The Privilege License Tax and the Game of Chance

In today's meeting of the Revenue Laws Study Committee they discussed the Privilege License Tax in North Carolina and what a mess the statutory framework is.

Our PLT is a state-authorized, municipally-levied tax on the privilege of doing business in a jurisdiction.  Of the 540 incorporated cities and towns in North Carolina only 300 use it, and many of those municipalities are now very reliant on the revenue.  To fully understand the law governing PLT you must, according to Chris McLaughlin (UNC School of Government), review laws that were repealed over the course the 1990s.  And it seems there is no organized way to do that.  Andy Ellen of the Retail Merchants' Association says he did year-by-year research of the repeals at the NC Supreme Court Library.

The North Carolina League of Municipalities and some members of the committee are ready to take a stab at reforming the PLT.  Also at issue are the various rates for the cost of doing business, for example an auto dealer would pay $25 per year and a gas station would pay $12.50 per year.  Compare that to an Internet Sweepstakes operation’s tax of $5000 per year for the establishment plus $2500 per machine in Lumberton, NC.

Nice segue to video poker...

Our Legislature has been outlawing video poker year after year, but because the intent is not to outlaw our state lottery or McDonald's Monopoly the laws have been specific as to the details of the game and not the act of gambling.  Whack-a-mole has ensued and now what our courts are dealing with is whether the super-high privilege tax is constitutional.  NC's Supreme Court said the tax was too high in Lumberton and the Court of Appeals used that decision in its ruling on Fayetteville.

So the questions remaining:  Are sweepstakes legal or illegal in North Carolina? And, how high a Privilege License tax is too high?

** Go here to learn more about Andy Ellen and the NC Retail Merchants' Association:  http://www.ncrma.org/about-us/ncrma-staff/

** Go here to learn more about Chris McLaughlin and the UNC School of Government:  http://www.sog.unc.edu/user/111

A Legislative "A ha" Moment Today

Today at the meeting of the Joint Legislative Oversight Committee on Unemployment Insurance I plainly saw something I have been anticipating for a long time -- a legislative committee explored, in real time, the direct relationship between federal funds and state funds. Well done.

Last session the Legislature undertook a radical reform of Unemployment Insurance with a reduction of benefits and an accelerated plan to pay off the state's debt to the federal government. The prevailing argument was that our benefit was rich enough, and lasted long enough, that we had unwittingly created a culture of unemployment as a short term career option for some. And we were using our federal government credit card to underwrite it. The new law was a bitter pill for all, and even Governor McCrory described it as a tough one when addressing the crowd at the NC Bankers' Association meeting this week.

Because of last year's reforms our debt to the federal government, currently at $1.85 billion, is $100 million ahead of the payoff projection. November 1st is the day the feds peer into our trust fund to assess its health, and we live with that diagnosis until the next November 1st. Current plans are to repay our debt in time for our November of 2015 check-up.

The "a ha" moment came when the committee heard a status report on federal emergency unemployment insurance legislation from Doug Holmes (an expert in Washington, DC) by phone about the result of the US Senate's cloture vote, and the talks between Senate and House Leadership about the possibility of enacting federal emergency unemployment insurance, and how the bill would be paid for, and who might support it. The committee (a ha!!) asked how receiving additional weeks of benefits for NC's unemployed would affect our state-run program and our repayment plan. It turns out the Congressional Budget Office presumes that some jobseekers in NC may delay their job hunt if a federal benefit was expecting to kick in in the near future and so the CBO predicts there would be a small impact to NC's program based on an individual's behavior. But aside from the unemployed taking full advantage of NC's existing benefit there would be no other additional state funds needed.

**For more about Doug Holmes, check him out on LinkedIn here: http://www.linkedin.com/pub/doug-holmes/27/8b7/75a

A Slightly Different Charter School

Gaveling in the meeting of the Joint Legislative Committee on Education Oversight is the first order of business for 2014. Among those making presentations to the Committee was ALS (Accelerated Learning Solutions).

ALS operates a number of charter schools in Florida that target high school dropouts -- those referred from regular high schools and those who have totally abandoned school. Their experience in FL has been as a partner to traditional public schools by taking referred failing students and working to turn them around and help them achieve, graduate, and join the economy; a full 88% of their students are referred from principals while 12% are kids who have just walked away.

This year ALS is hoping to get a toe hold in NC. I can tell you that from my 8 years working in leadership offices at the General Assembly the issue of how to handle high school dropouts has been wrestled with by every chamber leader. And a fair amount of funding has supported local solutions to local problems. But those have just been nibbles. The ALS model has metrics that are easy to understand and that, so far, tell a compelling story in FL.

And they're off!

The official "short session" of the legislature may not begin until mid-May, but the Honorables are back at work today with study committee and oversight committee meetings and office hours to have all priority legislation ready to go when they convene. Policy debates and the business of lining up support for bills was apparent in the halls today.

The Joint Legislative Committee on Education Oversight met today as did the Joint Legislative Commission on Energy Policy. Wednesday and Thursday will also be busy on Jones Street.