North Carolina has set a record for in-state film production spending this year with five months left to go. The North Carolina Film Office reported Wednesday that 35 films in 30 counties have accounted for $300 million in spending this year. The previous record of a little more than $220 million was set last year. A news release from Gov. Beverly Perdue’s office estimates the films have created more than 15,000 jobs and 3,300 crew positions. A spokesman for the film office said the movie companies self-report the estimates. Movies that have filmed in the state this year include “Iron Man 3,” “Safe Haven,” “We’re the Millers,” “Jessabelle” and “Writers.” The governor’s office credits the upswing to 2010 legislation that provided productions with a 25 percent refundable tax credit.
by Allen Reed
(THE ASSOCIATED PRESS)
7/25/12

HARRISBURG — Should Pennsylvania decide to overhaul its transportation infrastructure, chances are it won’t involve adding to a heap of state debt.

But its options are limited.

GARVEE bonds, short for grant anticipation revenue vehicles, offer states upfront funding for construction projects. The borrowing happens in anticipation of future federal aid, acting as an advance of federal money that will be issued in the future.

Nationwide, more than 30 states have taken advantage of GARVEEs.

Dennis Buterbaugh, press secretary for Pennsylvania Department of Transportation, said the state isn’t interested.

“Because of the debt load that would be incurred by the state using such financing for transportation projects, we feel it is not a prudent option,” Buterbaugh said in an email. “Bonding is borrowing and we have to live within our means.”

Buterbaugh said he was speaking for the administration.

The commonwealth’s debt is already leading to consequences. Last week, ratings agency Moody’s downgraded Pennsylvania’s debt rating in connection with unfunded pension liabilities.

House Transportation Committee Chairman Rep. Rick Geist, R-Altoona, said he didn’t think a GARVEE bond “is a workable solution for Pennsylvania” because of concerns about taking on new debt.

The state’s needs are pressing – there’s around $3.2 billion in immediate needs to be addressed, according to a report last summer from the state’s Transportation Funding Advisory Commission.

But how those needs will be met is still open-ended.

Elsewhere, GARVEEs funded billions of dollars worth of improvements. Underwriters issued a total of 38 separate GARVEEs totaling more than $6 billion since the 2008 credit crisis, according to a Bank of America Merrill Lynch March 2012 report on GARVEE markets.

Bank of America Merrill Lynch has a 40 percent market share of GARVEES.

The report indicated a GARVEE bond issue in Pennsylvania was “under discussion.”

Joshua Schank, president and chief executive offer for nonprofit think tank the Eno Center for Transportation, said states have a right to be nervous about taking advantage of the program.

The federal government has supplemented the Highway Trust Fund — from where state transportation funding comes — with revenue from the general fund instead of relying only on gas- tax revenue, Schank said.

The feds will only be able to bail out the fund for so long, Schank said, putting the reliability of future payments in jeopardy.

“It used to be GAVREES were based on the expectation of funding that people knew they were getting,” Schank said. “There’s no guarantee that money is going to be there when it’s time to pay it back.”

Schank said governments often lean on tolls as a source of reliable revenue to fund improvements – like the New York Metropolitan Transportation Authority does to fund an ongoing stream of subway system renovations.

The Pennsylvania Turnpike Commission recently announced toll hikes next year as part of a plan that funds PennDOT projects statewide. The federal government has turned down an application to implement tolls for Interstate 80.

Schank said Pennsylvania is not alone in struggling with a pressing need to address maintaining existing infrastructure. Politically, it’s tough to pull off, he said, and states tend to be more likely to pay for new projects than rehabbing what’s built.

“Northeastern states are in the toughest spot; they’re still having to work pretty hard to maintain existing infrastructure,” he said. “Maintaining the existing infrastructure is less sexy and harder to get people to buy into. You run into those problems.”

The Senate Democratic Appropriations Committee came up with an infrastructure-needs financing plan after the governor’s budget address in February. The plan included a $1 billion GARVEE bond in addition to $1.8 billion of spending in other areas.

