HB 1070 — Emergency Grants for Certain Milk Producers.

GENERAL ASSEMBLY OF NORTH CAROLINA SESSION 2019 H 21 HOUSE BILL 1070 Committee Substitute Favorable 6/16/20 Short Title:

EmergencyCredit Grants for Certain Milk Producers.

Representatives McNeely, Hurley, and Fraley (Primary Sponsors).

For a complete list of sponsors, refer to the North Carolina General Assembly web site.

Finance, if favorable, Agriculture, if favorable, Rules, Calendar, and Operations of the House May 14, 2020 A BILL TO BE ENTITLED AN ACT TO PROVIDE FUNDINGA FORTAX GRANTSCREDIT TOFOR CERTAIN MILK PRODUCERSPRODUCERS. TO ALLEVIATE NEGATIVE FOOD SUPPLY CHAIN IMPACTS DUE TO THE COVID-19 PANDEMIC.

Findings.Chapter 105 of the General Statutes is amended by adding a new Article to read:

–"Article The3M. General Assembly finds that the COVID-19 emergency has resulted in serious and substantial impacts on the food supply chain, including the State's dairy industry.

Dairy"Milk producersProducer andTax processorsCredits. in the State lost more than half of their market with COVID-19 related shutdowns of the school systems and food service industries.

This"§ resulted105-129.115. in milk being dumped and a devastating decrease in milk pay prices, which were already at a historical low.

TheDefinitions; additional bottlenecks caused by shutdowns in the meat processing plants and lack of facilities to process dairy animals for beef left producers with no income options from the sale of cows culled from their herds.

Thecredit General Assembly further finds that financial assistance to these producers is necessary in order to reduce disruptions in the supply chain for freshproducing dairymilk. products and to help dairy producers in the State stay in business.

SECTION(a) 2.(a)Definitions. Transfer of Funds from Reserves to Relief Fund.

– The Statefollowing Controllerdefinitions shallapply transfer the sum of four million one hundred four thousand dollars ($4,104,000) for the 2020-2021 fiscal year from the Coronavirus Relief Reserve established in Sectionthis 2.1Article: of S.L.

2020-4(1) toAnnounced theproduction Coronavirusprice. Relief Fund established in Section 2.2 of S.L.

2020-4.– Defined in G.S.

SECTION106-814. 2.(b) Appropriation of Funds from Relief Fund.

(2) – There(5) isReserved. appropriated from the Fund to the Department of Agriculture and Consumer Services the sum of four million one hundred four thousand dollars ($4,104,000) in nonrecurring funds for the 2020-2021 fiscal year to be allocated and used as provided in Section 3 of this act.

The(6) fundsQualifying appropriatedmilk. in this section must be expended by December 30, 2020, and funds not expended on that date shall revert at the end of the 2020-2021 fiscal year.

SECTION– 3.(a)Grade Allocation"A" ofmilk, Funds.as defined in G.S.

–106-266.30. The funds appropriated by Section 2 of this actshallbeallocatedtotheNorthCarolinaDairyStabilizationandGrowthFundtoprovidegrants as specified in subsection (b) of this section to compensate eligible dairy producers for losses incurred as a result of the collapse in dairy prices due to the COVID-19 pandemic or to improve the resiliency and adaptability of the dairy supply chain to future pandemics.

These(b) fundsCredit. may onlybe used forpurposes consistent with theApril 22, 2020, "CoronavirusReliefFund Guidance for State, Territorial, Local, and Tribal Governments" provided by the United States Department of the Treasury or with any subsequent act of Congress.

SECTION– 3.(b)A Granttaxpayer Procedures.engaged in the production of qualifying milk in this State for wholesale and for shipment on a weekly or more frequent basis is allowed a credit for each calendar year quarter in which the uniform price published by the United States Department of Agriculture in Federal Order Number 5 is less than the announced production price.

