NC Senate Bills - April 2021

Dozens of bills filed in the NC Senate in the days leading up to the April 7 bill filing deadline could affect the work of charitable nonprofits. The Center has provided highlights of the bills intended to help nonprofits in its weekly policy update email. Here is a summary of some of the other bills that could affect some nonprofits' operations.

Business Relief Proposals Could Be Model for Support for Nonprofits

Two NC Senate bills would use some of North Carolina’s $5.4 billion in American Rescue Plan Act (ARP) funds to pay for grants to business that have suffered economic harm due to COVID-19. One bill (S.524), which was filed on Monday, would create a $250 million Small Business Relief fund to provide grants of up to $250,000 to small businesses that have been economically harmed by the effects of the COVID-19 pandemic. The other bill (S.715), which was filed on Wednesday, would create a $300 million fund to provide grants of up to $500,000 to businesses in the hospitality industry.

While the proposed business grants in the new Senate bills would not be accessible to nonprofits, this type of relief fund provides a model for how a nonprofit relief fund could operate. The American Rescue Plan Act specifically allows state and local governments to use ARP funds to provide financial assistance to nonprofits that have suffered economic harm due to COVID-19.

The Center is developing plans to advocate for legislators to include a nonprofit relief fund in the next state COVID-19 response package. Your input is essential in coming up with a plan to provide meaningful relief for nonprofits. Specifically, it would be helpful to know what type of economic hardships your nonprofit has experienced due to COVID-19, so a grant program can have appropriate eligibility criteria. Examples of possible criteria could include:

• Revenue losses during some period of the pandemic;
• Shut-downs of operations due to COVID limitations (e.g. arts organizations and museums);
• Loss of volunteers during the pandemic; or
• Increase in services to meet community needs during the pandemic.

Proposed Employment Law Changes

A variety of Senate bills would make changes to state employment laws. Many of these proposals would affect nonprofits as employers and as service providers. The new bills include:

• Two proposals to increase the state’s minimum wage from $7.25 per hour to $15 per hour. One of these bills (S.447) would provide for a gradual increase in the minimum wage between 2022 and 2026. The other bill (S.673) would adjust the minimum wage over a two-year period (making it $15 per hour by 2023). Both bills would use the consumer price index to automatically increase the minimum wage in the future and would eliminate exceptions to the minimum wage for workers with disabilities, tipped workers, and domestic workers.
• Two bills would create new paid leave requirements for workers. One bill (S.457) would require employers to provide at least one hour of paid sick leave for every 30 hours their employees work. The other bill (S.564) would create a state Family and Medical Leave Fund. Employers (including nonprofits) would pay into this fund, and employees would be paid out of this fund when they take leave for a variety of health and family reasons.
•  A bill (S.598) would require employers (including nonprofits) to provide their workers with paid 20-minute work breaks when they are working shifts of six hours or more.
• A bill (S.573) would prohibit employers (including nonprofits) from discriminating in wages paid for equivalent work on the basis of gender.

Tax Proposals Could Affect the Work of Some Nonprofits

Several Senate bills would make changes to North Carolina’s tax laws. Some of these proposals could affect the programs and services of some nonprofits. These include:

• A bill (S.495) to modify the way that sales tax is applied to fees charged by nonprofit continuing care retirement communities (CCRCs). Recently, the NC Department of Revenue (DOR) has interpreted existing state law in a way that would impose significant new sales tax burdens on CCRCs. This bill would protect these nonprofits from having to pay back taxes due to the change in DOR’s interpretation of the law.
• A bill (S.576) to reinstate the North Carolina earned income tax credit (EITC). The EITC provides additional income for working families that can provide them greater financial security. Many nonprofits have advocated for the reinstatement of the state EITC. Under the bill, the refundable state EITC would be 20% of the amount that eligible taxpayers receive for the credit on their federal income taxes.
• A bill (S.625) that would significantly increase corporate income tax rates (from the current rate of 2.5% to 5.25%) and would increase individual income tax rates for high-income North Carolinians, while slightly lowering tax rates for most individuals (from 5.25% to 5.15%). A second bill (S.710) would include similar tax increases for high-income North Carolinians and a slightly smaller tax increase for corporations (to 5%), but would not reduce tax rates for most individuals. These proposals would make North Carolina’s state tax system more progressive and could generate some additional tax revenue that could be used for state programs. They also would increase taxes on nonprofits that pay unrelated business income tax.
• A bill (S.713) to create a new refundable tax credit for early childhood professionals.

Governor Cooper’s Proposed Budget Introduced as Legislation

On April 6, the NC Senate appropriations chairs introduced the formal legislation (S.622) of Governor Roy Cooper’s proposal for the state budget for FY2021-23. Governor Cooper has proposed a state budget that would spend $27.3 billion for FY2021-22 and $28.6 billion for FY2022-23.

Governor Cooper’s proposal sets the stage for the NC General Assembly to develop its state budget. The Senate is planning to vote on its version of the budget later this month, and the House will then develop its version in May. The legislative budget will likely be quite different from Governor Cooper’s proposal, so the Governor will likely need to negotiate with legislative leaders in June (and possibly into July) to find agreement on a state spending plan for the new two years.

Proposals to Establish Redistricting Criteria for 2021

Three bills would set criteria for drawing North Carolina’s congressional and state legislative districts this year. The General Assembly is required to redraw these districts every 10 years. The new bills include:

• A proposal filed in the NC House of Representatives (H.B.495) and the NC Senate (S.581) would use criteria established by a variety of court decisions over the past decade to avoid partisan or racial gerrymandering.
• Another bill (S.511) filed in the NC Senate would use a “county cluster” system developed by a group of Duke University mathematicians to create redistricting maps that are not based on partisan political interests.

Currently, state legislators develop North Carolina’s congressional and state legislative districts. Legislators from both parties (when they have been in the majority) have used gerrymandering to create districts that are largely non-competitive and that favor politicians from their own political party. Gerrymandering typically makes elected officials more responsive to political donors (who fund their primary campaigns) and less responsive to constituents and nonpartisan nonprofits in their districts. The Center supports a change to an independent redistricting process, which would strengthen nonprofits’ voices in public policy advocacy.

Government Reform Bills Could Have Implications for Nonprofits

Several bills would make structural changes to state government. Some of these reforms could affect the work of nonprofits that work in partnership with the state. New legislative proposals include:

• A bill (S.534) to create a special commission to study possible state legislative term limits, session limits, and legislator compensation. North Carolina’s legislators serve on a part-time basis (meaning that many of them have other jobs). Unlike most states, however, North Carolina’s state constitution does not limit the number of days when legislators are in session. In recent years, the legislative sessions have lasted more than half of the year. Long legislative sessions can create barriers to advocacy for nonprofits without paid lobbyists in Raleigh.
• A bill (S.705) to create a new state Department of Housing and Community Development. If established, this new state department would likely work closely with a wide variety of community-based nonprofits.
• A bill (S.690) to restructure the advisory boards of the NC Council for Women, the NC Youth Advisory Council, and the NC Internship Council by adding more legislatively appointed members and reducing the number of members appointed by the Governor. All of these councils collaborate with nonprofits.
• A bill (S.470) that would create a “regulatory sandbox” that would allow organizations to test new insurance or financial products without having to follow state regulations. The bill would allow nonprofits to provide technical assistance for organizations seeking to develop these type of products.