“GARVEE bonds, backed by the pledge of future federal transportation subsidies, provide the best means available to us now,” reads the proposal’s summary. “The Governor could act to generate these funds immediately and save the current construction season.”

State Sen. Vince Hughes, D-Philadelphia, chair of the Senate Democratic Appropriations Committee, said failing to take advantage of GARVEE bonds is a missed opportunity.

The GARVEE wouldn’t require legislative action, Hughes said, allowing work to begin this construction season, in accordance with other types of investments.

“It is not the long-term solution, it is not the overall solution to the transportation problem, to the infrastructure problem in Pennsylvania, but it should be used as part of a solution,” Hughes said.

Hughes said getting the bonds would bring jobs while addressing the needs of Pennsylvania’s 40,000 miles of state-owned roads and 25,000 bridges.

A transportation overhaul, he said, could be met with bipartisan support.

“The governor is going to have to send a message to the General Assembly that this is what he wants to do,” Hughes said.

By Melissa Daniels
(PA Independent)
July 23, 2012

Transportation officials have announced that within the next year contractors will pave the last 8 miles of state-maintained dirt and gravel roads in Forsyth County. For the past 20 years, Department of Transportation workers have slowly but surely been on a road-paving mission. The effort began in 1989, started by then-Gov. Jim Martin and lawmakers to improve and pave every state-maintained dirt and gravel road in North Carolina. Under the auspices of the N.C. Highway Trust Fund Act, the state has spent hundreds of millions of dollars collected in taxes and fees to blacktop 13,000 miles of roads. The work brought asphalt to the driveways of nearly 200,000 homes, according to Department of Transportation records. The money to pave the roads comes from gasoline and car-sale taxes, but fuel efficiency has impacted the amount of gas taxes collected. “We pay less to use the roads every day,” Gary Neal, Forsyth County maintenance engineer for the Transportation Department, said. At some point, the General Assembly will have to revisit money sources for road and highway construction, maintenance and improvements, Neal said.

by Annette Fuller
(WINSTON-SALEM JOURNAL)
7/23/12

North Carolina cities, which have enjoyed broad annexation powers for more than five decades, will have a harder time absorbing surrounding areas thanks to a new state law the legislature approved in May.

Before the new law took effect, North Carolina cities were allowed to amass unincorporated territory even over the objections of the residents of those areas. Those rules often dismayed suburbanites, but were hailed by city officials as a proven model for maintaining their tax bases and securing cities’ fiscal health.

Under the new law, North Carolina’s annexation process will look more like the process in most other states. Most significantly, residents of unincorporated territory will be able to vote up or down on whether to be absorbed into a city. As in other states, the new rule is likely to make annexations rare because of the higher taxes that come with city residency.

City officials argue that suburbanites often consume city services, so they should help pay for them through taxes. They say the old rules helped avoid the budget problems plaguing cities in other states by allowing them to grow beyond the limited tax bases of their urban core.

Many North Carolina cities, including Charlotte and Raleigh, enjoy AAA bond ratings. Annexation powers aren’t the entire reason for that — for example, the oversight of cities provided by the state’s Local Government Commission is also a key factor — but it’s generally regarded as part of the story. “That law was often cited as the best urban policy in the nation,” says Ellis Hankins, executive director of the North Carolina League of Municipalities.

To critics, though, the financial benefits for cities show precisely what was wrong with the old law: Suburbanites were being annexed and taxed against their will to boost city budgets. “It is all about the money for them,” says Catherine Heath, who leads the StopNCAnnexation Coalition. Heath argues that it’s more democratic to let suburban taxpayers vote as a prerequisite for annexation.

That argument didn’t win out in Raleigh until after the 2010 elections, which brought to power a Republican-controlled legislature that was more skeptical of annexation than its Democratic-majority predecessors. In 2011, the state approved a law that allowed areas facing annexation to block the takeover if 60 percent of property owners in the area signed a petition opposing it. A court threw out that law because only property owners — not renters — were allowed to sign the petitions, leading the legislature to approve the new law this year. Governor Bev Perdue, a Democrat, allowed it to become law without her signature.

