House defeats Senate gambit on TAs, Incentives

By a vote of 47-54, House lawmakers Tuesday turned down a complex end-of-session deal with the Senate that would have fixed a funding issue for teaching assistants, expanded the state's economic incentive programs, and capped Wake County's sales tax.

The vote, which came after an hour of debate and a full week of internal wrangling within the House GOP caucus, apparently came as a surprise to caucus leaders, who say they believed the House would approve the deal when they began debate.  

The bipartisan 47-54 vote against House Bill 1224 instead amounted to a legislative insurrection, with rank-and-file members voting against the wishes of House Speaker Thom TIllis, Senate Leader Phil Berger, and Governor Pat McCrory.

House Bill 1224 was the first of a three-part deal crafted late last week.

House and Senate leaders and the governor had all agreed to make a change in a budget provision that limited school districts' flexibility to convert money for teachers to pay teaching assistants.  But when that change emerged last Thursday in Senate Bill 718, Senate leaders made the fix contingent on the House's approval of House Bill 1224.

H1224, unpopular in the House, combined a list of tax and cash incentive expansions requested by the McCrory administration with a provision that would have reduced the maximum sales tax rate in Wake and Forsyth Counties from 2.75 to 2.5 percent, hobbling any attempts to pass a half-cent sales tax to pay for transit needs. 

The House added a third bill to the mix, House Bill 189, which would give Wake a 2016 deadline to raise its sales tax 3/4 percent, a move that apparently didn't appease the bipartisan Wake County delegation. 

House and Senate leaders agreed the latter two bills would be contingent on the passage of House Bill 1224. House leaders attempted to move H1224 onto the calendar Friday afternoon, but were rebuffed by a 44-46 vote, with Republican caucus leaders speaking against the move. 

Many of the same caucus leaders spoke against House Bill 1224 itself Tuesday.

Rep. Nelson Dollar, R-Wake, said the measure "is just not fair to the now one million citizens who live here in Wake County.” 

“The transit plan we’ve been discussing is based on buses. We need it,” Dollar said. “We don’t need to have our hand forced. Our Chamber [of Commerce] is opposed to this.”

Rep. Darren Jackson, D-Wake, said he'd been assured by House leaders two weeks ago that House Bill 1224 was "dead" for the session. 

"People should honor their commitments. If they don’t, we descend into chaos. That’s where we’ve been the past two weeks," Jackson said. "[Senate leaders] are extorting us, and the majority in this chamber is letting them do it. We’re buckling to Senate leadership to hurt a few large counties. Or maybe a personal vendetta against one particular one."  

Rep. David Lewis, R-Harnett, supported the measure, saying it lifts the sales tax cap from 2.25 percent to 2.5 percent for most counties in the state. "It’s an issue of fairness. It treats all counties the same."

Rep. Pat McElraft, R-Carteret, added that the sales tax changes "will give counties an opportunity to start pitching in their fair share" on school funding.

Lewis also urged support for the economic incentive expansions in the bill, saying that NC Commerce Secretary Sharon Decker told him her "pipeline of projects right now" could bring about 3000 jobs to the state, and that the changes in H1224 could help seal those deals, especially the $20 million closing fund. 

“All of them may not happen. That’s the way the economic development game works," Lewis said. "But you have to signal that’s you’re in business and you want them.”

Rep. Skip Stam, R-Wake, a longtime critic of incentives, argued that studies show in most cases, they're don't actually induce job creation.  

"The economists who study it say this kind of thing just doesn’t affect the economic wellbeing of a state. It just doesn’t work," Stam argued. “Folks, we do this every session. It’s usually the last week of session. They try to jam down a big giveaway to an out of state corporation, and that’s what we’ve got here.” 

Rep. Michele Presnell, R-Yancey, countered that one change in the bill would help Evergreen, a paper manufacturer employing 1000 people in and around her district. The company has asked for $13 million to help extend natural gas to its location in Canton. 

“If we lose this, we are going to be the poorest of the poor. It will take 20 years to get those jobs back," Presnell warned. "This is infrastructure. It will bring natural gas to all the mountain counties."

Dollar said he had real concerns about the $20 million Job Catalyst fund, for which the Secretary of Commerce would set guidelines and make decisions. He said that runs counter to longstanding efforts to increase accountability in economic development programs.

“It’s not about the individual. It’s about the principal involved. This is not the right principal for committing $20 million.”

There was as much debate over the process of the deal as over its substance, and considerably more anger.

Rep. Mike Stone, R-Lee, asked Rep. Mickey Michaux, D-Durham, whether he’d ever seen two bills be contingent on a third bill. 

Michaux responded that people had occasionally tried to link bills in the past, “but usually once you put the label of blackmail on it, it goes away.”

"When do we stand up and make a change?" Stone asked. "Are we all tired of passing five things and getting four you don’t like?

"The teacher assistant fix that we need for the budget should not be held hostage to [House Bill] 1224," agreed Rep. Larry Pittman, R-Cabarrus. "I don’t believe in cooperating with extortion.”

Rep. Bert Jones, R-Rockingham, said the "unrelated issues" linked in the three-bill deal "should have been considered on their own merit, not at the end of the session."

"This process is disrespectful to this institution, disrespectful to our members, and therefore disrespectful to the citizens of North Carolina that we are honored to represent," Jones said. "This is a sad day for this institution."

Rep. Nathan Ramsey, R-Buncombe, contested the labeling of the deal as "extortion."

"We all want to adjourn and go home. We have a bicameral legislature. We cannot tell the people across the way what to do, and they cannot tell us what to do," Ramsey countered. "It’s not extortion for them to ask for certain things for an adjournment." 

Because the Senate made Senate Bill 718 contingent on the passage of  House Bill 1224, the defeat of H1224 means the future of the fix to teacher assistant funding is uncertain.

After the session, House Rules Chairman Tim Moore, R-Cleveland, said House leaders are committed to finding a solution to the problem. He suggested that the governor may be able to address the issue through his budget authority.

House Rules last week approved a "clean" teaching assistant fix bill. It's possible that measure could resurface for a House vote Wednesday. 

Moore downplayed the importance of the vote as a message to the Senate or a referendum on House leadership. 

"It was obvious this was a contentious bill all the way around," Moore said. "Folks were encouraged to vote for it, but you know, people’s arms aren’t being twisted. And they’re being allowed to vote how they want."

"Obviously, if leadership opposed the bill, the bill would've not been heard," Moore added. "It was put on the floor and folks voted. So now whatever message is received will be based on the reality of the votes in the house."    

House and Senate leaders could try to craft a new deal tonight.

It's also possible that House leaders could use a parliamentary maneuver to bring the measure back up for another try Wednesday, when the House has already scheduled debate and a vote on a coal ash compromise.

Tillis has said he plans to adjourn the House for the year by Thursday.