The Joint Legislative Commission on Governmental Operations met this week as part of its duty to oversee the work of the legislature between sessions. The commission has several subcommittees, including one for Natural and Economic Resources. The Natural and Economic Resources Subcommittee is particularly important now, as much of its work is focused on job creation and retention. This week, I thought you may be interested to learn about the updates the group received.
Thank you as always for your interest in state government. If you have any questions about this information or anything else that I can help with, please contact me. I am always glad to be of service.
Commerce
_ State Commerce Secretary Keith Crisco update subcommittee members of the progress of economic development grants in North Carolina.
_JDIG – Job Development Investment Grant
_ Since its beginning in 2003, JDIG has committed $750 million in grants to 100 grantees, resulting in committments of over $7 billion in investment and over 30,000 new jobs.
_ In 2009 alone, JDIG entered into 16 grant agreements, which will result in the creation of over 5,000 new jobs and the retention of 6,000 existing jobs.
_One NC
_ Since 2003, through the One NC Fund the State has made 304 awards, totaling $71 million for the creation of 40,000 jobs and capital investment of $6.9 billion.
_ In 2009, $8.5 million was committed to 40 grantees for job creation and retention of over 14,000 jobs and $550 million in capital investment.
_Industrial Development Fund
_ 6 grants were awarded in 2009, totaling $4.6 million.
_ These grants leveraged $733 million in private capital investment and will result in the creation of 1,000 jobs.
_Site Infrastructure Development
_ This program was designed in 2003 to attract large scale industrial projects.
_ In 2009, Merck received $24 million under the fund for the construction of a facility in Durham that will manufacture flu vaccine.
_ The grant agreement set performance targets of 200 jobs at average wage of $57,000 and investment of $166 million in construction and $90 million in machinery and equipment. Merck has far surpassed all of those requirements.
_Job Maintenance and Capital Development Fund
_ This program was created in 2007 to help retain jobs with existing manufacturers who were making substantial capital investments.
_Two grants have been awarded under this program – Goodyear and Bridgestone Firestone. In each case, the company has made an additional investment of at least $200 million and has agreed to retain at least 1,800 existing jobs at salaries at least 40% above the county average.
_ $5 million appropriated in 2009-2010
Golden LEAF
_In 1999, the North Carolina legislature created Golden LEAF to administer one-half of North Carolina's share of the Master Settlement Agreement with cigarette manufacturers in accordance with the court consent decree between North Carolina and the manufacturers. Golden LEAF is a nonprofit organization devoted to the economic well being of North Carolinians. The foundation makes grants throughout the state intended to help improve the state’s economy, particularly in communities that relied heavily on the tobacco economy.
_ Dan Gerlach, president of Golden LEAF, updated subcommittee members on the recent work of the foundation. A total of 111 grants were awarded in 2009 totally $35 million. Major initiatives of the Foundation include:
_ Community Assistance Initiative – the Community Assistance Initiative is a grant program that targets communities of need and provides direct support for projects that significantly enhance the quality of life for citizens within those communities by stimulating economic activity or providing assistance in overcoming barriers to economic transition or community progress. The Initiative reserves $2 million for efforts in each county and works closely with community leaders in developing programs appropriate for the individual community.
_ Economic catalyst grants – economic catalyst grants assist eligible state, regional and local economic development groups with grants that lead to job creation in tobacco-dependent or economically distressed areas. Golden Leaf works closely with the NC Department of Commerce and other economic developers in awarding these grants.
_ Recent examples of this program include:
_ Domtar – The Foundation worked with various economic development groups to retain the Domtar facility (paper manufacturing) in Martin County. The facility is an important local economic engine and accounts for 20% of the tax base in Martin County.
_ Townsends – The Foundation worked to retain a chicken processing plant in the State. The efforts will ensure the retention of jobs not only at this particular plant, but also at other facilities and for poultry farmers throughout the State.
_ 4,300 jobs were created or retained in the 2009 calendar year with these grants.
_Golden LEAF Opportunities for Work
_ The Golden LEAF Opportunities for Work (GLOW) program was created to address some of the urgent job training needs North Carolina faces during the current economic downturn. GLOW was a short-term, non-degree workforce development grant initiative that supported vocational and/or technical training programs targeting identified employment opportunities in tobacco-dependent, economically distressed and/or rural communities. The expected outcome of projects awarded under this initiative is the eligibility of trainees for placement in permanent, full-time jobs requiring their new skills.