Despite her group’s victory, Heath fears that cities will try to reestablish their annexation powers sometime in the future. “It’s not the end of the conversation,” she says.

by Josh Goodman, Staff Writer
(Stateline)
July 6, 2012

Threat of legal battle with environmentalists prompts end of permit requests

The proposed Garden Parkway in Gaston County suffered a significant setback this week, when the state said it would withdraw applications for two environmental permits needed to build the toll road.

The N.C. Department of Transportation, in a July 10 letter, said the threat of litigation from environmental groups made it prudent to pull back.

Without state and federal water-quality permits, the $800 million project can’t be built. The state had hoped to begin construction in 2013, but there have been signs that the DOT is cooling to the controversial project.

In May, the 4th Circuit Court of Appeals in Richmond ruled against the state in a case involving another toll project, the Monroe Connector/Bypass. The court, in scathing language, found the state’s federally required environmental impact studies flawed, just as the Southern Environmental Law Center in Chapel Hill claimed in litigation.

David Farren of the law center said Wednesday that the state’s decision to withdraw its permit applications suggests that similar flaws exist in the Garden Parkway environmental studies.

“In 30 years of practicing law, I’ve never seen someone drop a permit application because they might get sued,” Farren said. “There are defects in the Garden Parkway study that are similar to what the court found deficient with Monroe.”

Greer Beaty, a spokesperson for the N.C. DOT, said the state is withdrawing its applications because it’s the best thing for residents along the parkway route.

“The stops and starts, the pauses and the breaks (in the road-building process) – all of that is very hard on people,” she said.

The DOT needs water-quality permits from the U.S. Army Corps of Engineers and the N.C. Department of Environment and Natural Resources. In its letter, the DOT said it would resubmit its applications in the future, but under the threat of litigation, it didn’t want them to be in “limbo.”

Boom or boondoggle?

The Garden Parkway is one of the state’s most controversial road projects.

If built, the 22-mile bypass around Gastonia would sweep through south Gaston County and create a new bridge over the Catawba River. It would connect with Interstate 485 south of Charlotte Douglas International Airport.
But the highway has been criticized as a boondoggle, and the state’s own studies show it would do little to relieve traffic congestion on Interstate 85. When he first became the state’s transportation secretary in 2009, Gene Conti questioned whether it made sense to build the road.

But the highway has been pushed by a number of business leaders in Gaston County, who believe it would spark an economic boom in the southern part of the county.

In June, the DOT had said it didn’t need money this year for the Garden Parkway because it expected the project to be delayed by litigation.

That alarmed parkway supporters, and caused Gov. Bev Perdue’s office to alter a letter from DOT chief operating officer Jim Trogdon. A letter sent to legislators, from Trogdon, was changed to say that the DOT needed the Garden Parkway money – a fact that Trogdon later refuted.

‘Moving backwards’

The Southern Environmental Law Center has charged that a federally required impact study for the Monroe Connector/Bypass was flawed. The state was supposed to conduct what’s known as a “build vs. no build” study, which compares what would happen if the highway were built compared with what would happen if it weren’t built.

The law center said that when the state did the “no build” study it used data showing the highway was already in place. That created a “build vs. build” study that showed little impact from the toll road’s construction.

The 4th Circuit Court of Appeals in Richmond agreed.

Farren said he believes there are similar flaws in the “build vs. no build” study for the Garden Parkway.

He said the DOT’s decision to withdraw its permit applications is a “face-saving” effort.

“Things are moving backwards on this project,” he said.

By Steve Harrison
(The Charlotte Observer)
Posted: Thursday, Jul. 12, 2012
Modified: Thursday, Jul. 12, 2012

RALEIGH, N.C. — Rep. Harold Brubaker, the first and only Republican House speaker of the 20th century and most recently the chamber’s senior budget-writer, announced Thursday he’s retiring from the General Assembly immediately.

Brubaker, from Randolph County, said he was stepping down from his seat a week after the short budget-adjustment session ended. Republican leaders in his district would pick a replacement candidate to run in the November election.

