Volume 45 | November 19, 2021 |
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Governor Signs State Budget with Strong Support for
NC Hospitality Industry
On Monday, legislators released the budget conference report and the House and Senate quickly voted to pass SB 105: 2021 Appropriations Act. The bill received a bipartisan vote in the Senate of 41-7 and an overwhelmingly bipartisan vote in the House of 101-10 on Thursday morning. On Thursday, the bill was sent to Gov. Cooper, who immediately signed it into law Thursday afternoon.
NCRLA released a press released on Thursday afternoon applauding state policymakers for their strong support for the hospitality industry. Included in the budget was the allocation of the state’s portion of federal dollars from the American Rescue Plan. This budget allocation designated specifically for NC restaurants, hotels, bars, attractions, and venues is the largest of its kind in the nation.
“Our collective efforts were heard and rewarded with critical funding and policies, including a grant program that will help hospitality and tourism businesses rebuild and recover from this pandemic, rebuild our NC hospitality workforce, and help restore lives and careers shattered during the pandemic,” said Lynn Minges, NCRLA President and CEO. “We are grateful to have policy makers on both sides of the aisle who stood with us and stepped up to provide meaningful relief when we need it most.”
The $500 million grant program included in North Carolina’s state budget is the largest appropriation from any state for the hospitality industry in the country. Under this program, an individual business could receive up to $500,000 in direct grants, which can cover rent, payroll costs, operating expenses, and other expenses related to addressing the pandemic. Since the hospitality industry was especially hard hit, $300 million of these funds are specifically protected for businesses in NAICS Code 71 & 72, which is primarily restaurants, hotels, bars, and other entertainment businesses.
“This funding is vital because before the pandemic the hospitality industry generated more than $27.3 billion annually and employed more than 11% of the state’s workforce. Today the industry is still down about 48,000 jobs and collectively down $5.6 billion in taxable sales,” Minges continued.
Other hospitality industry priorities that NCRLA directly lobbied for and that are included in the state’s budget bill (SB 105) are:
- Paycheck Protection Program (PPP) Expense Deductibility
- $5 Million for Hospitality Industry Workforce Development
- $400,000 in Funding for ProStart—High School Career and Technical Education Programming to Prepare Students for Hospitality Industry Careers
- $30 million in Additional Tourism Marketing Funds
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Other Budget Items of Importance
In addition to the many hospitality-specific items in the budget, many other appropriations and tax changes were made that would impact every North Carolinian. Some of the top lines for businesses and individuals include:
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- Cuts personal income tax from 5.25% to 3.99% over six years, including cutting to 4.99% beginning Jan. 1.
- Increases the zero-tax bracket—the amount of income on which people pay no income tax—to $12,750 for individuals or $25,500 for married couples, up from $10,750 and $21,500.
- Increases child tax deduction by $500 per child.
- Eliminates state income tax on military pensions.
- Phases out the corporate income tax beginning in 2025, reaching zero by the end of the decade.
- Simplifies the corporate franchise tax paid by C corporations by using one calculation instead of three ($1.50 for every $1,000 of the company’s net worth in North Carolina). The vast majority of companies already use that formula. Those that don’t typically have major real-estate and equipment assets in North Carolina, which the Legislature wants to encourage.
- Provides a minimum wage of $15 per hour for all local employees of public schools and community colleges beginning in 2022-23.
- Provides $1 billion for broadband expansion.
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ABC Committee Meets and Passes Provision to Help Restaurants
On Wednesday, the House ABC Committee was scheduled to hear about liquor shortages again from the ABC Commission and LB&B, the state contractor for distributing liquor to the local ABC boards. The meeting was changed at the last minute when LB&B claimed that, due to scheduling issues, no one from their company was available to answer the committee’s questions and speak.
Instead, the Committee heard Senate Bill 470: ABC Technical and Other Changes. This bill makes many technical clarifications to the ABC laws. In committee on Wednesday, Representative John Bradford offered an amendment that would allow restaurants to recycle spiritous liquor containers for display purposes at their locations. The containers would still be required to display the mixed beverage tax stamp.