_ A recent example of success is in the aerospace manufacturing industry. The Golden LEAF has played a pivotal role in the recruitment of Spirit Aerosystems to Kinston. This facility is expected to begin operation in mid-2010 and will bring 700 jobs to this area.
_What’s next for Golden Leaf?: In the foreseeable future, Golden LEAF will be involved in initiatives to:
_Invest in broadband infrastructure
_Green economy and health care
_Increase accountability and transparency
_Strengthen commitment to Community Assistance Initiative
_Build STEM (science, technology, engineering, and math) education opportunities.
Notes
_Turbotec Products Inc., an international supplier of heat exchangers and heat transfer products for the heating, refrigeration and geothermal markets, will greatly expand its presence in Catawba County. The company will move the bulk of its manufacturing operations from Connecticut to Hickory, adding 73 jobs and investing $6.5 million in the next three years. The project was made possible in part by a $76,500 grant from the One North Carolina Fund.
Prepared with the assistance of the Speaker’s Office of Communications
From the Office of Representative Jimmy L. Love, Sr. March 11, 2010
In the face of concerns about ethics and efficiency, reformation of North Carolina’s ABC System has become an important issue for many North Carolina lawmakers. The following information highlights the mission of the recently appointed Joint Select Committee on Alcohol and Beverage Control, and provides a general outline for the issues addressed by committee members this week during their first meeting.
Thank you as always for your interest in state government. If you have any questions about this information or anything else that I can help with, please contact me. I am always glad to be of service.
Overview of ABC System
_ Our ABC system dates back to 1874, and the ABC Commission was established in 1935 after the repeal of Prohibition.
_The state controls the sale of liquor, which means that only local ABC Boards are authorized to operate retail stores and sell liquor in NC. There are 163 local ABC boards and 414 stores across the state. These local boards employ close to 2,400 people.
_The ABC system is a profitable industry for the state of North Carolina: $757 million in sales in 2008-09 makes the ABC system an important source of revenue for the state. Proceeds from these sales support the operation of the stores and provide funds for state and local governments.
Joint Study Committee on Alcoholic Beverage Control
_The Joint Study Committee on Alcoholic Beverage Control is responsible for evaluating the need for statewide consistency and uniformity in ABC structures, rules, and ethics standards, and examining the current compensation structure for both state and local ABC board members and employees, and making recommendations for any salary limitations or oversight that might be needed.
_The committee will examine the governance structure of local ABC boards, the geographic proximity of local ABC boards, existing ethics rules and possible privatization of the ABC system. Committee members are expected to make recommendations for reform or change where needed.
Committee Meeting:
_Key findings of General Assembly’s Program Evaluation Division:
_ The ABC system has not kept pace with demographic and economic changes in the state.
_ Population growth is concentrated in urban centers, rather than rural areas, and these population shifts affect local board profitability.
_ The system is governed by statutes that limit system management.
_ The General Statutes limit ability of ABC Commission to effectively and efficiently manage the system. Currently, the commission is not allowed to enforce minimum standards for operation and profitability, assist boards in making changes to improve operations, or mandate board consolidations or mergers.
_ The system has not clearly defined the mission of local boards.
_ North Carolina has not clearly defined mission of local boards, neither by statute nor by rule.
_ Lack of a clear mission allows local boards to justify ineffective and inefficient store operations.
_ The system regulates the sale of liquor differently than in other states.
_ North Carolina is the only retail control state that has local boards operating stores.
_ Program Evaluation Division recommendations:
_ Define mission of local boards.
_ Efficient store operation; profitability and revenue; convenient access; excellent customer service; and appropriate control
_ Provide commission better management tools
_ Establish performance standards for local boards; mandate local board mergers; provide technical assistance; provide financial incentives; and authorize agency stores
_ Modify statutes for store elections and purchase-transportation permits
_ Increase threshold from 500 to 5,000 registered voters for election; eliminate ABC store requirement to hold mixed-beverages elections; and eliminate purchase-transportation permit requirement for liquor
_ Consider whether other regulatory systems are appropriate
_ Changing the system could affect: revenues; liquor selection and pricing; and warehouse ownership and operation
_The committee is scheduled to meet again on March 24, 2010.
