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NC Legislative Update for March 13, 2015

March 13, 2015

Welcome to the Nexsen Pruet Weekly Legislative Update! The Nexsen Pruet Public Policy team provides attorneys and clients with a newsletter summarizing the week's activities and conveying the inner workings of the legislative process and state government in Raleigh. Please feel free to pass this along to your clients or other interested parties, email to be added to the list. 

This Week

Freshman legislators finally got some insight into what to expect throughout the session, with their first full week of activity. The week was fast paced, with long days, as lawmakers acted upon a number of bills. The Governor’s proposed budget for the 2015-16 fiscal year was presented, hundreds of bills were filed and sent to bill drafting, all in time to head to Greensboro for the ACC Tournament.

Governor McCrory’s Budget Director, Lee Roberts, addressed a joint meeting of both the House and Senate full Appropriations Committees on Tuesday for an overview of the Governor’s budget. Wednesday, the individual Appropriations Committees meet separately for more detailed review of their respective budget sections.

Some good news for the budget is that revenue forecasts from NCGA fiscal analysts said that revenues are currently estimated at $159 Million below target. It is good news because last month, analysts projected a shortfall of $216 Million.

McCrory budget 1st test to see if NC lawmakers back reforms – WRAL

NC legislators critique Gov. McCrory’s proposed budget– N&O

On Wednesday morning, at 8 o’clock, the House Rules committee met to hear House Bill 157, Amend Environmental Laws. A proposed committee substitute (PCS) was presented that morning, which included, among other provisions, a controversial amendment sponsored by House Majority Leader Rep. Hager (R-Rutherford).

This same language was added, and then removed, from a bill on the floor earlier last week. The specific provision directs the Environmental Management Commission to adopt air quality rules for drilling operations only if it is determined that the federal regulations are inadequate.

HB 157 was reported favorably by the Rules Committee that morning and passed the full House that afternoon. The Senate also acted immediately, sending the bill through the Ag/Env/Natural Resources Committee Thursday morning, and passing the second reading that same day. Objection was raised to hearing the bill on third reading Thursday, thereby carrying over the bill to early next week and probably to the Governor shortly thereafter. Rep. Hager indicated that the reason for the fast pace is that it is a time sensitive piece.

N.C. House changes air pollution rules on fracking – Winston-Salem Journal

Differences between the Senate and the House have arisen early in the session. The Senate failed to accept modifications of Senate Bill 20 which addresses the changes to the NC gasoline tax. This bill is time sensitive, since if nothing is done by July 2015, the gas tax in NC will automatically decrease by 7.5 cents per gallon. A conference committee was appointed to address the differences with the house. The second area of disagreement appears to be around incentives. House Bill 117, the economic incentives bill, containing a number of the Governor’s recommendations, but was not received warmly by the Senate. Senate Rules Chairman Sen. Apodaca (R-Henderson) followed through with earlier statements, and referred the bill to his Rules Committee, where it is likely to remain for some time.

Senators skeptical of House economic development bill – WRAL

The Senate Health Care Committee met Wednesday to hear Senate Bill 7 , sponsored by Senate Majority Whip Sen. Tillman (R-Randolph). SB 7 states that as long as there is no threat to public health and safety, a food stand would be allowed to provide tables and chairs for customers eating or drinking on the premises, without obtaining a restaurant permit. The bill, which sparked humorous debate, stems from an example of a mini-mart. The mini-mart in question sells pre-packaged biscuits for customers to microwave themselves, but are currently not allowed to provide seating to customers because it would qualify as a restaurant. The only distinction in current law between a restaurant and a food stand is whether or not the establishment provides seating.

Certificate of Need

Rep. Avila (R-Wake) filed House Bill 200 on Tuesday along with Representatives Bishop (R-Mecklenburg), Collins (R-Nash) and Michaux (D-Durham). The bill would exempt psychiatric facilities, ambulatory surgical centers (ASC), and diagnostic centers from the state’s Certificate of Need (CON) process. State approval is currently required under CON to determine the need of new healthcare assets before they can be added. Proponents argue that eliminating CON requirements would help bring down healthcare costs by providing more competition in a free-market approach and expand access to rural areas.

Opponents counter by saying that healthcare is one of the most regulated industries in the country, and many providers are not free to accept or reject patients. A true free market in healthcare does not exist. In eliminating CON laws, owners of new facilities could elect to serve only the most lucrative, thereby pulling them from the safety net providers. That economic model does not encourage opening new facilities in an area with a large Medicaid or uninsured population.

Rural hospitals and larger hospital systems do serve those areas at substantial expense. This service is part of the charity care that is required of hospitals, along with treating patients who have government insurance or no insurance at all. Providers are able to accept these losses only by subsidizing revenues from patients with private insurance, which many times is not sufficient. Perhaps the CON process could be streamlined and some of the costs eliminated, in order to address some of the complaints.