– The Departmentcredit shallfor developthe policiestaxable andyear proceduresis equal to the product of the number of quarters for the disbursementcalendar year (i) for which the credit is allowed and (ii) during the entirety of grantswhich thatthe include,taxpayer atwas aengaged minimum,in the following:production and shipment of qualifying milk multiplied by the following applicable quarterly tax credit amount:

*H1070-v-2*Annual GeneralPounds Assembly Of North Carolina Session 2019 (1) Notwithstanding any provision of ArticleQualifying 68AMilk ofProduced ChapterQuarterly 106Credit ofAmount the500,000 General Statutes to the2,500,000 contrary,$8,750 theMore Departmentthan shall2,500,000 makeup a monthly grant payment from the Dairy Stabilization and Growth Fund to each7,500,000 eligible12,500 dairyMore producerthan for7,500,000 any15,000 month"§ in105-129.116. which the baseline price exceeds the announced price.

TheTax amountelection; of the payment shall be the difference between the baseline price and the announced price, times the hundredweight of milk produced by the producer for each month beginning with April 2020 and continuing until the earlier of the month in which the funds appropriated by this act have been expended or December 30, 2020.

(2)credit Therefundable. maximum grant amount provided to any producer in any month shall be twenty-five thousand dollars ($25,000).

(3)(a) IfTax theElection. funds appropriated by this act are insufficient to make a full payment to each producer in any month, the Department may either award a partial grant to each eligible producer calculated based on the ratio of available funds to needed funds or may supplement the appropriated funds with other funds available to the Department in order to award the full grant amount or a uniformly increased grant to each eligible producer.

(4)– The Departmentcredit mayprovided usein upthis toArticle oneis percentallowed (1%)against of the fundsfranchise appropriatedtax bylevied thisin actArticle for3 administrativeof expensesthis relatedChapter toand administrationthe ofincome thetaxes grantslevied authorizedin byArticle 4 of this act.Chapter.

SECTIONThe 3.(c)taxpayer Definitions.may take the credits allowed by this Article against only one of the taxes against which it is allowed.

– The followingtaxpayer definitionsmust applyelect inthe thistax act:against which a credit will be claimed when filing the return on which it is claimed.

(1)This Announcedelection price.is binding.

–(b) TheCredit monthlyClassRefundable. I Milk Price for the Appalachian Milk Marketing Order area reported by the Agricultural Marketing Service of the United States Department of Agriculture.

(2)– BaselineIf price.the credit allowed by this section exceeds the amount of tax against which the credit is claimed for the taxable year reduced by the sum of all credits allowable, the Secretary must refund the excess to the taxpayer.

–The Twentyrefundable dollarsexcess andis thirty-eightgoverned centsby ($20.38), the averageprovisions monthlygoverning Classa Irefund Milkof Pricean foroverpayment by the Appalachiantaxpayer Milkof Marketing Order area for 2019 reported by the Agriculturaltax Marketing*H1070-v-1* ServiceGeneral ofAssembly theOf UnitedNorth StatesCarolina DepartmentSession of2019 Agriculture.imposed.

(3)In Eligiblecomputing producer.the amount of tax against which multiple credits are allowed, nonrefundable credits are subtracted before refundable credits.

–"§ A105-129.117. Grade A milk producer who can demonstrate to the satisfaction of the Department that the producer is in compliance with federal Grade A milk regulations.

SECTIONSubstantiation. 4.

OtherTo Requirements.claim a credit allowed bythis Article, the taxpayer must provide anyinformation required by the Secretary of Revenue.

–Every Thetaxpayer requirementsclaiming a credit under this Article must maintain and limitationsmake setavailable forthfor ininspection Partby Ithe Secretary of S.L.Revenue any records the Secretary considers necessary to determine and verify the amount of the credit to which the taxpayer is entitled.

2020-4The applyburden toof proving eligibility for a credit and the fundsamount appropriatedof inthe thiscredit act.rests upon the taxpayer, and no credit may be allowed to a taxpayer that fails to maintain adequate records or to make them available for inspection.