Brubaker, 65, said in an interview he had decided early last year that he would leave the legislature when he felt confident the House was led by a new generation of Republicans who could govern. The chamber is in good hands, he said, and he didn’t want to just stick around.

“My role is to train the next majority,” Brubaker told The Associated Press, adding “if I was going to retire, I wanted to make sure that I was going to retire when I was up on top.”

Brubaker, the speaker from 1995 through 1998, had an upfront view of the transformation of the North Carolina Republican Party, which for decades had been little more than a speed bump for Democrats on the way to general election victories in an era of one-party government.

When Brubaker arrived in the House in 1977, Democrats held a whopping 114 of the 120 seats in the chamber, partly the result of the extended post-Watergate drubbing the GOP took.

Brubaker said his goal was always to become House speaker but kept it largely to himself because it seems almost absurd in the 1970s: “They would have laughed me out of the building.”

The numbers steadily improved for Republicans and Brubaker, who became minority leader in the early 1980s.
Republicans swept into power nationwide during the 1994 elections and took a 68-52 majority that year in the North Carolina House. Brubaker, who owns a real estate appraisal company in Asheboro, was the first Republican voted to the speaker’s post since 1895. He embarked on carrying out an eight-point pre-election contract signed by GOP candidates.

He succeeded at negotiating with two powerful Democrats – Gov. Jim Hunt and Senate leader Marc Basnight – by passing tax cuts and putting a referendum on the ballot that ultimately made North Carolina the final state to give its governor veto power. Democrats and even some Republicans chafed at the GOP’s governing style under the reign of Brubaker and Rules Chairman Richard Morgan of Moore County.

“To all my colleagues, I want to thank you for the friendship, which I will always cherish as well as a lifetime of memories from all the spirited legislative battles,” Brubaker said in a written statement.

Brubaker’s second term as speaker was more difficult as Republicans held only a two-seat majority in the House and were squarely in the minority in the Senate.

Brubaker returned to the House floor in 1999 after Democrats took back the majority in the 1998 elections. Even in his early 50s, Brubaker was considered an elder statesman among House Republicans, content to play a low-key role and quietly swaying fellow caucus members on key business-friendly legislation.

Current House Speaker Thom Tillis called Brubaker “my mentor, a trusted colleague, and a dear friend. ”
His “commitment to fiscal conservatism and his mastery of the legislative process have made him one of the most effective legislators in our state’s history,” said Tillis, R-Mecklenburg.

Brubaker, a Pennsylvania native who moved to North Carolina in 1969, had one more big part to play when both the House and Senate went Republican following the 2010 elections for the first time since 1870. With Republicans lacking a deep bench of veteran committee leaders, Brubaker stayed on as senior chairman of the House Appropriations Committee.

He helped draw up a two-year budget bill in 2011 that Gov. Beverly Perdue vetoed – a historic first for a spending plan – but was quickly overridden with the help of a handful of House Democrats. The 2011 plan let expire temporary sales and income tax increases approved by Democrats in 2009 that generated $1 billion annually.

Brubaker said Republicans set the tone “that government must live within our means. We do not have to raise taxes.”

Perdue vetoed a budget-adjustment bill two weeks ago, but that was overridden only 10 days before Brubaker’s announcement.

On Thursday, the governor called Brubaker “a good friend.”

“The North Carolina House will certainly miss his experience and depth of knowledge. His long-time service to the state and to the voters of the 78th district will be missed,” she said in a statement.

Brubaker, who is also a cattle farmer, said he would expand his business to include consulting and lobbying work, with help from his son. State law permits Brubaker to register as a lobbyist early next year as the next two-year General Assembly session begins in January.

It wasn’t immediately clear if Republicans in Brubaker’s district also would choose someone to serve out his term through the end of the year. Barring a veto override session, lawmakers aren’t expected to reconvene again in 2012.

By GARY D. ROBERTSON, Associated Press
(WRAL)
Posted: 11:22 a.m. today
Updated: 48 minutes ago

Welcome to Triangle Business Journal’s inaugural “The Triangle’s Most Influential Business Leaders” list.