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Legislative Session Update
Now that the budget has passed and redistricting is done and awaiting court action, it is likely that the legislature will wrap up its business quickly after the Thanksgiving holiday. There is some debate whether the legislature will adjourn or return in the new year to recommence some of its work. Focus is now placed on the election cycles, with the candidate filing deadline quickly approaching on Dec. 8. Many announcements for elections have already begun.
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Updates to Mask Mandates
Several mask mandate changes occurred this week. On Monday, the Guilford County Board of Commissioners voted to lift the countywide indoor mask mandate, effective immediately. Masks will still be required in county facilities. READ MORE.
On Wednesday, the Town Council for Blowing Rock voted to lift the local state of emergency, which includes lifting the town’s mask mandate. Leaders will be able to reconvene and implement a new mask mandate if the percent positive for cases is 5% or above for seven consecutive days. READ MORE.
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Mecklenburg Passes Nondiscrimination Ordinance
Mecklenburg County commissioners voted unanimously to officially pass the county’s nondiscrimination ordinance. The ordinance protects residents and visitors from discrimination based on sexual orientation, gender identity, natural hairstyle, and other characteristics in employment and public accommodations. Mecklenburg County is now the 13th local government in the state to approve LGBTQ-inclusive non-discrimination protections. READ MORE
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Take a look at all the bills that NCRLA is tracking here: |
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As ERTC Ends, NRA and AHLA Respond
With President Biden signing into law the Infrastructure Investment and Jobs Act, the Employee Retention Tax Credit (ERTC) ended for the fourth calendar quarter (Oct. to Dec.) of 2021. Our partners at the National Restaurant Association sent a letter to Treasury Secretary Janet Yellen and Internal Revenue Service Commissioner Charles Rettig urging both agencies to adopt objectives that will help restaurants. The specific measures are:
- Speed the processing of ERTC payments so that the backlog from 2020 and previous calendar quarters in 2021 is completely resolved by the end of this year.
- Allow small businesses to defer their fourth quarter federal income tax payments due on January 15, 2022, until July 15, 2022.
- Safeguard all deferred fourth quarter federal income tax payments from any penalties or interest.
The American Hotel & Lodging Association (AHLA) released a statement in support of investment in our nation’s infrastructure, but calling attention to the steep cost of terminating the Employee Retention Tax Credit (ERTC) two months early. Struggling hotel employees and small businesses should not be forced to bear that cost.
NCRLA and our national partners continue to advocate for the ERTC in subsequent legislation and will keep you updated on developments as they unfold.
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US Dept. of Labor Tip Rule Goes Into Effect Dec. 28
The US Department of Labor's new Dual Jobs final tip rule goes into effect December 28, 2021, and changes tip regulations under the federal Fair Labor Standards Act (FLSA). Employers will be required to closely monitor tipped employees’ work in three categories: time spent on tasks that produce tips, time spent on tasks directly supporting tip-producing work, and time spent on tasks that are not part of the tipped occupation.
Under the final rule, an employer can take a tip credit only when the worker is performing tip-producing work or when:
- A tipped employee performs work that directly supports tip-producing work for less than 20% of the hours worked during the employee’s workweek. Therefore, an employer cannot take a tip credit for any of the time that exceeds 20% of the workweek. Time for which an employer does not take a tip credit is excluded in calculating the 20% tolerance.
- A tipped employee performs directly supporting work for not more than 30 minutes. Therefore, an employer cannot take a tip credit for any of the time that exceeds 30 minutes.
We will be updating our resources and providing more details soon to help keep you informed and in compliance.
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Corporate Partner Highlights |
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The North Carolina Restaurant & Lodging Association serves to advance and protect
the interests of more than 20,000 businesses that employ 11 percent of the state’s workforce
and generate more than $27.3 billion in sales annually.
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