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NC Legislative Update: October 25, 2019

October 25, 2019

After taking last week off, both chambers returned to Raleigh this week to continue their efforts to wrap up the legislative session. Senate Leader Phil Berger has asserted that the Senate will adjourn on October 31, regardless of whatever legislation is outstanding, but the House has not given an end date for session. 

The legislature has continued work on mini budgets as the budget stalemate with the Governor continues. While most state employees have received raises in various mini budgets, the legislature has yet to pass a raise for teachers and school employees. They have indicated that a bill is being worked on, but there is some disagreement on the path forward.

The Senate has not voted on the budget override since receiving the bill from the House. However, the Senate has noticed that an override vote may take place on Monday, the 28th. Senator Berger has also indicated that the Senate may come back to Raleigh to vote on the budget override after the candidate filing period, so that Democrats can vote for the override without fear of a primary challenger.


NC Farm Act Compromise

The House and Senate have been at odds for months over the North Carolina Farm Act of 2019. The bill largely deals with updating industrial hemp regulations in response to a recent federal law change that expanded the legal uses and market for hemp. The issue in controversy between the House and Senate has been a ban on smokable hemp. Representative Jimmy Dixon has claimed that leaving smokable hemp legal would essentially be a backdoor way to legalize marijuana, since the two plants look and smell similar. The law enforcement community shares those concerns, claiming that smokable hemp would prevent them from getting probable cause based on the smell of marijuana. Senator Brent Jackson, the bill sponsor, has argued that there are tests to differentiate the two substances, and that banning smokable hemp will severely affect farmers’ ability to market the crop, since the smokable products are one of the most profitable uses of the plant. The two sides reached a compromise this week in conference and agreed on a smokable hemp ban that will start on June 1, 2020. The bill also requires the Department of Agriculture and Consumer Services, the North Carolina Industrial Hemp Association, the North Carolina Hemp Commission, the State Bureau of Investigation, and other law enforcement agencies to study the issue and report to the Agriculture and Forestry Awareness Study Commission, who will decide whether the prohibition on the sale of smokable hemp should be repealed.

The conference report is on both chambers’ calendar for Monday.

WRAL: https://www.wral.com/deal-struck-on-nc-farm-bill-smokable-hemp-ban/18719711/ 


Senate Finance Bills

The Senate passed two finance bills this week that largely include provisions included in the vetoed budget. Senate Bill 557 and Senate Bill 578 have both passed the Senate and are now in the House Finance Committee.

Senate Bill 557 increases the standard deduction for married couples filing jointly from $20,000 to $21,000, and from $10,000 to $10,750 for those filing single. The bill also clarifies the definition of a holding company for franchise tax implementation. It establishes market-based sourcing for companies calculating their sales factor for multi-state apportionment, and requires marketplace facilitators to collect and remit sales tax for third-party-sellers.

Senate Bill 578 reduces the franchise tax rate from $1.50 to $0.96 per $1,000 of tax value over two years. The rate will be $1.29 in 2021 and $0.96 in 2022. Electric utility companies will continue to pay the $1.50 rate until 2027. The bill also reduces the qualifying expense threshold for awards from the Film and Entertainment Grant Fund. This section also specifies that the grant is a binding agreement and not subject to appropriations by the General Assembly.

Senate bill 557 passed the Senate with large bipartisan support, while Senate Bill 578 passed on mainly party lines, as Democrats feared that the franchise tax cuts would jeopardize funding availability for future government needs.