The 100 names for this list were chosen by the TBJ editors after going through hundreds of names across various sectors that fall under the general coverage guidelines of this newspaper.

A special feature relating to these 100 individuals will be published in our July 27 issue. At that time, you will read about the influence and impact these individuals have had on our communities.

The 2012 list contains many familiar names in business, education, philanthropy and government. It also contains some names you may not recognize right away because they have just started their careers but hold tremendous promise for our communities.

Also, you will see some names missing from this list, including North Carolina Gov. Beverly Perdue, former Progress Energy (NYSE: PGN) CEO Bill Johnson and former Raleigh Mayor Charles Meeker. These individuals have made unparalleled contributions in forwarding our collective goal of being one of the best places in the country to live, work and play. But with this list, we also wanted to look ahead and take inventory of what individuals we believe will continue to make a substantial contribution in the coming years.

Also on this list you will find some former corporate executives such as Red Hat’s (NYSE: RHT) Matthew Szulik, Mulkey’s Barbara Mulkey and Martin Marietta Materials’ (NYSE: MLM) Steve Zelnak who have managed to remain active in this community by participating in ventures that make our communities richer in talent, culture and education.

As I mentioned, the process itself being subjective, might result in some disagreements over who has been included since we only chose 100 individuals. And that’s where you come in. We would love to hear from you any names you feel deserve mention as part of the Top 100. Email me at sougata@amcity.com and follow our blogs relating to this issue in the coming weeks.

