only one section 24 is [substantive]. For my edification going forward, can you define, when you say [substantives]? What does that mean to you? Because, on I rely on your opinions on things. [SPEAKER CHANGES] Yes sir. If you’ll notice that summary was to an earlier version of a committee substitute and that’s why on our verbal explanation we wanted to point out that there was an additional section added, which was your lottery advertising that had been put in. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] So to confirm, Section 26 would be considered a substitute. [SPEAKER CHANGES] Yes Sir. [SPEAKER CHANGES] You know how definitions change all the time around here. [SPEAKER CHANGES] Comment on the amendment. [SPEAKER CHANGES] Of course. [SPEAKER CHANGES] I went along with the 2% lottery increase because we had the honest lottery protections and we needed for it the budget, but we decided later on not to do that. I got one Senator Apodaca’s little scratch-off tickets in the big budget hearing, even though I didn’t win, I appreciate him giving me that and showing me what the opinion of the Senate is on using those funds. So, I don’t want to mess up this whole bill by putting in something that I’m pretty sure [inaudible] So, I would be for the amendment, that we would not muddy the waters. [SPEAKER CHANGES] And good luck with that. Representative Warren. [SPEAKER CHANGES] Thank you Mr. Chairman. I’m speaking against the amendment. I think too frequently we let issues go by that deserve debate. I think the fact that we are getting ourselves into a financial situation, and we’re going to be looking for revenue and revenue streams next year. I think whether or not the 2% provision would pass or not from this committee is irrelevant to the fact that we are obligated or should feel obligated to explore any possible revenue stream. Too frequently, we’re laying things on the table, we’re avoiding a robust discussion, I think that we should vote the amendment now and then we could discuss the duplicity that we have as a body on the virtues of a lottery. [SPEAKER CHANGES] Further discussion or debate? [SPEAKER CHANGES] Representative Myers. [SPEAKER CHANGES] I appreciate all the discussion by majority party today about adding tools to the tool kit and exploring every revenue option available. [SPEAKER CHANGES] Yes, we all do. [SPEAKER CHANGES] I look forward to those discussions next year. I do have a question. Probably for Representative Howard. Although, anyone could answer this. If this is not going to going to impact the current budget, why do we need to consider it today? Why not wait until next year? [SPEAKER CHANGES] Representative Howard. [SPEAKER CHANGES] Representative Myer, I think that it is in our best interest to prepare for what is coming in the future, and you can’t wait, or we shouldn’t wait till we’re in a total crisis of need, and then we do certain things. If we wait, it’s no skin off my nose whatever happens to with this amendment. I think it’s in the best interest of everybody who is sitting on the Finance Committee today, but more so, for those members in this room who are in this today, who are on appropriations. The Finance Committee is charged with raising revenue and providing the resources for the Appropriations Committee to spend and as we prepare to leave session this year and come back, regardless, this is not a partisan decision by any means, the House will develop the budget next year and you’re going to be looking at

him who have amenities revenues that you do not have to ought to put together that budget so you then be faced with some series options of using every tool that Paulson on thepossibilities such as the laundry for making great decision of where you want to waste back into your options and edited pizza said that I was trying in all honesty you view and not limit not bailing when it, if he fails on their walk. at this rate, and that time to do that to give feelings of other options in, but I'm not. I'm just because then you know the Digest that you are going to have sender immediately has choices to make wish to bring if you're here, as you did begin to develop the budget and this is an option that are young the type was not there. tags, video poker at the time with me. we could raise four hundred and fifty million dollars that this is devastated by that. this is an option that you already have on the table and why not utilize it to its full advantage or stick your head in sand into communion with him, have revenue shortfall as unit for the budget. I'm just warning you that we got a problem purchased them Change speaker: speaks briefly, you recognize the look at section twenty seven. this provision is not repealed would go into effect. hopefully next week, not in some future year you would have. this saw that glass of wine deceptive ads Spartan as soon as I get them up there thanks. I then preserve the status quo sure I'm left to reveal the lottery. I don't have the boat, for I have it attempted to do that. but this up. this maintains the status quo. it's the underlying bill that turns our lottery into a big