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NC Legislative Update: January 12, 2017

January 12, 2017

The 2017-18 Session of the North Carolina General Assembly

On Tuesday, Chief U.S. Supreme Court Justice John Roberts issued a stay, temporarily halting an order by the U.S. District Court for the Middle District of North Carolina requiring state legislators in NC to run in newly drawn legislative districts in a special, off-year, legislative election this Fall. The three-judge panel ruled last year that 28 of the state’s 170 legislative districts were racially gerrymandered and ordered those districts to be redrawn by March 15th in order to hold a special, off-year election this year. Only members whose district boundaries are altered would have been required to run while members whose districts remain unchanged will serve the remainder of their two-year term. It is likely however that a large number of districts, if not all, will have to be redrawn to comply with the panel’s order. Legislative leaders have appealed to the U.S. Supreme Court, in hopes of holding a regularly scheduled election instead, under the new districts in November of 2018. The stay is in effect pending a decision by the U.S. Supreme Court. 
Judges refuse to delay court-ordered 2017 legislative elections – WRAL 
N Carolina voters ask Supreme Court for no delays on maps – AP 
Supreme Court puts 2017 NC legislative election on hold – N&O 
GOP confident federal justices will nix 2017 NCGA elections – Carolina Journal

Lawmakers convened the 2017-18 session of the North Carolina General Assembly yesterday, marking the official beginning of the 2017 “long session”. The opening day of session is both organizational and ceremonial as each body is sworn in, elects officers and adopts temporary rules to govern their respective chamber. Lawmakers then adjourned for two weeks ahead of their first substantive day of legislating, which will begin January 25th. The NC Senate returns with 35 Republicans and 15 Democrats, following a net gain of one seat by the GOP and the NC House returns with 74 Republicans and 46 Democrats, a net gain of one seat by the Democrats. 
Lawmakers Prepared for Long Session, New Governor – Southern Pines Pilot 
NC lawmakers return Wednesday to begin long session – WNCN

Senators reelected President Pro-Tem of the Senate, Sen. Phil Berger (R-Rockingham) and the House reelected Rep. Tim Moore (R-Cleveland) as Speaker of the House, both by acclamation. Rep. Sarah Stevens (R-Surry) was elected as Speaker Pro- Tem and Sen. Louis Pate (R-Wayne) returns in the role of Deputy President Pro-Tem. In the House, Rep. John Bell (R-Wayne) will retain the post of House Majority Leader and Rep. Darren Jackson (D-Wake) was selected by his Democratic colleagues to serve as Minority Leader, succeeding Rep. Larry Hall (D-Durham) who chose not to seek another term in the post. In the Senate, Sen. Harry Brown (R-Onslow) returns as Majority Leader and Sen. Dan Blue (D-Wake) returns as Minority Leader. Rep. David Lewis (R-Harnett) will again serve as House Rules Chairman and Sen. Bill Rabon (R-Brunswick) assumes the role of Senate Rules Chairman. In both chambers, Republicans wield veto-proof majorities, which will enable them to override most if not all of the vetoes imposed by the newly elected Governor Roy Cooper (D).
Moore, Berger re-elected to lead state legislature – WITN 
New faces in key legislature roles for 2017 – N&O New faces in key legislature roles for 2017 – N&O

It is also worth noting that the Senate Ways and Means Committee, which hasn’t met in years and was known as the “graveyard” for bills, has been dissolved. 
NC Senate kills ‘graveyard’ committee used to troll Democrats – N&O

Gov. Cooper has already set a tone for how he will carry himself in his new role as Governor, beginning with taking the oath of office just after midnight on January 1st. In his first days in office Gov. Cooper has taken several firm policy positions, including a call for the full repeal of House Bill 2. He announced that he intends to expand Medicaid in NC ahead of President Obama’s final day in office, and he filed suit challenging a law passed in one of the December special session’s which stripped powers from the Governor. 
NC has history of political power struggles involving governors – Citizen-Times 
Cooper lays out goals, challenges lawmakers in inaugural address – WRAL 
Cooper expands challenge to new state laws – WRAL 
NC House ready for common ground with Cooper, but will continue Republican policy reforms – NSJ