Names are in alphabetical order:
Adam Abram, founder, James River Corp.
Catharine Arrowood, attorney, Parker Poe.
John Atkins, founder, O’BrienAtkins.
William Atkinson, CEO, WakeMed Health and Hospitals.
Bill Bell, mayor, city of Durham.
Betsy Bennett, executive director, N.C. Museum of Natural Sciences.
Linda Birnbaum, director, NIEHS.
Jim Blaine, CEO, State Employees Credit Union.
Richard Brodhead, president, Duke University.
Joe Bryan, commissioner, Wake County.
Mike Capps, CEO, Epic Games.
Ralph Capps, CEO, Boys and Girls Club of Wake County.
Ashley Christensen, chef and owner of several local restaurants.
Jack Clayton, regional president, Wells Fargo (NYSE: WFC).
Gene Conti, secretary, N.C. Department of Transportation.
Keith Crisco, secretary, N.C. Department of Commerce.
Don Curtis, owner, Curtis Media Group.
Dennis Daugherty, managing partner, Intersouth Partners.
Dr. Joseph DiSimone, professor, UNC-CH and N.C. State University .
Dr. Victor Dzau, CEO, Duke University Health System .
Martin Eakes, CEO, Self-Help Credit Union.
Ken Eudy, CEO, Capstrat.
Van Eure, owner, The Angus Barn.
Philip Freelon, CEO, The Freelon Group.
Kip Frey, CEO, EvoApp.
Bill Friday, retired president, UNC System.
Ed Fritsch, CEO, Highwoods properties (NYSE: HIW).
Paula Fryland, regional executive, PNC Bank (NYSE: PNC).
Ping Fu, CEO, Geomagic.
Bob Geolas, CEO, Research Triangle Foundation.
Dennis Gillings, chairman, Quintiles .
Jim Goodmon, CEO, Capitol Broadcasting Co.
Ann Goodnight, community volunteer.
Jim Goodnight, CEO, SAS.
Robert Gruber, director, N.C. Public Staff.
Charles Hamner, former CEO, N.C. Biotech Center.
Clay Hamner, director for the Center of Entrepreneurial Studies, UNC-CH.
Frank Harmon, principal, Frank Harmon Architect.
Frank Holding Jr., CEO, First Citizens Bancshares (Nasdaq: FCNCA).
Noah Huffstetler, attorney, Nelson Mullins.
Jim Hunt, former governor, North Carolina.
Fred Hutchison, managing partner, Hutchison Law.
Jim Hyler, former president, USGA.
Bob Ingram, former vice chairman, GlaxoSmithKline (NYSE: GSK).
John Jernigan, managing principal, Smith Anderson.
Darleen Johns, former owner, Alphanumeric Systems.
Gary Joyner, partner, Kilpatrick Townsend.
John Kane, developer, North Hills.
Mark Kleinschmidt, mayor, town of Chapel Hill.
Mike Krzyzewski, men’s basketball coach, Duke University.
Michael Landguth, CEO, RDU Airport Authority.
Steve Lerner, Managing Partner, Blue Hill Group.
Carolyn Logan, CEO, Salix Pharmaceuticals (Nasdaq: SLXP).
Cynthia Marshall, president, AT&T North Carolina.
Elaine Marshall, N.C. secretary of state.
James Maynard, Chairman, Investors Management Corp.
John McConnell, CEO, McConnell Golf.
Nancy McFarlane, mayor, city of Raleigh.
Assad Meymandi, Triangle philanthropist.
Rusine Mitchell-Sinclair, former site executive, IBM Corp. (NYSE: IBM).
Johnny Morisey, founder, Fonville Morisey Realty.
Lou Moshakos, CEO, LM Restaurants.
Barbara Mulkey, founder, Mulkey Engineers & Consultants.
Charlie Nelms, chancellor, N.C. Central University.
Art Pappas, founder, Pappas Ventures.
Sarah Parker, chief justice, N.C. Supreme Court.
Roger Perry, CEO, East West Partners.
Lonnie Poole, founder, Waste Industries.
Art Pope, CEO, Variety Wholesalers.
Billie Redmond, CEO, Coldwell Banker Commercial.
Larry Robbins, partner, Wyrick Robbins.
Dr. William Roper, CEO, UNC Health.
Tom Ross, president, UNC System.
Jim Rutherford, general manager, Carolina Hurricanes.
Harvey Schmitt, CEO, Greater Raleigh Chamber of Commerce.
Steven Scott, president, Wake Technical Community College.
O. Temple Sloan, chairman, General Parts Inc.
Dr. Ralph Snyderman, chancellor emeritus, Duke University Health System.
David Strong, CEO, Rex Hospital.
Steve Stroud, chairman, NAI Carolantic.
Chuck Swoboda, CEO, Cree Inc. (Nasdaq: CREE).
Matthew Szulik, former CEO, Red Hat.
Robb Teer, CEO, Teer Associates.
J. Rex Thomas, founder, Thomas Linderman Group.
Holden Thorp, chancellor, UNC-Chapel Hill.
Garland Tucker, CEO, Triangle Capital Corp. (Nasdaq: TCAP).
Doug Vinsel, CEO, Duke Raleigh Hospital .
John Wagner, plant manager, Merck & Co. (NYSE: MRK).
Don Walston, founder, Howard Perry and Walston.
Larry Wheeler, CEO, N.C. Museum of Art.
Jim Whitehurst, CEO, Red Hat (NYSE: RHT).
Brad Wilson, CEO, Blue Cross Blue Shield North Carolina.
Bob Winston, founder, Winston Hotels.
Thad Woodard, CEO, N.C. Bankers Association.
Randy Woodson, chancellor, N.C. State University.
Phail Wynn, vice president, Duke University.
Lee Yarbrough, former president, Novozymes North America.
Smedes York, former mayor, city of Raleigh.
Debbie Yow, athletic director, N.C. State University.
Steve Zelnak, former CEO, Martin Marietta Materials (NYSE: MLM).

by Sougata Mukherjee, Editor
(Triangle Business Journal)
Monday, July 9, 2012, 2:56pm EDT
Last Modified: Monday, July 9, 2012, 3:23pm EDT

EDEN ­— The Republican remolding of North Carolina state government is essentially two years in, with elections coming in November to determine whether voters want more of what it’s brought.

The Republicans who won historic legislative majorities in both the House and Senate in 2010 have made good on many of their campaign promises.

Republicans cut the budget and held the line on tax increases, although some government fees have increased and education advocates say the cuts were too deep. They’ve rolled back a number of environmental regulations on businesses, with more of the same slated to come.