carnival atmosphere to other one other break point. this is not an alternative to attacks. the lottery is a tax if the tax at about twenty seven percent of the ticket. the only difference is that the taxes embedded in the price of the ticket and that's what it isso if you want to say what other people say, well, that's a voluntary guy would think about it all taxes. if you think about are voluntary, but this is a tax on a particular set of people. it's at the facts. what a particular region of the state are provided for many of you, the figures to show how disproportionately your counties for supporting the rest of the state from this urge you to document and Mrs. Roger, I'm not asking the eyes, nose, but I do think and racing would be a good idea. Change speaker: Mister Stanton resigned warmth so severe for the river evolve Change speaker: distributed in the deserted of being one of the initial sponsors on the honest letter. it wanted to speak a little bit about this because I think it's important principled. it was brought up revs of Howard in saying that we already know this would be a major hole in the budget next year and we need to start thinking about how to fill it one of the ways is to think about what would O'Donnellthis week regarding the budget and how did we create that whole this is a small idol based on what this visit of the owner of budget and of course it starts a discussion that is woefully insufficient for work. the what do doctors know to create it. so we know we need to think about Austin going forward in future. I don't think anyone should vote to keep using this be a limited try to go home and say I try to do something to help the budget for next year that this won't even get us all. the first step in solo on a middle of hose under the support video motion to take this out and but I appreciate the powered guitar tension and shown us how important it is that we could route a way to deal with the holes were created this year 's budget. Change speaker: here is a blue-collar Change speaker: sightedness chairman, Missouri, one from the lottery here to talk about potential elasticity of demand. based on this doubling of advertising down there by relevant one time Change speaker: was then state your name for the record, and thank you for being here before the funniest way we will be civil official

I appreciate that. My name's Brianna Hager and I'm with the North Carolina Education Lottery. I am brand new, so I'm probably not the best person to talk to about this, but I can answer some questions if you guys have them for me. [SPEAKER CHANGE] Representative Brawley. [SPEAKER CHANGE] Thank you. Miss Hager, is it. Does the lottery have any sense of whether additional advertising would simply increase consumption from current users of the lottery, or would it create new users of the lottery, or a combination of both? [SPEAKER CHANGE] I don't think we have those numbers of that research done, but we can get those numbers for you. [SPEAKER CHANGE] Thank you. Follow up. [SPEAKER CHANGE] Follow up. [SPEAKER CHANGE] Do you have, or does the lottery have any sense of how much potential lottery gross sales would increase by doubling the advertising budget? [SPEAKER CHANGE] We do have those numbers, but also and personally, I don't have them, but I can get them for you, Mr. Representative. [SPEAKER CHANGE] Mr. Dale can answer some of those questions. Mr. Dale. [SPEAKER CHANGE] Representative Brawley, Timothy Dale, fiscal research. I'm going to speak just to a memo that Dr. Boardman had prepared, I think about a month ago or so. But, basically, in his analysis, if you take it from 1% to 2%, your looking at roughly a $56 1/2 Million minimum on an annualized basis. In terms of a net revenue the state would receive. [SPEAKER CHANGE] Any further questions, Representative Brawley? Representative Warren. [SPEAKER CHANGE] Yes. To speak on the amendment again and to counter Representative Hall's point. We have money that we spend on appropriations in small amounts everywhere. In fact, yesterday I believe it was, we revealed that the historic tax preservation credit was about $12 Million a year, maybe as much at 20. That's something that this one extra percent would take care of two times over. We spend our money in small increments, we save it, and we draw it, we pull it in in small increments. I think it all adds up, I think its an important piece and I think its an important point that we need to discuss. Whether we agree on it ultimately or not. But, again, I asked urge everyone to vote against the amendment. [SPEAKER CHANGE] Representative Alexander. [SPEAKER CHANGE] Thank you, Mr. Chairman. I just wanted to point out that it appears that there is a great consensus on the fact that we are going to be in the hole by the beginning of the next-- By any, a considerable hole. I would suggest that revenue laws in the interim might seriously want to look at the revenue potential for such things as-- [Laughs] One of my favorite proposals, which is about $100 Million in tax revenue. Then, theres some opportunities with taxation as Representative Howard