RALEIGH — With the long legislative session officially adjourned, lawmakers departed Jones Street having passed a roughly $23 billion budget, overridden half a dozen gubernatorial vetoes, and passed laws that will affect businesses large and small. Tax cuts, regulatory reform, and economic development were among the dozens of legislative acts of 2017 that could translate to the bottom line.
Contained within the larger biennial budget were tax cuts that will take effect in 2019. Obviously impacting net business profits will be the reduction in the corporate income tax rate from 3 percent to 2.5 percent. However, since so many small-business owners actually file personal income taxes for their proceeds, the scheduled 2019 reduction in those rates will likely impact a much higher number of businesses across the Old North State. The personal income tax rate will drop from the current 5.499 percent to 5.25 percent. Further, the standard deduction for personal filings (married filing jointly) will increase $2,500 to $20,000.Also within the budget were the extension or creation of economic development incentive programs. The bill created the NC Ready Sites Fund, allocating $2 million to help local municipalities acquire and equip sites to attracted major employers. The Job Development Investment Grant (JDIG) program was extended two years to 2021. The JDIG program offers corporations locating in North Carolina specific employment-related tax rebates contingent upon the creation of jobs and the associated payroll taxes that come with them.
Opening doors for coastal economies is the Marine Aquaculture Development Act, which establishes a program to lease publicly owned sea and sound bottom parcels for the purposes of farming fish and shellfish. Lawmakers hope the program will encourage increased seafood production and “long-term economic and employment” opportunities for those coastal communities that have historically thrived from leveraging the bounty of North Carolina’s coastal waters.
Senate Bill 621 will give parties to business contracts choice of law and forum, in which the parties agree to adhere to North Carolina law and as such jurisdiction of contract disputes will be with North Carolina courts. The proposal, still awaiting the governor’s signature, will apply whether or not, “The parties, the business contract, or the transaction that is the subject of the business contract bear a reasonable relation to this state,” or, “A provision of the business contract is contrary to the fundamental policy of the jurisdiction whose law would apply in the absence of the parties’ choice of North Carolina law.”
Businesses’ workers’ compensation liabilities were also reformed with an amendment by Sen. Dan Bishop (R-Mecklenburg) to a related bill that is still awaiting the governor’s signature. The subsection of House Bill 26 will legislatively reverse the N.C. Supreme Court’s decision in the Wilkes vs. Greenville case that held an employer could be liable for compensation related to medical conditions or injuries incurred before employment, and merely exacerbated on the job. The updated language to the Workers’ Compensation Act will include the chance for employees to have a hearing to prove the “condition is causally related.”
Energy reform legislation will also affect business across the state as House Bill 589 will implement new competitive bidding processes for utilities to satisfy renewable energy mandates. Those and other changes are likely to alleviate upward pressure on electricity rates for industrial, commercial, and residential customers.