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NC Legislative Update for May 22, 2015

May 22, 2015

This Week

Although the House budget was the primary focus for both lawmakers and lobbyists this week at the General Assembly, the Senate continued their work throughout the week. The Senate Commerce Committee met on Tuesday to hear House Bill 332 . Rep. Hager again attempted to freeze the Renewable Energy Portfolio Standards (REPS) at their current levels.

The REPS requirement is the amount of power Duke Energy must use from renewable sources in their power generation. The amount is currently 6% and is scheduled to increase to 10% in 2018 and eventually to 12%, but this bill would freeze it at 6%. The provision was inserted into an unrelated bill in the Commerce Committee and passed. The bill then went to Finance on Wednesday where it received heated debate followed by a request for division from Sen. Blue (D-Wake), the Minority Leader. Finance Chairman Sen. Rucho (R-Mecklenburg) refused the request despite Senate rules and called for a voice vote that sounded like the “noes” overpowered the “ayes”. The Chairman nevertheless ruled that the bill passed the committee.
Bill putting renewable requirements on hold hitches ride on natural gas bill – WRAL
NC Senate panel rushes energy bill through – N&O
Renewable energy freeze on fast track – WRAL

Sen. Jackson (R-Sampson) moved Senate Bill 513 the North Carolina Farm Act of 2015. Largely noncontroversial, the bill is a collection of provisions intended to benefit the agriculture industry in the State. The bill passed the Senate 43-2.
Deer, swine, eels in NC farm bill that gets Senate OK – Daily Reflector

The Senate also passed legislation that was again directed towards the infamous Clay’s Corner New Year’s Eve Possum Drop out in the western corner of the State. The popular event has been challenged in court by PETA for the last several years and every year since, Rep. West (R-Cherokee), who represents the area, has filed legislation to circumvent the lawsuits. House Bill 574 would exempt the possum from any laws that would prevent the capture, confinement or treatment of the animals from Dec. 29 – Jan. 2.
Possum bill moseys into Senate – WRAL
Thursday's Senate session deals with environmental, power plant, possum bills – WRAL

Senate Commerce Thursday merged several alcohol related bills into one omnibus alcohol bill. House Bill 909 originally dealt with allowing the sale of antique spirituous liquor in North Carolina. Sen. Gunn (R-Alamance) rolled all of the alcohol related House bills that had passed over into the Senate and added a few new provisions, into the bill in a Proposed Committee Substitute (PCS). The bill now also contains a ban on powdered alcohol as well as a provision that would allow distilleries that give tours to sell one commemorative bottle of liquor per year to a legal age individual that takes the tour.
Powdered alcohol, distillery sales, other ABC provisions rolled into one bill – WRAL

The House did take some time on Tuesday and Thursday to dispose of some matters other than the budget. One of which was honoring the Duke men’s basketball team for their 2015 National Championship in a joint session of the two bodies. Coach K addressed the members and took his opportunity at the bully pulpit to stress the importance of education in the state. The Senate kept busy as well, moving a number of bills through the chamber.
North Carolina lawmakers honor Duke's NCAA title – N&O

Legislation in the News:
Developers lobby for JDIG expansion – WRAL
Anti-graffiti bill moves to NC Senate – WNCN
Jim Rogers criticizes N.C. legislature for 'moving into the past' on energy policy – CBJ
McCrory signs off on easier grading scale for schools – WRAL
Bill would give extra 3 years for Lake Julian cleanup – Citizen-Times
Gun-rights backers demand House vote on bill – WRAL

The Budget Debate

The House began a rollercoaster week with a Finance Committee meeting on Monday evening to discuss the portions of the budget with financial impact. A document released the night before indicated that House budget writers intended to reinstate several tax credits that the legislature eliminated such as the historic preservation credit and the medical deduction for seniors. It would also extend tax credits for solar energy project for two years and four years for other renewable energy projects as well as restore funding for the film grants and increasing fees for the DMV. Although the bill passed in Finance, there was some dissention in the ranks of the House Republican caucus. Several members including the Majority Leader Rep. Hager (R-Rutherford) openly opposed these measures and in turn, voted “no”.
Finance committee expands medical tax deduction in state budget – WRAL
NC House budget prompts tax, spending disagreements with Senate – N&O
House budget restores historic tax credits, medical deductions – WRAL

The House Appropriations Committee was the next stop and the members met throughout the day Tuesday to debate the bill and hear over 100 amendments. The bill finally passed there and went to the Pensions and Retirement Committee where it passed as well on Wednesday.