mentioned, concerning video poker. I think the time has come for us to seriously start looking at alternatives. Though this is a somewhat humorous point, its a serious point. We are building a budget, that I'm sure in the next few days that we're going to end up adopting, that guarantees a train wreck next year. [SPEAKER CHANGE] There always is. [SPEAKER CHANGE] Revenue is going to fold and demand is going to go up. Thank you, Mr. Chairman. [SPEAKER CHANGE] Every budget I've seen since I've been here has been a train wreck. But, thats a different story. Representative Robert Brawley. [SPEAKER CHANGE] Thank you, Mr. Chairman. Listening to this train wreck discussion, I've heard a lot of talk putting down incentives for business, where you get a 10%, 14%, 20% return. You invest $10 Million, you're create income of $200 Million, $300 Million from the business transactions that take place as a result of that. We've just had a discussion fighting those incentives for business, yet here we're willing to spend $18 Million dollars on this increasing advertising for an expect $56 Million return. We're expecting a 3% to 1% return, I mean a 3 to 1 return on something that, unless I'm mistaken, we also know the lottery is more participated in by people who really can't

Can’t afford it. So we’re taking money out of people who can’t afford it, for a 3 to 1 return, and we turn down businesses who pay their own plus at 10 and 14%, 10 and 14 times return. We need to support this amendment. [SPEAKER CHANGES] Representative Stam. Further questions. Representative Dollar [SPEAKER CHANGES] Thank you, Mr. Chairman. Let me make sure something is cleared up here or at least let me give you my view of it. As the Speaker mentioned in press conference I believe yesterday or after that press conference, the state of North Carolina following enactment of the budget compromise will have in its possession at least a billion dollars in reserve whether you’re talking about rainy day fund, whether you’re talking about risk reserves, other reserves, that the state has available to it and that we have been working on building back over the last several years. I would also anticipate that employment, as everyone realizes, unemployment has been going down. In fact unemployment’s been dropping in this state, faster than other states, most other states. North Carolina has been bouncing back rather well. We have implemented a regulatory reform of a variety of areas, we’re implemented tax reform which the leaders of the finance committee have put together, that’s way above my head. And we are seeing benefits already that leadership of the finance committee and others in our economy and I would anticipate that we will although years are always tight, needs are always out there, that we will be fine in our budget that we’ll begin the process for the following biennium. So this $55.6 million I guess that is the estimate without the honest lottery act, is not I believe is critical at this pointin time to enact. [SPEAKER CHANGES] Representative Stam moves for the adoption of his amendment. The clerk will call the roll. [SPEAKER CHANGES] Representative Alexander. Representative Alexander, no. Representative Blust, Representative Blust aye. Representative Robert Brawley. Representative Robert Brawley aye. Representative William Brawley, aye. Representative Burr. Representative Burr, aye. Representative Carney, Representative Carney, no. Representative Collins. Representative Collins, aye. Representative Cotham. Representative Cotham, no. Representative Davis. Representative Davis, aye. Representative Dollar. Representative Dollar aye. Representative Hager. [SPEAKER CHANGES] Mr Chairman I would be excused from voting. [SPEAKER CHANGES] So heard, so moved. [SPEAKER CHANGES] Representative Hall. Representative Hall, aye. Representative Hamilton. Representative Hamilton, no. Representative Hanes. Representative Hanes, no. Representative Hardister. Representative Hardister, aye. Representative Holley. Representative Holley, no. Representative Howard. Representative Howard, no. Representative Johnson. Representative Jones. Representative Jones, aye. Representative Jordan. Representative Jordan, aye. Representative Luebke. Representative Luebke, aye. Representative Lewis. Representative Lewis, aye. Representative Martin. Representative Martin, aye. Representative Meyer. Representative Meyer, aye. Representative Moffitt. Representative Moffitt, no. Representative Rodney Moore. Representative Rodney Moore, no. Representative Tim Moore. Representative Tim Moore, aye. Representative Samuelson. Representative Samuelson, aye. Representative Schaffer. Representative Schaffer, aye. Representative Setzer. Representative Setzer, no. Representative Stam. Representative Stam, aye. Representative Starnes. Representative Starnes. Representative Stone. Stone, no. aye . Representative Tine. Representative Waddell. Representative Waddell, no. Representative Warren Representative Warren, no. Representative Wells. Representative Wells, aye. [SPEAKER CHANGES] The amendment passes 22 to 12. We will now take the Samuelson amendment.