Notes
_Siemens Energy Inc., an international supplier of products and services for the generation, transmission and distribution of power, will expand its gas turbine operations in Mecklenburg County. The company plans to add 825 jobs and invest at least $135 million over the next five years. The announcement was made possible in part by state grants from the Job Development Investment Grant program and One North Carolina Fund.
_Affiliated Computer Services, a global call center operation based in Dallas, announced this week that it will add 280 jobs at its Raleigh office. The company is accepting applications and inquiries by phone, online and in person at its Raleigh office. ACS employs 1,100 people in Raleigh and 3,250 throughout the state.
_Pierre Foods Inc., a Cincinnati-based food products maker, announced this week that the Company plans to invest $16.8 million over the next three years and add 500 jobs in Claremont in Catawba County. The expansion is a result of a $600,000 incentive provided by state officials.
Prepared with the assistance of the Speaker’s Office of Communications
Thank you as always for your interest in state government. If you have any questions about this information or anything else that I can help with, please contact me. I am always glad to be of service.
Overview of ABC System
_ Our ABC system dates back to 1874, and the ABC Commission was established in 1935 after the repeal of Prohibition.
_The state controls the sale of liquor, which means that only local ABC Boards are authorized to operate retail stores and sell liquor in NC. There are 163 local ABC boards and 414 stores across the state. These local boards employ close to 2,400 people.
_The ABC system is a profitable industry for the state of North Carolina: $757 million in sales in 2008-09 makes the ABC system an important source of revenue for the state. Proceeds from these sales support the operation of the stores and provide funds for state and local governments.
Joint Study Committee on Alcoholic Beverage Control
_The Joint Study Committee on Alcoholic Beverage Control is responsible for evaluating the need for statewide consistency and uniformity in ABC structures, rules, and ethics standards, and examining the current compensation structure for both state and local ABC board members and employees, and making recommendations for any salary limitations or oversight that might be needed.
_The committee will examine the governance structure of local ABC boards, the geographic proximity of local ABC boards, existing ethics rules and possible privatization of the ABC system. Committee members are expected to make recommendations for reform or change where needed.
Committee Meeting:
_Key findings of General Assembly’s Program Evaluation Division:
_ The ABC system has not kept pace with demographic and economic changes in the state.
_ Population growth is concentrated in urban centers, rather than rural areas, and these population shifts affect local board profitability.
_ The system is governed by statutes that limit system management.
_ The General Statutes limit ability of ABC Commission to effectively and efficiently manage the system. Currently, the commission is not allowed to enforce minimum standards for operation and profitability, assist boards in making changes to improve operations, or mandate board consolidations or mergers.
_ The system has not clearly defined the mission of local boards.
_ North Carolina has not clearly defined mission of local boards, neither by statute nor by rule.
_ Lack of a clear mission allows local boards to justify ineffective and inefficient store operations.
_ The system regulates the sale of liquor differently than in other states.
_ North Carolina is the only retail control state that has local boards operating stores.
_ Program Evaluation Division recommendations:
_ Define mission of local boards.
_ Efficient store operation; profitability and revenue; convenient access; excellent customer service; and appropriate control
_ Provide commission better management tools
_ Establish performance standards for local boards; mandate local board mergers; provide technical assistance; provide financial incentives; and authorize agency stores
_ Modify statutes for store elections and purchase-transportation permits
_ Increase threshold from 500 to 5,000 registered voters for election; eliminate ABC store requirement to hold mixed-beverages elections; and eliminate purchase-transportation permit requirement for liquor
_ Consider whether other regulatory systems are appropriate
_ Changing the system could affect: revenues; liquor selection and pricing; and warehouse ownership and operation
_The committee is scheduled to meet again on March 24, 2010.
Notes
_Siemens Energy Inc., an international supplier of products and services for the generation, transmission and distribution of power, will expand its gas turbine operations in Mecklenburg County. The company plans to add 825 jobs and invest at least $135 million over the next five years. The announcement was made possible in part by state grants from the Job Development Investment Grant program and One North Carolina Fund.
_Affiliated Computer Services, a global call center operation based in Dallas, announced this week that it will add 280 jobs at its Raleigh office. The company is accepting applications and inquiries by phone, online and in person at its Raleigh office. ACS employs 1,100 people in Raleigh and 3,250 throughout the state.
_Pierre Foods Inc., a Cincinnati-based food products maker, announced this week that the Company plans to invest $16.8 million over the next three years and add 500 jobs in Claremont in Catawba County. The expansion is a result of a $600,000 incentive provided by state officials.