Gov. Cooper submitted a State Plan Amendment to the federal government, requesting Medicaid expansion in North Carolina under the Affordable Care Act, prior to President Obama leaving office. The 20-day window between Cooper’s swearing in and Obama’s exit is decidedly short, but was met with a response from the Obama administration which will process the request “as expeditiously as possible.” A 2013 law preventing the Governor from unilaterally expanding Medicaid without legislative approval has lawmakers crying foul. The offices of both Sen. Berger and Speaker Moore condemned the attempt as have all 10 Republican members of the NC Congressional delegation. If approved, the state would be responsible for matching 5% of the cost initially, and then 10% in 2020, which Cooper suggested could come from taxpayer dollars or by assessing the state’s hospitals. The NC Hospital Association does not support Cooper’s plan for Medicaid Expansion without legislative approval. 
Gov. Roy Cooper wants to expand Medicaid; Republicans vow to fight – N&O 
NC governor formally begins Medicaid expansion pursuit – Washington Post 
Swift federal action vowed on NC governor’s Medicaid expansion plan – N&O

Gov. Cooper has begun making Cabinet appointments and key staff hires. As of today, he has announced five Cabinet Secretaries: Michael Regan to lead the Department of Environmental Quality; Jim Trogdon to lead the Department of Transportation; Erik Hooks to lead the Department of Public Safety; Tony Copeland to lead the Department of Commerce; and Machelle Sanders to lead the Department of Administration. Although Cooper is challenging the law passed during a December special session which required Senate confirmation of Cabinet Secretaries, yesterday the Senate passed rules which included that process. Rumors are that Cooper had in place a full Cabinet committed to serve prior to the new law requiring confirmation, which has since caused several to withdraw their names from consideration. If the law stands, this will be the first time lawmakers have been able to vet and approve a Governor’s choice for Cabinet Secretary. Gov. cooper has said he will finish naming Cabinet nominees next week. 
Gov. Roy Cooper names 4 state government veterans to key positions – Winston-Salem Journal 
Cooper names first cabinet nominees – WRAL 
Cooper picks SBI agent to head Public Safety – WRAL 
Cooper hires more aides for governor’s office jobs – N&O

The UNC School of Government has a piece here regarding the Governor’s role in the legislative process. It takes a deeper dive into the process that initiates once the Governor vetoes a bill, which will be a regular occurrence over the next two years.

You can also watch WRAL’s wrap of the opening day of the General Assembly here.

What to Expect?

  • Potentially contentious Cabinet hearings
  • Raising average teacher pay to $55,000
  • Mental health reform
  • Medicaid changes
  • Regulatory reform
  • Additional tax relief
  • Additional money for disaster relief
  • Additional funds committed to the “rainy day fund”

December Special Sessions & Litigation

Upon proclamation from then Governor McCrory, the legislature reconvened in December for a special session. Gov. McCrory asked lawmakers to appropriate state funds to assist families in the wake of both October’s flooding from Hurricane Matthew, in the eastern part of the state as well as the recent wildfires in the west. Projections from McCrory’s administration suggested that the economic damage caused by Matthew exceeds $2 Billion. After securing roughly $1 Billion in federal aid to help assist with relief efforts, Gov. McCrory requested an additional $200 Million in state funds. Lawmakers obliged, with half coming from the savings reserves and the other half from the current budget surplus. Additional funds will be needed from the legislature during the long session. 
North Carolina to get $300M in Matthew recovery assistance – WRAL 
McCrory makes pitch for disaster recovery bill; here’s what’s in it – N&O

Immediately following the adjournment of the hurricane special session, the legislature called itself into another special session to address any other matters, without limitation. Among the numerous bills filed, eventually lawmakers confirmed the appointments of two special superior court judges and one member of the Industrial Commission, and passed two bills that made numerous restrictions to the incoming Cooper administration. McCrory signed both bills into law. Both laws are now the subject of legal challenges, House Bill 17 by the State Board of Education and Senate Bill 4 by the Governor. 
Fate of House Bill 17 may not be decided until 2017 – Carolina Journal 