The server face this have to say this is the recognizes the need to invest in the senate banking as chairman by the cafe doubt until other someone that this is that we've all seen this provision before making that SNL three E. Salinas identifier columnist Canadian MS. But the second LS no cost in this year's budget or next, (SPEAKER CHANGES) this is an existing tax credit that we not changing the sunset on and what this says is these are for renewable energy projects that underway AS area Blanca democratic spies as long as they are under way they will still qualify a four by the cracker reason for this is because what we're all are finding SMS more and more of these projects are being down the hangouts that they get 59-under control the contractor there under control and other outside grades and selling them money and masters for this last around the projects from the AV Data certainty that even if that happens outside their control that they will still be able to get the project and example, a 60,000,000 SI waste projects are 400,000,000 installer projects that need to finish before the credit expires and that's all investments and I districts that are not going to have any impact on the budget and fiscal magnificent week SSF, column to Peter E9 cents last comeback from 1990 that this back and thank you , this has helped design the NFS that factors that this leads says now impacting 201415201516 discussion, committing this entire thing as chairman of assemblies, semi was the resistance of talk about this life, but Monday's session data from the oven 5% is there is a definitional know what the fed is that just buying layout artist Elisa landers their specific activities that take place at finest Edward SM Kennedy some of you define as a SAC State attorneys he's alive Federal projects anything\all the way to once they got and got much put together any dead people are connected and it's ready that it's not combative sites here you have a definition DBMS, that's an accord will miss the Federal clean -up at the Michael SMS SSA said MMM MMM-five E like a second MSN the exact replica of a black has been done with Conrail Energy tax that the Federal level N set by the bay bridge of MSSCTA would FIM Nicklaus said that encourage MMI documentation would be cemented, with the taxpayer is a new tax return and ordered 2275 S D's and SSA, NDS S NBC taking place and things like five design large land acquisition and M actually, choir and the components of a project to you and bob, and that his name, but if they think you can perfect NLG by come off by the someone else's said satellite 9927, (SPEAKER CHANGES) financed that you have to get rid of * to check bounced high despite his tenure investors' minds said the body and Esther peace in the line that many will start standing at the padding L asbestos-thinking that first party even get to the 5% because they're not sure this, and I’m, four extensions of the shares vote, I guess what one will worried about here is the fact that folks who live there no doubt land in the massive 5% or they'll go leakage in their design the master five pursue nothing to fill cauliflower will have no some or skim the game to have a broken ground ball uses the odyssey pieces of notebook full far away from the layout of a revolving be a much more skin and taken out of the solo worried that a lot of folks who run after the calls of the active you may be the tax could explain it sure will this will become them all out there now walks me and to do the whole project that may take another 23 years some extent are self, vs. I guess at how an IE scored a decisive combat plane that 1:00 AM not a diffuse and say that that is that we had a line from that has to be put into service said they can just as he staked out plan either a letter three years and years and years to SMS a deadline that they have to meet and noble thing financed his chest AM to ??....

Huff says the security if any of that FS of an opening, not gonna get hit with that deadline the first in line descendants of the device, said the outfit will couple flee with an increase of 5% you to 20% were some number that think they would have some more skin gain from the sulfate fox's knuckles of secession them all now we can do anybody can do business person of the lockout like that of the so that support the worst, M handle at nine studies now speak on this all airlines and, as much about the poultry lines from a you have a threshold at which the two masters you take your land and that they got this coming back at having to complete the project is axing the fed at fangs and said he would set up and partially constructed that's where the hitting the delighted that the Lang is between the time that they purchased the land and get their investors BN start construction seven S electronic addresses where that the layoff in the S think you mentioned that the payments chairman, and this is important to them, I am for those who fly investor and considering investing in the Noble Energy, too many issues of fairness issue and congressman Sporkin and a convention of culture today at saint those 25 two buses and having this is anything we entered four discussed five and was that if first then that we discussed it and so that you have remained said a good idea, which members to support think you have two columns that have questioned if revenues sensors that Federal statute home-run rally for North Carolina last few weeks of the biggest thing, how much farmland and not return them to come from the health?? (SPEAKER CHANGES) it's really, stressing the one that fell my concern was this is almost about this program opened five taxpayers the twenty something Federal credit from about 60% of the songs that the concern is that most of them unlike visit to expand it is there some limits to act as a summit how much we can put in the days of the state of cadets could this producer rush of people just you started with a staff of the Guillaume, the bug in the sales of potential people for money and we got back at 47 and a sense of things stand tall hat and forgot what is it cannot buy this SR projects that were already expected, but his staff we get is just a game that will be hitting these unexpected delay suspicious recognizing what we originally gave them permission today that staff need for this cattle camp to start as soon as someone this memo would do with 50 a medic on hand 5% vote, the little too clever expenses and third, through June 30, 2017 and I believe there's a good two courses and discredit only one has a cat, the process of verifying major U.S. is sending in the open back, that's a valid and that the dollar finished sharing, this question, for many impressions some areas but it's my impact different species my understanding of the fears of casual significant that the impact , and some were farming interest at least if issues, if this was not passed a consensus not delay and miss chairman if you don't mind, like two, to make an inquiry two represented the two of these hearing room has two when he sees the impact on farming, (SPEAKER CHANGES) if this some sense edition of the late -tax and revenue from its stated that two reception and Jan which puts a chance to get out of that which are very best of times and all your jacket could lead from the most significant, but challenge to militarize seven million dollars in campaign cash , search the web, just seven strokes that will allow the level of the government would restore them to follow comment at one of their body and mouse is said to have 1,000,000 per installation the ??....