Prepared with the assistance of the Speaker’s Office of Communications
From the Office of Representative Jimmy L. Love, Sr. March 4, 2010
This week, I would like to take the time to talk to you a little bit about one of our most important interim commissions, the Joint Legislative Commission on Governmental Operations. The commission was created in 1975 to provide ongoing legislative examination and review between legislative sessions. Various general statutes and session laws also require state agencies and other entities to consult with the commission before taking action on a particular issue or to submit reports for its review.
The Commission is chaired by the leaders of both the House and the Senate: House Speaker Joe Hackney and Senator Pro-Tem Marc Basnight, respectively. I have been appointed as a member of the Justice and Public Safety Subcommittee in an advisory position.
The Joint Legislative Commission on Governmental Operations has met twice since the legislative session adjourned in August, once in November and once in January. The following information highlights just some of the important issues they have considered recently.
Thank you as always for your interest in state government. If you have any questions about this information or anything else that I can help with, please contact me. I am always glad to be of service.
Revenue Outlook and Economic Report
_Revenues through January are $35 million short of forecast.
_ The General Fund revenue for the first half of the fiscal year came in about $35 million below the $11 billion target for the period. So far, collections are running just below expectations. The weak economy continues to affect consumer spending, and in turn, the state’s economy-based taxes. Revenue forecast assumptions anticipated slow economic growth with a gradual improvement during the second-half of the fiscal year.
_Budget pressures will continue to mount as prolonged weaknesses in the economy affect revenue collections the remainder of the fiscal year. At this stage of economic recovery, economic signals remain mixed, yet most economists believe a sustainable recovery is underway.
– Sales tax collections have been slow to recover. Our economists say that with continued employment uncertainty, cautious consumer behavior is likely to continue.
_ The expected slower job and wage growth will delay the growth of income tax withholding. The 2009-10 forecast envisioned zero growth for withholding for the year, but positive improvement was expected the last quarter.
_Even though our economists, like most others, are pessimistic about a full recovery in 2010, a cautious budgeting approach will help reduce the harm.
_The overall economy is in much better shape than a year ago. Nonetheless, recession-like conditions will be with us for a while longer.
Medicaid
_About 49 percent of the state’s Medicaid budget had been spent through December 1, 2009. Year-to-date Medicaid expenditures reflect an increase of 8.8 percent compared to the same period last year. Currently, the Department of Health and Human Services is working to reduce expenditures in a time that the program is experiencing substantial growth.
_Medicaid enrollment growth was budgeted at 8.44 percent, but actual enrollment growth is now projected at about 9.8 percent. This means that the average enrollment is projected to exceed 18,000 individuals more than budgeted.
_The average Medicaid enrollee is using 4 percent more Medicaid services than budgeted.
_Projections indicate that these enrollment and consumption trends could require $72 million more state dollars than budgeted ($285 million total dollars).
_Based upon current experience with flu-related treatment of Medicaid enrollees, projections indicate that H1N1 may cost the Medicaid program $13 million more state dollars than budgeted ($52 million total dollars).
_The size of the proposed Medicaid budget cuts is unprecedented in North Carolina, and trying to meet these lower budget targets while also seeing a significant increase in demand for services substantially complicates the efforts. The department is trying to accomplish the budget reductions in a manner that limits damage to the state’s health care delivery system and avoids the loss of access to critical services.
Federal Funds
_Corina Eckl, Fiscal Program Director with the National Conference of State Legislatures, reported to the Joint Commission on Governmental Operations the fiscal conditions of the states remain dire. Twenty-one states reported a pessimistic outlook on 2010 revenues. Florida, for example, reports that annual revenues today compare to 2001 levels and are not expected to return to peak levels until 2013. Colorado has a similar experience in that annual revenues are no more than amounts collected in 2005.
_States used a variety of methods to close their budget gaps, including spending cuts, federal funds, tapping rainy day and other funds, and revenue increases. Some states like Arizona cut as little as 4 percent of their expenditures while North Carolina cut 36 percent of expenditures. ARRA funds were used at varying amounts as well. Texas bridged 97 percent of its budget gap through ARRA fund while North Carolina closed its budget gap by 31 percent through the use of ARRA funds.
_Forty-four states experienced a budget gap in FY 2009, and 46 states had a gap in FY 2010 before the budget was adopted. States collectively experienced budget gaps of $263.8 billion from 2002-2006. The current recession, including projections through 2012, reflect budget gaps of $386.8 billion.