House Bill 17 – Modify Certain Appointments/Employment:

  • Moves the State Board of Education, currently housed under the Governor, to the Department of Public Instruction;
  • Alters several duties and functions of the State Board of Education;
  • Removes the Governor’s authority to appoint members of the Boards of Trustees to the various universities in the UNC System, and gives the appointments to the Speaker of the House and the President Pro-Tem of the Senate;
  • Significantly reduces the number of “exempt” state employees serving at the pleasure of the Governor from 1,500 to 425;
  • Requires appointments to the Governor’s Cabinet be confirmed by the Senate;
  • Establishes a Task Force for Safer Schools 
  • Restraining order in education board lawsuit to remain in place – WRAL 

Senate Bill 4 - Bi-Partisan Ethics, Elections & Court Reform:

  • Creates the State Board of Elections and Ethics Enforcement (SBEEE), consolidating the powers and duties of the current State Board of Elections and the State Board of Ethics, as well as the oversight of lobbyists, which is currently the responsibility of the Secretary of State;
  • Establishes that the SBEEE shall consist of eight members, four Republicans and four Democrats, two Republicans and two Democrats appointed by the Governor, and one Republican and one Democrat appointed by both the Speaker of the House and the President Pro-Tem of the Senate;
  • Designates that Chair of the SBEEE shall be a Republican in even numbered years and a Democrat in odd numbered years (statewide elections normally occur on even numbered years);
  • Requires that except where required by law to act unanimously, a majority vote for action by the Board would require six of the eight members;
  • Expands County Boards of Elections from three to four members with two being Democrats and two being Republicans and members of the County Boards are appointed by the SBEEE;
  • Places partisan labels on the ballot to identify the political party of candidates running for North Carolina Supreme Court and the North Carolina Court of Appeals, and establishes partisan primaries for those races;
  • Allows the Court of Appeals, in addition to hearing cases in three-judge panels, to sit “en banc” to hear or rehear any cause upon a vote of the majority of the judges of the court;
  • Modifies the terms of members of the Industrial Commission and designates the Governor to appoint the Chair at the end of his or her four-year term 

People showed up to protest the legislation, resulting in the arrests of dozens. Rumors that the General Assembly was planning to “pack” the North Carolina Supreme Court proved unfounded.  
Coal ash dispute laid groundwork for power-shift plan – WRAL 
McCrory calls special session, ignores pleas to limit purposes – WRAL 
Common Cause ad opposes “court packing” – N&O

HB2 Special Session

Not a week after the first December special session, the Governor called the legislature back into another special session to address the repeal of House Bill 2. It was a valuable lesson in parliamentary procedure. It began with the Charlotte City Council repealing their non-discrimination “bathroom” ordinance as part of a reported deal, struck with lawmakers who would in turn repeal the controversial legislation widely known as House Bill 2. The City’s repeal was conditional on the State repealing HB2 before the end of the year. After Governor McCrory called for another special session, the Council voted again Wednesday morning for a full repeal of their earlier ordinance, without a deadline.

Sen. Berger (R-Rockingham) filed Senate Bill 4 Wednesday afternoon which repealed House Bill 2 in its entirety, but also enacted a 6-month cooling off period for local ordinances in Section 2 of the bill. The 6-month moratorium read, “no local government in this State may enact or amend an ordinance regulating employment practices or regulating public accommodations or access to restrooms, showers, or changing facilities.” Sen. Berger noted that Section 2 expired after the 6-month cooling off period in hopes of reaching a long-term solution during the 2017 session.

After hours of caucus deliberation, it was clear there was substantial dissent in the Republican caucuses of both the House and the Senate from the conservative wings who did not want any form of repeal. In an effort to appease those members, Sen. Berger amended the bill to change the 6-month period so that the moratorium would expire 30 days after the 2017 General Assembly adjourned, ensuring enough time to put a solution into place. This led to more unrest from both Democrats, who wanted just a clean repeal, and the more conservative Republicans, who still didn’t want to repeal HB2 in any form.