him broadcast this to me in translation. there's a rubber room. Change speaker: the phone with a good lead Dixon was a Los Angeles economic situation wherein in the United States as a whole. right now, human beings are terrifically adaptable and they would find a way to come out of it if they could operate under the same rules. every year on the have pretty strong belief that this drum assembly was shut down for two years. North Carolina would come out of any economic slump wiki change the rules am in the middle of the game makes it very hard for this is person anybody that successful treatment is successful, I think we'd adopt this amendment give these people have already made some plans a chance to get out of it to keep moving forward and growing. thank you with the stars. Change speaker: my question is for staff. is there anything in the statute that would determine what would cost you calls to construction with .net& user language that would determine what they would have to purchase costing five percent of the cost, Change speaker: not Change speaker: further discussion from the Change speaker: committee doesn't happen. thank you, Mister Chairman, I tend to agree with representative value here. I support this amendment hundred percent. this is the right thing to do is good for business difficult ally good for the environment. some of the triple whammy to projects out there that there is bad theology and history that are already in the past and we're moving the cheese on these industries as well I will be specific decided to start resumes invited from going in my community and that a man accompanied in a sunset. I got and I'll say it. we got down project is that I don't really him any network which had been away from a lot of fun with estimated is always talked about in finances incentivizing business can write about retaining the business we have year the bathroom and I will support the same zones of minutes and then it continued to have this discussion. as long as as we have to need to make things right in Change speaker: the sperm and all in favor say I all opposed the motion carried him him and his adopted a cute Change speaker: started on the path that will submit an surprise as it was you recognized you explain your minute copies of the NSF committee. I think you must have Change speaker: it that loses recognizers Heisman message him and learned gentleman of community in the time. let me explain that this is the exact language. it was contained in the house budget. this does expand the historic tax credit, which is vital in order to ensure every one of our districts. these are projects that preserve and place back into service the poor properties that otherwise will decay away on again. we can talk about this for a long time. I think it, but he knows where they stand on the bill me home. the neck and that I want to ask your support and that was normal. Mister Change speaker: Bush 's comments is great. as for the doorstep Change speaker: you tell me how this compares to the program. the just got dropped any disposable hi Change speaker: yes or so, then this program in comparing a variety ways of resolving combines article three phases of no credit article 3-D which the current historic rehabilitation credit by and large others. with this in treat income producing properties and non income producing properties differently for in both instances, this amendment would constitute a reduction in the credit amount for income producing properties, we'd be looking at credit of fifteen percent on the first ten million dollars worth of investment, ten percent on the second ten million dollars with investment that's compared against a forty percent credits into one of two counties under the existing three H and twenty percent under existing 3-D

were reducing the credit amount by a certain amount for income producing properties there is a bump of 5 percent on that credit for tier 1 and 2 counties and a bump of 5 percent for projects that would currently fall under article 3h the mill credit in addition for non income producing properties the credit amount is being reduced to 20 percent for properties that are worth less than the median home price under the current program there's no provision about how valuable the home is so this is for homes that are less than the median home value in North Carolina you get a credit of 20 percent for homes that are between the median home value of 100 percent and 150 percent of the median home value its a credit of 15 percent so its slightly less for homes that are a bit more valuable and if a home is worth more then a 150 percent of the median state wide value of a home this credit would not be eligible. In addition for non income producing properties this limits the types of expenses that the credit can be taken against under the current program theirs no limitations placed on the type of expenses and this specifies that basically only fundamental investment expenses so structure exterior hvac plumbing electrical things like that those are the only types of expenses that would qualify where as currently anything that's you