In responding to the LRC subcommittee, PENC stated its strong opposition to the requirement of a filing of a Notice of Commencement.  This provision would add significantly to an engineering firm’s cost of doing business likely requiring the use of outside legal counsel to appropriately prepare and file the required documentation.  Additionally, a very low percentage of liens of an engineering firm’s total number of projects are filed by engineering firms (projected at less than 5%) causing these firms to spend a disproportionate amount of money to protect their lien rights compared to the number of liens that are actually filed.  Under the existing lien statute, engineering firms are only required to spend money enforcing liens on those projects where an actual lien is filed. 

There are also many instances where an owner may wish to keep a project confidential while proceeding with the design phase as often the design work will determine the fesibility of the project.  A Notice of Commencement requirement would either force the designer/engineer to “go public” with the project possibly against the wishes of the owner, or result in non-compliance with the filing of the Notice of Commencement thereby foregoing the designer/engineer’s priority of lien rights in favor of abiding by the wishes of the client.

The Administrative Office of the Courts would also incur significant costs at a time when they are overwhelmed with existing caseloads and insufficient budgets.

Design Professionals should hope that the legislative subcommittee studying this issue realizes that while this notice provision may mitigate some of the financial losses to the title insurers and lenders, the trade-off would be a heavy administrative and legal burden on the design and construction industry that could lead to even more job losses as our industry continues to struggle in this economy.

The LRC subcommittee will begin meeting this winter and spring to determine whether this legislation will move forward in its current form in the legislative short session which begins in May.  And, PENC will continue to voice our opposition to tje Notice of Commencement provision unless alternatives are proposed that adequately address our priority rights in filing liens.         

With that amount of activity, it’s understandably that you might find it difficult to stay up to date on legislative information that could potentially affect your career and livelihood as an engineer. That’s where PENC comes in! PENC actively monitors any and all legislation that could potentially affect the profession of engineering so that we can provide you with the information you need in a timely manner.

We’ve recently “published” our electronic Legislative Review. It’s meant to be a convenient overview of all issues that are (or could be) pertinent to you and the profession. You can access this review here. I understand your time is valuable, but I urge you to take a few minutes to read through the review. I also encourage you to comment on any of the issues in the comments section below.

I have my reservations. Even Senator Basnight’s power and influence may not be enough to overcome the resistance of the state treasurer to take on additional debt.  Several legislative oversight and appropriations committees have recently heard from the Debt Affordability Advisory Committee that NC is in danger of bumping up against the 4% guideline of debt service as a percentage of revenues.  Actually if both general fund and transportation fund debt is combined, the result is projected to be above the guideline – at 4.3% in 2012, leaving no room for borrowing.  The state treasurer maintains that our state is being “watched” to see if we make any financial decisions that could threaten the state’s Triple A bond rating.  Only 7 states maintain a triple A bond rating which saves the state money when it borrows (somewhere between 5 and 20 points depending on interest rates at the time). 

However, the ceiling of debt service, as established by the Advisory Committee, as a percentage of revenues is actually 4.75% leaving at least a quarter of a point available in debt capacity before reaching the ceiling.  This quarter of a percent translates into another $200 million in availability each year – enough for a $2 billion bond program.  A $2 billion bond program could be used to fund higher education, transportation and other state construction projects which could generate jobs in the construction and design industries, in turn, producing more tax revenue for the state. 

Our Jobs Recovery Coalition has plans to meet with noted economists such as Mike Walden at NC State and the Treasurer’s office to gather additional information before refining a legislative agenda that will focus on infrastructure investment that will lead to jobs growth.  In addition, we will continue to compile compelling statistics to demonstrate the number of jobs that can be retained or created with additional investment, the unemployment data for each of our industries, and the tax revenue that is produced from our respective industries.  

An interesting presentation made this week, related to the argument for increased investment in infrastructure, was the result of a study of NC’s economic development incentives programs. This study found that economic development incentives, particularly statutory tax credits, are limited in their effectiveness in job creation.  In fact, if these tax credits were eliminated, the savings could be used over a phased in time period, to reduce the corporate income tax, the highest in the southeast, from 6.9% down to 6.5%. 

“Such corporate tax rate reduction would bring North Carolina in line with our competitor states. At 6.9%, North Carolina’s corporate tax rate is 0.4% higher than Alabama and Tennessee (6.5%). A reduction to 6.5% would still leave the North Carolina rate substantially higher than South Carolina’s rate of 5.0%, but it would at least neutralize the corporate tax rate as a regional competitive disadvantage.”
(An Evaluation of NC’s Economic Incentive Programs, UNC Center for Competitive Economies)

The study also found the primary reasons most companies choose to relocate are based on the strength of the workforce and existing infrastructure (to include schools) – not tax incentives. 

What are your thoughts?

Representative Crawford is one of the few businessmen that serve in the House which is populated mostly by lawyers and retired educators. For this reason, he acknowledged that the legislature is quickly becoming business “unfriendly” and strongly encouraged engineers to recruit candidates among themselves, or at the very least business men or women, to run for office. The challenge is that the legislature does not pay enough to live on and most business men and women can’t afford to leave their jobs to serve in the legislature. Yet Crawford felt it was so important to have stronger business representation that companies should be willing to continue paying one of their own to serve in the legislature. Unfortunately, in this economy, no company can afford to pay a salary to a senior staff member who is not maintaining or bringing in business and contributing to the bottom line. While this practice is fairly common with lawyers, I doubt we’ll see it gain a stronghold in the engineering community.