They approved a statewide referendum for a new law against gay marriage and civil unions, which voters overwhelmingly added to the state constitution in May. They’ve pushed through some education reforms, with more planned in coming years.

“I’m confident that what we’ve done is what the voters asked us to do in 2010,” Senate President Pro Tem Phil Berger, R-Rockingham, said Monday. “And so for that reason I feel good about what we’re going to see in the fall.”

Democrats see things differently, to put it mildly. State Sen. Don Vaughan, D-Guilford, called the recently ended legislative session “a step backwards,” largely due to the Republican majority’s refusal to increase education funding as Gov. Bev Perdue and other Democrats requested.

Vaughan also derided “the millionaires tax cut” the legislature passed last year, which was initially billed as a benefit for small businesses, allowing them to claim their first $50,000 in annual revenue tax free.

It turned out that perk is available to all businesses, large and small, which became obvious only recently. Capping the break so only smaller businesses could benefit would have raised millions ­— as much as $150 million by one estimate ­— and a number of Democrats wanted to use that money in public schools.

But Berger, the top legislator in the state Senate, and other Republicans have said they’re tired of throwing money at education and getting less-than-hoped-for returns.

To that end, Berger got several of the education reforms he wanted passed this session, including a move toward merit-pay programs for teachers, more robust student assessments from kindergarten to third grade, new literacy programs for young students and a new rating system for K-12 schools.

His effort to hire teachers on annual contracts, instead of the current method of granting them tenure and protections against firing after four years on the job, didn’t move forward. It remains a priority, though the details may change, Berger said.

Berger, who faces a re-election challenge this November from Stoneville Democrat Bobby R. Stanley, sat down Monday with the News & Record at his Eden law firm.

He discussed the recent session, future policy initiatives and a rumored pending U.S. Senate campaign. An edited version of that conversation follows.

Where do we stand with tax reform? Will the majority try to do away with state income tax in the next couple of years, possibly replace it with a sales tax on services?

I think you’ll see us address the issue. Exactly how it will be addressed, we’ll just have to wait and see. … We would like to be able to not just lower the income tax rates, but eliminate the income tax rates. Whether that can be done or not, I just don’t know, but that’s certainly the goal.

We spend $2.5 billion (a year) on the university system in this state and just under a billion on the community college system. Do you see those numbers getting closer to each other in the near future … ?

I think we’re looking at potential large changes in higher education. We’ve seen for years the situation where we have someone who graduates from our university system, and they end up going back to the community college to get job skills. … And so I think it’s incumbent upon us as policymakers to recognize that and try to find ways to be more efficient with our dollars. And if that means that we end up with more students getting two-year technical or job-training type degrees as opposed to four-year degrees that don’t really provide any marketable job skills, then clearly we need to do that.

The $50,000 in tax-free business income bill. I remember it was billed as a small-business tax credit. It ended up being an all-business tax credit. Why not do as some of your critics repeatedly asked and put a ceiling on it … and plow (the extra money) into education?

It is targeted to small businesses because it hits the first $50,000 in business income. And so the businesses that will benefit from that are by and large small businesses. There was some discussion, if I recall correctly, about trying to target it in some way at businesses that earn less than a certain amount. … But the problem that we had was our staff was telling us that it was difficult to … have that provision written so you could accurately predict what your revenue situation was going to be. … And, again, what we were trying to do was leave more money in the private sector.

Are you going to run for the U.S. Senate in 2014?

I’m running for the North Carolina Senate this year.

What about in 2014?

I have no plans to run for the U.S. Senate in 2014 at this time.

By Travis Fain
Staff Writer
(News & Record)
Tuesday, July 10, 2012 (Updated 7:17 am)

Gov Bev Perdue’s veto Friday of the proposed $20.2 billion state budget leaves schools, courts and college students on scholarships facing an uncertainty they haven’t experienced in years.

The impasse between the Democratic governor and the Republican-led legislature may mean lawmakers will finish work in a few days without putting a revised budget in place.

