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NC Legislative Update for May 15, 2015

May 15, 2015

This Week

The end of the week at the General Assembly marked the official beginning of the House budget process. The various House Appropriations Subcommittee Chairs have been meeting behind closed doors for weeks crafting the initial budget proposal. House Bill 97, the 2015 Appropriations Act, was finally revealed Thursday morning and the Subcommittees met to review and amend their respective sections of the $22 Billion that the state will spend this year.

Wednesday, Senior Appropriations Chairman, Rep. Dollar (R-Wake), laid out the intended timetable for the budget next week. The bill’s first stop after the Subcommittees is the Finance Committee on Monday afternoon, which will debate only the finance portions of the bill, which are currently unavailable. The bill will then be debated in the full Appropriations Committee on Tuesday morning and due to a large number of anticipated amendments, will likely meet throughout the day. The final stop for the bill before the floor is the Pensions and Retirement Committee, the time of the meeting will be determined by the length of the Appropriations Committee.

If all goes according to plan, the budget is expected to be on the House floor for second and third readings on Wednesday and Thursday. Speaker Moore (R-Cleveland), did say that votes could instead take place on Thursday and Friday, but that the budget will be out of the House by the end of the week. While the budget will be the primary focus for the House, the Senate is expected to continue business as usual with committee meetings and floor votes.
SUNDAY DOME: April surprise – budget gains as tax rates cut – N&O
Moore says state employee pay raises on the table – N&O
NC Senate leader outlines budget priorities – N&O

The news that Volvo passed over North Carolina for its proposed $500 Million auto plant rekindled the debate over economic incentives for North Carolina. Following the news, Sen. Berger (R-Rockingham) promised that the Senate, which has been the major hurdle for expanding incentives, would have a full debate on the issue within the next two weeks. Speaker Moore noted that even if House Bill 117, the NC Competes Act which passed the House had been law, North Carolina still would not have been able to compete with the nearly $300 Million incentive package offered by South Carolina.

N.C. Senate to debate incentives bill within weeks amid push for automaker – TBJ
Moore: NC couldn’t have won Volvo – N&O


Legislation in the News:
Senate approves juvenile justice reforms – WRAL
NC Senate Approves Teen Tanning Bed Ban – WFMY
House approves more leeway for consumers in property insurance rate changes – WRAL
Deer farming changes debated – WRAL
NC lawmakers approve bill targeting group-home abuse – WNCN
Bill to add trash trucks to NC 'move over' law gets final OK – WECT
Proposal would force probation violators to pay court costs – WRAL


House Budget Highlights

The House released some aspects of its budget on Thursday. Compared to previous recession years, lawmakers were not tasked with cutting funds, but rather deciding where to spend the additional $400 Million surplus that was announced last week. In some ways, this can put more pressure on budget writers because rather than telling everyone “no” during a recession, when there is a surplus, everyone knows there is money to go around and everyone wants their piece. The pieces generally add to more than the whole pie.

The full budget, including revenue figures, is expected to be released late Sunday evening or early Monday morning. Anticipated teacher and state employee raises will be revealed, along with other provisions when the full budget is presented. Below are some of the highlights from what yesterday’s budget proposal did and did not include.
House budget plan modest, targeted – WRAL
NC House differs with McCrory on budget plans – Charlotte Observer

Transportation
• Increases fees for drivers licenses, vehicle titles and other fees by 50%
• Lowers the gas tax from the recently imposed 35 cents per gallon to 33 cents
• Sets aside $50 Million for debt service payments resulting from the Governor’s proposed, but not yet passed, $1.4 Billion transportation bond.
• Does not include funds requested by the Governor to build a new DMV headquarters
More gas tax changes in House budget – WRAL

Health & Human Services
• $287 Million in additional funding to match increases in Medicaid enrollment
• $2.5 Million to fund Medicaid Reform
• Uses $25 Million from the sale of the Dorothea Dix campus to fund converting unused beds in rural hospitals into inpatient mental health beds
• Directs the Department of Health and Human Services (DHHS) to create a real-time, statewide database to track the use of behavioral health beds
• Adds three-way bed money to the tune of $4.9 Million, bringing the total from 165 to 180 beds
• Creates a permanent Joint Legislative Oversight Committee on Medicaid
• Eliminates vacant positions
House plan highlights mental health, courts, hospice and foster care – WRAL

Education
• Increases K-12 spending by $269 Million or 3.3%, $100.2 of which matches student enrollment growth which is projected to add 17,000 more students
• Cuts the UNC System by $26 Million or 1% as opposed to the Governor’s proposed reduction of 2%
• Increases community college tuition by $4 per credit hour or a total of $128 per year to a full-time student.
• Adds $50 Million for textbooks and educational technology
• Establishes grant program to encourage new charter schools in rural areas
• Replaces lottery funds to the tune of $89 Million to retain teaching assistants at the current level
• $6.8 Million nonrecurring bump for opportunity scholarships
• Restores funding for driver’s education in public schools which was cut last year
• Limits each UNC System school to spending no more than $1 Million on fundraising using taxpayer money
• House leaders are expected to increase the starting salary for teacher to $35,000 in the full budget package released this weekend.
NC House budget reduces cut for UNC system – N&O
House budget writers want to boost scholarship, textbook funding – WRAL

Natural & Economic Resources
• Does not transfer the NC Zoo, the aquariums and the Museum of Natural Sciences from the Department of Natural Resources (DENR) to the Department of Cultural Resources as the Governor requested.
• Increases state park funding by $12.5 Million
• Cuts the Wildlife Resources Commission by 23% or roughly $3 Million
• Eliminates vacant positions in DENR
Dozens of unfilled environmental jobs would be cut in House budget – N&O

Justice & Public Safety
• Increases funding for the operating budget of the Court System by $6.3 Million
• Adds $11.9 Million for the Court System to update the technology for its court filing system
• Adds funding to help facilitate new behavioral-health units at eight high-security prisons
• Funds six new technician jobs for the State Crime Lab
• Adds two superior court judges for the NC Business Court
• Spends $15 Million to increase capacity at the State Crime Lab
NC Courts pleased with NC House spending plan – N&O

Miscellaneous
• Defunds the Governor’s Government Efficiency and Reform (NC GEAR) program that has been underwhelming in pinpointing savings in state government
• Adds $3 Million to repair the hull of the North Carolina Battleship
• Adds $5 Million for dredging and beach nourishment
• Allocates $4 Million to replace the roof of the NC Legislative Building
• Creates a new Cabinet-level Department of Military Affairs as the Governor requested
• Does not create a new Cabinet-level Department of Information Technology as the Governor requested
House budget would put a wrench in McCrory’s reform effort – N&O


In the News

CEO magazine: North Carolina is No. 3 for business climate – CBJ

McCrory, legislators talk incentives, budget with NC Chamber – N&O

Auditor: N.C. health agency wasted $1.7M on Medicaid payroll – Winston-Salem Journal

Gov. McCrory makes the case for $3B bond proposals – TBJ

S.C. wins again in automaker chase – CBJ

Prosecutors: Duke Energy ignored warnings before ash spill – N&O

Audit spurs NC treasurer to changes in money system upgrade – WNCN

McCrory: Reinstate historic tax credits – Charlotte Observer

Troxler: Avian flu likely in NC this fall – WRAL

Last class of NC Teaching Fellows graduates – WECT

Declining tourism on Outer Banks concerns NC officials – WNCN


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

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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. Send an email kcollins@nexsenpruet.com to be added to the list.

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