know either cosmetic would qualify so my understanding is that part of the intent of this was when you got a million dollar home that puts in a you know $250,000 kitchen with granite counter-tops that would not qualify under this amendment [SPEAKER CHANGES]. Representative Luebke [SPEAKER CHANGES]. mr chairman thank you two things the first I really think this is a good amendment and because its been a great help to Durham has been and continues to be helpful I first raised my hand simply Mr Chairman because I think there is just a technical problem in lines 3 through 5 because it includes the words advertising expenses and thats not there any longer and I know staff will clean that up but just wanted to draw that to your attention [SPEAKER CHANGES]. thank you [SPEAKER CHANGES]. thank you [SPEAKER CHANGES]. Representative Stam [SPEAKER CHANGES]. this is a very weak statement I'm sort of in favor but I'm going to vote against it [SPEAKER CHANGES]. of course appreciate [SPEAKER CHANGES]. I dont know the parentage of this but we did study this quite a bit in the economic development boards sub committee on community services dah dah dah and I came to the conclusion that this is one of the least harmful credits that there is so I'm not going to vote for it but I will say that it is not disruptive of the economy like so many of them are [SPEAKER CHANGES]. thank you for your indifference we appreciate that Representative Moore Representative Starns Rodney Moore excuse me Representative Rodney Moore pardon me [SPEAKER CHANGES]. thank you mr chair just wanted to advocate my support for this amendment but also I want to magnify the comments by my colleague from Willmington were picking winners and losers here and we really need to be cognizant of the film industry because you already have 4200 existing jobs in the state that are here and you have so many ancillary jobs that are tied to this industry so I would ask that you be fair across the board and look back at state but I will support this amendment just wanted to get that out there thank you [SPEAKER CHANGES]. thank you sir. Representative Starnes [SPEAKER CHANGES]. thank you mr chairman well you know we are presented with a wide range of opportunities today on different issues [SPEAKER CHANGES]. they always are [SPEAKER CHANGES]. and I love history I love the old buildings and I think that this is historic tax credits have benefited the state but your in the finance committee were dr jeckle and mr hyde. Dr Jeckle just a few minutes ago said we dont want to raise anymore revenue but now Mr Hyde say but we want to keep spending the money and the east and west are not going to meet so you while I love the program and think it has benefited we cant afford it I mean if were not going to raise the revenue then we cant continue to spend the money so for that reason I'll vote against the amendment [SPEAKER CHANGES]. Representative Dollar [SPEAKER CHANGES]. well I guess two sort of two different inquiries I guess one I think the analysis really

up to be and Representative Starnes I think this speaks to the concern that your or that the issue problem that you raise and that is what is the overall impact of the state making this investment of expending this money as it shows in return back to the state in terms of economic activity and ultimately revenues to the state as well from tax payers and from all the economic activity that you generate I'm certainly not an expert in this area by any stretch of the imagination but from everything that I understand the return on investment has been extremely strong for the historic rehabilitation tax credit both with regard to the construction aspect of it as well as the long term longer term benefit of increasing property values and economic activity as a result of whats going on after the rehabilitation is done and so my suspect is that its very much in that game the other sort of question not directly a question but an observation for Representative Hamilton is that as she continues to bring up the film facts credit which I we appreciate I hope that means that if there is something in the budget that deals with them that Representative Hamilton is going to show that same level of enthusiasm for the budget compromise [SPEAKER CHANGES]. move all aruond [SPEAKER CHANGES]. Representative Hamilton of course [SPEAKER CHANGES]. thank you Mr Chairman dont hold your breath Representative Dollar [SPEAKER CHANGES]. yes and we dont have oxygen mask dropping from the ceiling of this room because the pressure is never going to leave this cabin [SPEAKER CHANGES]. I do have a I do have a question for Representative Lewis [SPEAKER CHANGES]. proceed at your convenience [SPEAKER CHANGES]. Representative Lewis just some very quick question is this the credit that the preservation of North Carolina folks have been hoping to accomplish in this session have they seen this bill? [SPEAKER CHANGES]. Representative Lewis [SPEAKER CHANGES]. you may want to direct this to staff Mr Chairman but I believe this is I just dont want to mis-speak on this direct [SPEAKER CHANGES]. Patrick [SPEAKER CHANGES]. I wont