Graph courtesy of the Fiscal Research Division

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RALEIGH — As of Monday morning, there is no word yet if the legislative session and the next round of state budget discussions will be delayed due to inclement weather. That will depend on whether the predicted snow/sleet/ice storm hits north or south of Raleigh.

Still, the deluge of numbers seen here last week is expected to continue, possibly through June.

Last week, legislators got their first set of math problems through a major change proposed to the gas tax and to transportation funding — plus the first formal presentation on the state’s revenue outlook.

And the big number coming out of last week’s work was $271 million.

That’s the projected budget hole legislators will have to fill as they plan for the next biennial budget.

In a budget outlook presentation at a joint session of the House and Senate Committee on Appropriations, Barry Boardman, an analyst with the legislature’s Fiscal Research Division, said the gap between projections and actual revenue was due to a drop in personal income tax receipts. The legislature lowered and flattened the income tax rate last year as part of a tax overhaul.

Since much of the current revenue gap is due to lower withholding rates, Boardman said, April revenue numbers, already the most important when it comes to drafting a budget, will be even more critical. Lower withholding rates, he said, should also mean lower refunds and should pull the revenue numbers out of their nose dive.

Personal income tax is 5.8 percent below target, but that drop is partially made up by a jump in sales taxes, which are 2.3 percent ahead of projections, and a 5.7 percent increase in corporate and franchise taxes.

Projections for next year, analysts said, included a $21 billion base budget and more than $500 million in budget pressures — including additional Medicaid spending, raising starting teacher pay to $35,000 and enrollment growth at schools and universities. The full report is available here [PDF].

This week, work on the transportation bill and budget discussion continue, weather permitting.

Sparring over the gas tax

Sen. Terry Van Duyn, D-Buncombe

Sen. Terry Van Duyn, D-Buncombe, picked up where her predecessor, the late Martin Nesbitt, left off, challenging senate leaders, including fellow mountain legislator Sen. Tom Apodaca, R-Henderson, over proposed changes to the gas tax.

The senate proposal would drop the tax temporarily, but eliminate a further reduction scheduled for later this year. The loss of funds would be made up with a reduction of more than 500 positions at the N.C. Department of Transportation.

During final debate in the Senate, Democrats, including Duyn, called out the leadership’s claims of a tax cut, pointing to the elimination of the further scheduled drop in the gas tax.

In response, Apodaca noted that the bill was directly tied to DOT and local projects funding and asked a fellow senator to read off the list of projects for Buncombe County.

“Very simple bill here,” he said in closing. “If you don’t want your road money in your district, please vote against this bill.”

The measured passed 35-15 and moves to the House.

Legislation of note: Fracking included

Rep. Susan Fisher, D-Buncombe, was one of four primary sponsors of a bill that would disapprove recent rules for natural gas exploration through hydraulic fracturing. For now, the bill, H76, would disapprove new rules for fracking adopted by the state Mining and Energy Commission. The commission was tasked with coming up with a set of rules to clear the way for fracking permits as early as this year, and it adopted two sets of rules, in December and January.

Disapproval by the legislature could force the commission to restart its rulemaking process. The bill’s co-sponsors are mostly Democrats, including WNC legislators Reps. John Ager, Joe Sam Queen and Brian Turner, but two Republicans have signed on as well, including Henderson County Rep. Chuck McGrady.

Western North Carolina’s legislators also supported bills including:

H80 — Special license plates supporting RiverLink would benefit from a new bill introduced by Buncombe County Reps. Fisher, Turner and Ager. The bill would allow a more distinctive design for the plate.

H69 — Rep. Josh Dobson, R-McDowell, co-sponsored a bill that would make admission charges at entertainment events at agricultural fairs exempt from sales taxes.

H87 — McGrady co-sponsored a bill that would tighten community college auditing, requiring the State Board of Community Colleges to adopt more specific guidelines for the scope and frequency of the audits.

H83Rep. Chris Whitmire, R-Transylvania, and three other House members filed a resolution calling for an examination of ways to prevent suicide among minors and veterans. The resolution authorizes a study by the Legislative Research Commission to compile a study in time for the 2016 legislative session.

Kirk Ross

Based in the Triangle, Kirk Ross is the capital bureau chief for Carolina Public Press. Contact him at kross@carolinapublicpress.org.

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