NC House bill aims to reduce healthcare regulations – N&O

Local Intervention

On Thursday the Senate approved two bills that would change the makeup of the Wake County Commission and the Greensboro City Council. The first bill Senate Bill 181, sponsored by Sen. Barefoot (R-Wake) would increase the number of members of the Wake County Commission from seven to nine, while also drawing commissioners into individual districts.

Wake County voters can currently vote in all county commission races and candidates for the Wake County Commission must live in their individual districts, but are elected at-large. Rather than voting in all county Commission races, the bill would change the electoral structure so that voters would only be able to vote in two races, their individual district, and one of the two new regional districts in which they reside.

Proponents cite a lack of geographical diversity on the Commission as reason for the change, with most members residing in Raleigh and few from the outlying suburbs or rural areas of the county. They also point to the high cost of running countywide, having to reach more voters than a candidate seeking a congressional seat. Opponents feel that such substantial changes should be done with local input rather than imposed by the legislature. There is also concern that this is being done primarily to change the political composition of the board.

The other bill, Senate Bill 36 sponsored by Sen. Wade (R-Guilford), would increase the number of city council members from five to seven while simultaneously redrawing the council districts, and modifying the length of the terms of the members. Proponents similarly cite lack of geographic diversity, with five of the seven council members residing in one part of the city, within a two-mile radius of each other. Opponents to SB 36 have similar concerns to those of SB 181.

Senate redraws Wake commission – N&O

In the News

NC House Speaker Tim Moore on split votes: 'We have to govern' - N&O

Chief Justice names interim leader of N.C. courts system - TBJ

N.C. can cut 3 carmakers from list - News & Record

N.C. House to see bill soon extending solar tax credits - CBJ

NC Chief Justice Martin makes case to boost court funding - N&O

Senior medical tax deduction could return - WRAL

House passes two DWI bills - WRAL

NC Republican Party will have new chairman in June - Citizen Times

South Carolina : 2, North Carolina: 0 in chase for auto plants - CBJ

Lost privilege taxes are hurting Raleigh and other NC cities - N&O

While N.C. struggles to attract film projects, Georgia is riding high - CBJ

Snapshot: Next N.C. governor's race looks close - CBJ

North Carolina legislation filed in wake of police deaths - WRAL

Report on U.S. Open in Pinehurst outlines spending, economic impact - TBJ

In Other News

• Key legislators in both chambers indicated support for versions of an expansion of the NC film grant which was created last year to replace the film tax credit for productions in the state. Endorsers included top budget writers from both the House and Senate, Rep. Dollar (R-Wake) and Sen. Brown (R-Onslow), House and Senate Finance Chairmen Rep. Saine (R-Lincoln) and Sen. Rabon (R-Brunswick) as well as House Rules Chairman Rep. Lewis (R-Harnett). Two companion bills have been filed, House Bill 171 Rep. Davis (R-New Hanover) and Senate Bill 193 Sen. Lee (R- New Hanover). It is more likely that any language to expand the grant that will pass, would be included in the budget. Read more from the N&O here.

• Wednesday, Rep. Jeter (R-Mecklenburg) filed House Bill 203 which would phase-out the gas tax by July 1st, 2016 and replace it with a $201 per vehicle annual usage fee for registered vehicles, regardless of mileage. Citing the constant fluctuation of the gas tax, he touted the proposal as a way to stabilize highway funding making it more predictable. The bill has already met resistance from members in both the House and Senate, primarily because it would not tax out of state vehicles for highway use. This is likely one of many bills that will attempt to reform the NC gas tax this session. Read more in the Charlotte Observer with video interview from Rep. Jeter here.

• Insurance Commissioner Wayne Goodwin (D) made a rare appearance at the NCGA this week to tout his support for two companion bills, Senate Bill 208, Sen. Cook (R-Beaufort) and House Bill 182, Rep. Millis (R-Pender). Both bills would give the Commissioner the authority to reduce homeowner’s insurance rates. Commissioner Goodwin’s comments can be viewed here, courtesy of UNC-TV.

• Liberal group Progress NC Action filed an ethics inquiry regarding Gov. McCrory’s travel expenses for various Republican Governor’s Association events. The travel for these events, was paid for by the RGA, but omitted from the Governor’s original ethics filings. Gov. McCrory recently amended his filings to include the roughly $13,000 worth of travel paid for by the RGA which was previously excluded, which spurred the inquiry. Read more from the Charlotte Business Journal here.

Please reach out to TJ Bugbee for any further information or to Susan Latta to request the monitoring of any specific legislation.