speak for the for cultural resources directly but I will say the language of this is more or less identical to what came over in the Governor's special provisions so this is more or less what the administration came over with [SPEAKER CHANGES]. follow up [SPEAKER CHANGES]. follow up [SPEAKER CHANGES]. I think what were witnessing here is a couple of good things were finally making some compromises for whats good for the economy of this state and were actually having a dialogue were having a little too much fun with it perhaps but I think that this is I would not be doing my job for the 1200 citizens in my district who are employed by the film industry if I didn't say that the budget provision is not a compromise its an end to the program and I'm willing to support the extensions of these tax credits and others that come for the good of the state and I'm going to ask you again to support the extension of the film incentives for the 4200 families that work in the industry in the state so I urge your adoption of this amendment [SPEAKER CHANGES]. thank you Representative Warren [SPEAKER CHANGES]. thank you Mr chair you know for every action there is an equal and opposite reaction and if we don't support this credit and what it accomplishes I think we have to look at what the result of that is and I want to echo what Representative Dollar was saying there is a return on investment here you rehabilitate a historic building you got property tax there you got jobs that are being supported if not created in the renovation of the project I think its a short sighted move to try to save you know to be penny wise and dollar foolish I don't see it as being anything different than a local Jdig grant its an investment and I support it and I hope you'll will vote for it [SPEAKER CHANGES]. thank you representative Tim Moore [SPEAKER CHANGES]. thank you Mr chairman part of this and I support this fully Representative Dollar Representative Lewis and others have fairly summarized the reasons this is a good thing but you know this whole notion of trying to go in and do this with historic properties actually got started during the Reagan administration under Jack Kemp when he was secretary of HUD with the enterprise zones finding distressed areas and finding a way to make to bring those back to life that started

The inner cities. And what it spread to, fortunately, is throughout the state. Those of us who represent particularly rural North Carolina have seen the old textile mills that for years employed hundreds and thousands of people. Representative Setzer, you've seen plenty of them in Catawba County, the furniture factories. Those, those places sitting empty. The problems that happen when you have empty buildings. And this has been a great thing. For those of you that haven't seen it, the old Loray Mill in Gastonia, in the West side of Gastonia, recently participated in this. It's been covered in the Charlotte Observer, the ??, a lot of media, and the success that's being brought about. I know we should always be very cautious about tax credits and so forth, but folks the fact is, these things work. They're providing jobs and they're taking some of our blighted areas and making them productive again. I hope you'll support this amendment. [SPEAKER CHANGES] Representative Stone. [SPEAKER CHANGES] I got my question answered. [SPEAKER CHANGES] Representative Starnes. [SPEAKER CHANGES] Thank you very much. Well, I do think that the historic rehabilitation tax credits go to very worthy causes, but I just want to remind you of the euphoria we had last session when we passed comprehensive tax reform. And we said we're gonna fundamentally change the way we do taxes in North Carolina, and we started moving away from tax credits and that's reason, this was one of them that went. All the tax credits were set to sunset, because we said well, we want to lower income tax rates, we want to lower corporate income tax rates and we'll go more towards a sales tax based economy, but it takes money to do that. And so what we're seeing now is the death of tax reform. It was a fight to keep the little county fairs from having to pay the sales tax. I don't, I don't know if it was worth the fight or not, because that was pennies compared to this and so, really, tax reform is gonna be dead because it's started to unravel and we can't stop it. [SPEAKER CHANGES] Representative Lewis moves for the adoption of his amendment. All in favor say aye. [SPEAKER CHANGES] Aye. [SPEAKER CHANGES] All opposed? [SPEAKER CHANGES] No. [SPEAKER CHANGES] The amendment is adopted. Now we're back on the bill, further discussion or debate on the bill. Representative Hardister, you are recognized. [SPEAKER CHANGES] Thank you mister Chair. I move for a favorable report on the PCS on Senate bill 763 as amended, unfavorable to the original bill. [SPEAKER CHANGES] You heard the motion on the floor. Any further discussion or debate? Hearing none, all in favor say aye. [SPEAKER CHANGES] Aye. [SPEAKER CHANGES] All opposed. Motion carried. It's been a real pleasure. We appreciate ya'll's time and patience and this meeting's adjourned.