Perdue said she wants to draw legislative leaders into negotiations.

She has made at least two suggestions in the last week for spending about $100 million more on K-12 schools, probation officers and other items by using money from reserve accounts or an unexpected bump in revenue. Legislative leaders have rebuffed her suggestions, and said they don’t intend to rework the budget.

The revenue bump that Perdue is referring to comes from businesses not yet claiming a new $3,500 tax credit, law makers said. Because businesses still have time to claim the money, the state can’t spend it, Sen. Bob Rucho, a Mecklenburg County Republican, said on Thursday when Perdue first suggested the idea.

“I really tried to forge a consensus with them,” Perdue said. “Ultimately, they told me ‘No.’ They said, ‘Take it or leave it.’ I refuse to give up.”

Flanked by two large signs listing “Top 20 Budget Flaws,” Perdue said the legislature’s plan falls short in many areas. But the budget discussion isn’t about money, she said, but about the state’s priorities and future.

House Speaker Thom Tillis said Perdue’s spending suggestions were “structurally flawed,” and that she is holding up progress for the sake of one-half of 1 percent in a $20.2 billion budget.

“It must be all about ego,” Tillis said. “The governor is willing to take pay raises away from state employees and teachers. She’s willing to take classroom funding away and we’re trying to fill a hole because federal funding is going away. We’re increasing state spending. It sounds more political to me than principle.”

In odd-numbered years, as they did in 2011, the legislature approves a two-year budget. In even-numbered years, they make adjustments to the spending plan they approved the year before.

Under the two-year budget approved last June, school districts have less to spend next year. When the expiring federal money is considered, their accounts drop by $333 million. House and Senate leaders softened that blow when they revised the budget this month; schools would have about $190 million less next year. They also added $18.6 million more for UNC need-based financial aid, and put the Family Court program, where domestic and juvenile cases are handled, back on a steady source of funds.

The association for school superintendents is advising school leaders to tell legislators and Perdue’s office how the cut would hit their districts and urge them to work together “to address the looming shortfall of $333 million.”

The legislature’s budget also gave 1.2 percent raises for state employees, teachers and other school personnel – the first raises they’ve seen in four years. Those raises won’t happen if the veto stands and no compromise is reached.

In her news conference, Perdue spoke directly to teachers and school employees, saying that she wants them to have raises and gave them more in her budget proposal.

While most would get raises in the legislature’s budget, she said, some teachers and state employees will lose their jobs.

“Raises for some and pink slips for others is not the right thing,” she said.

Picking up the attack launched by legislative Democrats, Perdue said legislators should not give tax breaks to some of the state’s wealthiest residents while failing to do enough for schools. Legislators passed the tax break last year.

“I simply don’t believe as a citizen that the General Assembly should give tax breaks to equity partners in law firms, to lobbyists and other wealthy business owners while they leave the needs of our classroom and our state unmet,” she said.

The new tax break is expected to cost the state $336 million.

Tillis countered that Perdue proposed to cut the corporate tax rate, a break that would have gone to large businesses.

This is the second year in a row that Perdue has vetoed the budget. Last year, the House and Senate were able to cancel her veto, with five House Democrats joining Republicans in an override.

This year, six Democrats voted for the Republican budget. Friday, four of the six were uncertain how they would vote on an override. One of the Democrats, Rep.Timothy Spear of Washington, has been absent, dealing with the death of his father and a family illness. So far, only Rep. William Brisson of Dublin has indicated he would continue to support the GOP budget and vote for the override.

“We’ll be back next week on Monday or Tuesday to take up a veto override if we have sufficient votes,” Tillis said.

The last time legislators left Raleigh without adopting a new second-year budget was in 1996, when differences over how to spend a budget surplus sent the Democratic Senate and the Republican House home without an agreement.

Then-Gov. Jim Hunt called legislators back to work the following week for a budget session, and they worked out a deal.

By Lynn Bonner
(News & Observer)
Published Fri, Jun 29, 2012 10:24 PM
Modified Sat, Jun 30, 2012 03:01 AM