_State governments will face budgetary problems at least 12 months after the US recession ends.
Prepared with the assistance of the Speaker’s Office of Communications
The Commission is chaired by the leaders of both the House and the Senate: House Speaker Joe Hackney and Senator Pro-Tem Marc Basnight, respectively. I have been appointed as a member of the Justice and Public Safety Subcommittee in an advisory position.
The Joint Legislative Commission on Governmental Operations has met twice since the legislative session adjourned in August, once in November and once in January. The following information highlights just some of the important issues they have considered recently.
Thank you as always for your interest in state government. If you have any questions about this information or anything else that I can help with, please contact me. I am always glad to be of service.
Revenue Outlook and Economic Report
_Revenues through January are $35 million short of forecast.
_ The General Fund revenue for the first half of the fiscal year came in about $35 million below the $11 billion target for the period. So far, collections are running just below expectations. The weak economy continues to affect consumer spending, and in turn, the state’s economy-based taxes. Revenue forecast assumptions anticipated slow economic growth with a gradual improvement during the second-half of the fiscal year.
_Budget pressures will continue to mount as prolonged weaknesses in the economy affect revenue collections the remainder of the fiscal year. At this stage of economic recovery, economic signals remain mixed, yet most economists believe a sustainable recovery is underway.
– Sales tax collections have been slow to recover. Our economists say that with continued employment uncertainty, cautious consumer behavior is likely to continue.
_ The expected slower job and wage growth will delay the growth of income tax withholding. The 2009-10 forecast envisioned zero growth for withholding for the year, but positive improvement was expected the last quarter.
_Even though our economists, like most others, are pessimistic about a full recovery in 2010, a cautious budgeting approach will help reduce the harm.
_The overall economy is in much better shape than a year ago. Nonetheless, recession-like conditions will be with us for a while longer.
Medicaid
_About 49 percent of the state’s Medicaid budget had been spent through December 1, 2009. Year-to-date Medicaid expenditures reflect an increase of 8.8 percent compared to the same period last year. Currently, the Department of Health and Human Services is working to reduce expenditures in a time that the program is experiencing substantial growth.
_Medicaid enrollment growth was budgeted at 8.44 percent, but actual enrollment growth is now projected at about 9.8 percent. This means that the average enrollment is projected to exceed 18,000 individuals more than budgeted.
_The average Medicaid enrollee is using 4 percent more Medicaid services than budgeted.
_Projections indicate that these enrollment and consumption trends could require $72 million more state dollars than budgeted ($285 million total dollars).
_Based upon current experience with flu-related treatment of Medicaid enrollees, projections indicate that H1N1 may cost the Medicaid program $13 million more state dollars than budgeted ($52 million total dollars).
_The size of the proposed Medicaid budget cuts is unprecedented in North Carolina, and trying to meet these lower budget targets while also seeing a significant increase in demand for services substantially complicates the efforts. The department is trying to accomplish the budget reductions in a manner that limits damage to the state’s health care delivery system and avoids the loss of access to critical services.
Federal Funds
_Corina Eckl, Fiscal Program Director with the National Conference of State Legislatures, reported to the Joint Commission on Governmental Operations the fiscal conditions of the states remain dire. Twenty-one states reported a pessimistic outlook on 2010 revenues. Florida, for example, reports that annual revenues today compare to 2001 levels and are not expected to return to peak levels until 2013. Colorado has a similar experience in that annual revenues are no more than amounts collected in 2005.
_States used a variety of methods to close their budget gaps, including spending cuts, federal funds, tapping rainy day and other funds, and revenue increases. Some states like Arizona cut as little as 4 percent of their expenditures while North Carolina cut 36 percent of expenditures. ARRA funds were used at varying amounts as well. Texas bridged 97 percent of its budget gap through ARRA fund while North Carolina closed its budget gap by 31 percent through the use of ARRA funds.
_Forty-four states experienced a budget gap in FY 2009, and 46 states had a gap in FY 2010 before the budget was adopted. States collectively experienced budget gaps of $263.8 billion from 2002-2006. The current recession, including projections through 2012, reflect budget gaps of $386.8 billion.
_State governments will face budgetary problems at least 12 months after the US recession ends.
Prepared with the assistance of the Speaker’s Office of Communications
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