So, what’s an engineer to do? Here are a few ideas:

• Consider serving on a local or state board or commission. Many engineers do serve on local planning boards and in other capacities at this level. There are also many opportunities for engineers to serve on state boards such as the Environmental Management Commission, Building Code Council, etc., where they can have statewide influence. These activities do take time, but not as much time as it takes to serve in the state legislature – even the typical short session in even numbered years last for 3 months!
• Get to know your state legislator before you need them! Representative Crawford stressed the importance of visiting your Representative while they are at home in their district. Most have offices or are easily accessible at community events and public places such as church. Even if you come to Raleigh for a visit, they are more likely to remember you if they have seen you at “home” first – and, they will be more accommodating and welcoming.
• Become a member of the engineer’s Political Action Committee – E-PAC – which exists to support candidates who support issues important to the engineering profession and engineering businesses in the state. Let’s face it, it takes money to run a successful political campaign. So if we want “friends” in the legislature, we have to be willing to support them with a financial contribution. If every licensed engineer in NC gave only $25 to E-PAC, we could raise over a quarter of a million dollars and become one of the most influential PACS in the state.

Although a Democrat, Representative Crawford acknowledged that the political winds may be shifting and that the Republicans truly feel they can control the Senate in the next election. With Senator Basnight’s illness – Basnight is the head guy in the Senate – Representative Crawford sees “the sharks circling”. Regardless of who gains control, there could be a new Sheriff coming to Senate town sooner rather than later. As for the House, it may be harder for the Republicans to wrestle this from the Democrats but, a lot can happen between now and then.

Naturally, Compton has his critics. Dr. Yong Zhao, a University Distinguished Professor at the College of Education at Michigan State University argues that the global education achievement gap many are fretting over in the U.S. is based on test scores that do not adequately reflect how well-educated a child is. Creativity, diversity, and stimulating experiences in curriculum – arguably the hallmarks of the American education system – are equally important predictors of a nation’s ability to produce intellectual creators, innovators, entrepreneurs and yes, engineers!

Regardless of whether you side with Compton or Zhao (or both!), the important message is that both sides want the same thing – well-educated children that can compete in a global economy. Both of them want kids that can develop new technologies, invent new products and found companies that will produce the quality jobs in emerging growth industries (biomedicine, nanotechnology, biopolymers, alternative energy production) that will be in high demand in the 21st century. Both agree that a strong STEM (Science, Technology, Engineering and Math) education is essential. Compton, the entrepreneur/venture capitalist/businessman has one perspective – the educator, Dr. Zhao, has another. But both want the same result.

That’s essentially why our Lt. Governor created the Joining Our Business and Schools (JOBS) Study Commission – so that our business and education leaders could come together to advise our schools on what they need to be teaching so that our children can compete for jobs in the industries that we think will be the economic engines for our state in the future. This is a great idea – except for the fact that there are very few opportunities for business and industry representation on the Commission. Of the 20 commission members that are to make up this study/advisory group, only 4 from business will be eligible for appointment. The others will be educators and legislators.

We believe strongly that for a true public/private partnership to emerge from the work of the Commission and meaningful outcomes developed to raise the bar when it comes to adequately educating our kids in the STEM disciplines, there should be a higher concentration of private sector business people that actually work in these professions, like engineers, who are already recruiting, hiring and training college graduates in their own companies represented on the Commission. And, we’re lobbying hard to get a PE officially named so the Commission will have the benefit of the perspective from someone who knows what it will take to create a multidisciplinary engineer that will be demanded in this new global economy. Engineers need this opportunity to contribute their practical, problem solving skills to preparing our students for what will be a very competitive and challenging future. For the sake of our children and their “Two Million Minutes” let’s hope the engineer’s perspective is well represented.

Yesterday, the NC House Environment and Natural Resources Committee debated a bill that would authorize aquifer storage of reclaimed water. Although the bill is being introduced at the request of Onslow County, if would be applied statewide allowing any local government the ability to go through the necessary permitting process to store reclaimed water for beneficial reuse.

The opponents of the bill, primarily environmental groups, spoke up against the bill citing safety concerns and the fear that this reclaimed water could end up coming out of our tap. There were comparisons to the Hercules Project in Wilmington, where apparently something like this did happen, and other apocalyptic predictions with very little basis of fact. PENC’s water resource expert, Don Safrit, PE with McKim and Creed, and Frank Meyers, PE, the Director of ONWASA, spoke in support of the bill. Both have years of experience with water reuse issues. Don has worked for over 13 years with DENR DWQ as the Assistant Chief for the Water Quality Section and is primarily responsible for statewide permitting of wastewater systems. He also authored much of what is the current set of reuse regulations for DWQ, serves as chair of AWWA’s reuse committee, and is active in PENC and ACEC’s Environmental Committee. There is probably no one else in the state that is as knowledgeable of this issue as Don.

But the committee seemed to be more interested in hearing of all the horrifying things that could happen from people that are NOT experts rather than carefully considering the expert opinion of the licensed professional engineer who has worked on these issues for years and – who also, by the way, is bound by the Engineer’s Creed to “put the public welfare above all other considerations” . Yes, there are some engineers that do not practice competently or ethically but, they are a minority and, there’s a very strong and aggressive state licensing board that is there to discipline them and revoke their license if necessary.

It wasn’t so long ago that this state was in a severe drought. Had this legislation been brought up then, my guess is that the legislature would have listened more carefully to the Professional Engineer rather than the “River Keepers Association”.

Thankfully, time ran out and the committee was not able to vote on the bill. But, it will come up again. If you have an opinion on this issue, I would love to hear it. Click here for a copy of the proposed committee substitute for HB 643 and let me know what you think.