Brooks Pierce Capital Dispatch: Updates from the NC General Assembly and Governor’s Office, May 28, 2021

This week, the Senate considered a grant and tax bill and a bill to incent unemployed workers to return to work, while the House passed a broadband bill.                  

Senate Grant and Tax bill

Two Senate committees this week passed a bill (H 334) that makes a number of changes in state law.  

The bill:

• Reduces the state personal income tax rate from 5.25% to 4.99%,
• Increases the personal income tax standard deduction to match the 2022 federal standard deduction,
• Increases the personal income tax child deduction by $500 and expands eligibility for the deduction,
• Eliminates the state corporate income tax over five years beginning with tax year 2024,
• Eliminates the North Carolina property base of covered businesses from the franchise tax calculation,
• Extends the time to complete eligible mill rehabilitation tax credit projects by two years,
• Expands the state’s existing 12.8% excise tax on other tobacco products to include all cigars shipped to North Carolina residents from out of state sellers. It also places a cap of 30¢ per cigar on all sales of cigars, regardless of whether they are sold in-person or online,
• Applies the existing general rates of sales and use tax to short-term motor vehicle rentals by a peer-to-peer vehicle sharing facilitator and credits these proceeds to the Highway Fund;
• Reduces local property tax revenue by exempting from property tax vaccines, and commercial real property set aside for burial purposes.

The bill also directs $1 billion of federal funds for grants to North Carolina businesses that earlier received financial assistance from certain state or federal COVID-related programs. The maximum grant amount would be $18,750. This approach is different from an earlier version of H 334 passed by the House, which would have exempted the expenses for a business that received a federal Payment Protection Program loan from state income taxation.

The bill will next be heard in the Senate Rules committee.

Broadband Funds

The House this week passed a bill (H 947) that would target $750 million in federal funds to expand broadband access in North Carolina. The existing GREAT grant program, which provides grants to private sector providers to spur broadband development in unserved areas, would receive $350 million. The bill also directs $400 million to a new Competing Access to Broadband (CAB) program under which counties, in collaboration with the Broadband Infrastructure Office in the Department of Information Technology, would identify areas eligible for program funding. Under the guidance of the Department, a county could initiate a bid process to select a broadband service provider for broadband infrastructure expansion into unserved and underserved areas. The county and the state would each be responsible for a portion of the project cost utilizing American Rescue Plan Act (ARPA) funds.

Reemploying Unemployed Workers

Two Senate committees this week passed a bill (H 128) that would provide bonuses to incent unemployed workers to accept reemployment, require unemployment claimants to meet work search requirements, and require those individuals to respond to employer requests such as for interviews. Gov. Roy Cooper recently issued Executive Order 216  that would reinstate certain work search requirements for state unemployment claimants. The bill will next be considered by the full Senate.

For more information, contact a member of the Brooks Pierce Government Affairs Team.