In a subsequent effort to appease both sides, Sen. Berger made a motion to divide the vote, which would allow members to vote separately on the repeal section of the bill and the moratorium section of the bill. In a motion to divide, if either section fails to pass then the whole bill fails. The vote on the first section, which was the repeal of HB2, failed in a bipartisan vote of 16-32, with 16 Republicans joining all of the Democrats in voting “no” to repeal and killing the bill. A yes vote on this provision would have led to passage of the bill with the moratorium. A motion to reconsider was tabled and lawmakers went home leaving House Bill 2 in place. 
N.C. General Assembly adjourns special session without H.B. 2 repeal – NSJ 
ACC likely to move championship from Charlotte again if HB2 remains – Charlotte Observer

Department of Revenue Publication

“The N.C. Department of Revenue has published Important Notice: Transition Issues Relative to Sales and Use Tax Law Changes with Respect to Real Property Contracts; Repair, Maintenance, and Installation Services to Real Property, and Other Items. In conjunction with the transition notice, Form E-589K, Affidavit for a Purchase or Transaction for Certain Lump-Sum or Unit-Price Contracts (March 1, 2016 – December 31, 2016) has been created. The E-589K is to be executed only for a purchase or transaction to fulfill a lump-sum or unit-price contract entered into or awarded on or after March 1, 2016 and prior to January 1, 2017, or entered into or awarded pursuant to a bid made on or after March 1, 2016 and prior to January 1, 2017.”

In Other News

Speaker Moore’s Chief of Staff, Clayton Somers, has departed to take on a new role leading UNC-Chapel Hill’s government relations. This leaves a vacancy in the role of top advisor and gatekeeper to the Speaker ahead of tomorrow’s opening day of the legislative session and the vote for Speaker. 
NC House Speaker’s chief of staff gets new leadership job at UNC-Chapel Hill – N&O

The House chose a new Principal Clerk in James White to succeed longtime Clerk Denise Weeks who announced her retirement last year after serving in the role since 1993. White, who is an internal hire from within the Clerk’s office has been working under Weeks since 2012 and has served in the roles of Voting Clerk and Administrative Clerk. 
NC House to choose new clerk – WRAL

Former NC Insurance Commissioner, Wayne Goodwin (D), who was upset in November in a very tight race, is seeking to chair the North Carolina Democratic Party.

Before leaving office, outgoing Governor Pat McCrory proposed his 2017-18 biennium budget recommendations as he is obligated to do by law. The proposal, which includes: a $1 Billion transportation bond; raising average teacher pay to $55,000 by 2018; fully funding the Mental Health Task Force recommendations; and appropriating an additional $700 Million to the State’s rainy day fund. Incoming Governor Roy Cooper will also propose his own budget recommendations to lawmakers when he takes office. The legislature is not bound by either budget proposal and will enact its own. 
Gov. McCrory’s proposed budget could greatly impact roads in the East – WNCT

In the news

Sales tax changes taxing for consumers, contractors – WRAL
Low Pay In State Legislatures Means Some Can't Afford The Job – NPR
Several new laws now in effect in NC – WNCN
Let’s start 2017 by promoting ideas that benefit all – Carolina Journal
NC Supreme Court withdraws fill-in justice rule – WRAL
New NC Medicaid managed care company formed by state doctors – N&O
Cooper may quietly have lost influence over NC business recruiter – WRAL
Advocates push - again - for redistricting reform – WRAL
Youth Legislative Assembly seeks applicants – The Wilson Times
STEWART: N.C. businesses hope for a practical, productive legislative session - NSJ
Gov. Cooper, Avett Brothers greet revelers at revamped Inaugural Ball – TBJ
New NC superintendent hires former Pat McCrory employees – N&O
Minority-oriented think tank lauds Sen. Thom Tillis for hiring diversity – McClatchy DC
Interstate 85 section named for Congressman Howard Coble – N&O

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.