Speaker Moore’s (R-Cleveland) intent was to calendar the bill for Wednesday afternoon and hold votes Wednesday and Thursday for the budget. In caucus however, there were enough Republicans that remained opposed to the bill and would not vote for it with certain provisions contained. The Speaker was forced to re-refer it to the House Rules Committee to accommodate these concerns. The Rules Committee met and made changes yet again to renewable energy among other things. Floated as a compromise by Majority Whip Rep. Bell (R-Wayne), the amendment extended the tax credit for renewable energy to 2018, which is currently set to expire at the beginning of 2016 while also reducing the credit from 35% to 20%.
Final House budget tune-up tweaks renewable energy, venture fund provisions – WRAL

The bill was then calendared for Wednesday evening, but was later delayed until Thursday morning when the bill was yet again referred to the House Rules Committee. A PCS reduced the proposed increased fees for DMV from a 50% increase to a 30% increase, reduced the film grant from the proposed $60 Million to $40 Million and eliminated $44 Million that would have extended the research and development tax credit.
NC House Republicans divided on budget provisions – N&O
House GOP compromises on tax credit, fees – WRAL
Budget changes assuage some conservatives before vote – Citizen-Times
Film grant funds trimmed in new version of two-year budget plan – WECT

After beginning at 3:00PM, the floor debate for second reading Thursday evening lasted until just before midnight. The third reading began on Friday morning at 12:15AM and adjourned just after 1:00AM. The House considered over 60 amendments during the debate. Although the proposed budget did include policy changes, no amendments were allowed to those that were already contained in the budget, prompting Speaker Moore to rule several amendments out of order. Eight of the amendments had to wait until third reading due to a midnight vote deadline and Speaker Moore allowing full and complete debate. One of the more contentious amendments was sponsored by Rep. Avila (R-Wake) and included another attempt to eliminate the tax credit for renewables after an agreement had been reached. The amendment brought divisions in the Republican caucus to the surface and failed 38-77.

The House passed the budget with strong bipartisan support 94-23 on second reading and 93-23 on third reading with 11 Republicans joining just 12 Democrats in voting “no”. Now that the House has passed the budget, it will be the Senate’s turn to propose their spending plan which is expected to be vastly different in terms of both policy changes and appropriations.
House approves $22.1B state budget plan – WRAL
NC House votes to keep solar energy tax credits – N&O
NC House budget passes in 93-23 bipartisan vote – N&O

What's in the Budget?

• Increases fees for drivers licenses, vehicle titles and other fees by 30%
• 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
NC House budget would tweak gas tax – again – N&O
NC House's proposed budget funds driver's ed – WNCN

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 $4.9 Million in three-way bed money, bringing the total from 165 to 180 beds
• Creates a Joint Legislative Oversight Committee on Medicaid
• Eliminates vacant positions
House Medicaid budget provision draws fire – WRAL

• Increases K-12 spending by $269 Million or 3.3%, $100.2 Million 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 $89 Million in lottery funds 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
• House leaders are expected to increase the starting salary for teacher to $35,000 in the full budget package released this weekend.
With money on hand, education funding tops House budget agenda – N&O
Patrick Gannon: House budget continues education policy shift – Daily Reflector

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

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
• Sets aside $2.5 Million this year and next year for grant program to equip officers with body cameras
• Spends $15 Million to increase capacity at the State Crime Lab
House budget creates new grants for body cameras – WRAL

• Reinstates a scaled back version of the historic preservation tax credit
• Bumps film grant funds from $10 Million to $40 Million
• Defunds the Governor’s Government Efficiency and Reform (NC GEAR) program that has been underwhelming in pinpointing savings in state government
• State Employees will receive a 2% pay increase
• Adds $3 Million to repair the hull of the NC 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
• Does not create a new Cabinet-level Department of Information Technology
State employees would get 2 percent raise in NC House budget – N&O

In Other News

• NC Attorney General Roy Cooper (D) announced his long anticipated plans to run for Governor in 2016 over the weekend.
• Eight-term Republican Senator from Davidson County, Sen. Stan Bingham, announced that he would not seek reelection in 2016. Read more from the Lexington Dispatch here.

In the News

N.C. lawmaker questions Carolina Panthers' ticket prices – CBJ

Meck lawmaker: N.C. legislature not at fault in Volvo decision – CBJ

In N.C. incentives debate, Skvarla responds to Rucho – CBJ

NC Medicaid chief to head UNC-Pembroke – WRAL

With renewables freeze in Senate's hands, industry ramps up opposition – TBJ

Top N.C. tax-credit takers of 2014 (Slideshow) – TBJ

N.C. officials hope to bring in more minority-owned businesses – Winston-Salem Journal

Blue crabs top North Carolina's commercial fishing catch – WRAL

N.C. lawmaker plays an unexpected role in Duke Energy's new Asheville gas plant – CBJ

Officials want to give private firm keys to state motor fleet – WRAL

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 to be added to the list.