Medicaid Transformation Readiness Hearing

The House Health Committee held a meeting this week to hear from the NC Department of Health and Human Services (DHHS), NC Healthcare Association (NCHA), and the NC Medical Society on the state’s move to managed care Medicaid, known as Medicaid Transformation. DHHS Secretary Mandy Cohen noted slow sign-ups and the budget stalemate as challenges to meeting the February 2020 implementation date, but still insisted that the Department would be ready if they had a budget by November 15. The provider community seemed less optimistic that the February 2020 date was feasible, as they noted slow patient sign-ups, credentialing issues, and a lack of provider contracts in place. Without provider contracts in place, many Medicaid beneficiaries will not be able to select their doctor when enrolling, and credentialing issues will affect reimbursements. Lawmakers also expressed concern with the Department’s aggressive timeline, with Republicans and Democrats both talking of delaying the implementation until July 2020. With the Senate planning to adjourn next week, and no budget in place, it is likely that the Department will be forced to delay.

NC Health News: https://www.northcarolinahealthnews.org/2019/10/24/march-to-medicaid-managed-care-switch-looking-rocky/ 


DOT Cash Flow Fix

The House Transportation Appropriations Committee took up a bill to address the current cash flow issues at the Department of Transportation (DOT). DOT announced earlier this year that a cash flow shortage will force them to lay off around 1,000 temporary employees and halt nearly a thousand projects. DOT cited increased costs due to hurricane-related road repairs and slow federal reimbursements for road damage costs. In an average year, DOT spends around $65 million on storm damage road repair, however, this year they have spent nearly $300 million. DOT has also spent $311 million defending the controversial Map Act, which prevents landowners from developing property in areas where future highway projects are planned. The legislature has repealed the Map Act.

Representative John Torbett unveiled the DOT Fin. Preservation and Accountability Act in committee and the bill would spend $360,200,000 from the General Fund to help DOT pay for Map Act claims. It also appropriates $301,000,000 from the Savings Reserve to the Highway Fund to be used towards projects on the delayed list, but the Department would be required to repay the Savings Reserve by 2025. The bill contains another section that would make money in the Savings Reserve available for DOT in response to nationally declared disasters. The bill passed the Committee, but House budget writers have indicated that they are working on a competing approach that will be narrower and try to use more money currently at DOT to solve the problem. One issue contributing to the cash flow problem is a statutory cash floor that the Department cannot go beneath.

The Senate has indicated that they are interested in addressing the issue, but are troubled that Governor Cooper has not submitted a plan to address the problem or requested additional DOT funding from the General Assembly. The Senate has also raised concerns that additional oversight at DOT might be needed to avoid similar problems in the future. Others have indicated that the cash flow issue warrants a larger look at how the state funds transportation infrastructure, which relies heavily on the gas tax, but has been seeing declines in revenue. 

WRAL: https://www.wral.com/dot-cash-flow-fix-moves-in-house-but-competing-proposal-coming/18716658/

2019 Session Laws

The following 232 bills have become law this session:

  1. SB 7: Bipartisan Ethics Appointments
  2. SB 75: Restore Ct. of Appeals Membership
  3. SB 77: Ag Disaster Fund/Certain Counties
  4. SB 214: Ensure Orderly 2019 Elections
  5. SB 12: Fill Certain Vacancies/Alexander & Burke Co.
  6. SB 56: Revenue Laws Technical Changes
  7. SB 4: Extend Terms of 2 Members/Coastal Carolina CC
  8. SB 272: Zoning for University Facilities-Durham
  9. SB 6: Dare County/CC Construction Funds
  10. SB 162: Loan Origination/Late Payment Charge Changes
  11. HB 263: Fill Vacancies/Modify 2018 Appointments
  12. SB 63: City of Kannapolis/Annexation
  13. HB 130: Allow Game Nights
  14. SB 505: Rural Job Retention Act
  15. SB 605: Highway Storm Recovery Act
  16. HB 1014: 2020 Census VTD Verification Program
  17. SB 310: Electric Co-Op Rural Broadband Services
  18. HB 363: Craft Beer Distribution & Modernization Act
  19. HB 233: State Auditor/Local Finance Officer Amends
  20. HB 532: DNCR Add New Trails & Various Changes
  21. HB 388: Immunizing Pharmacists
  22. HB 646: ID Approval/Flex Muni One-Stop
  23. HB 70: Delay NC HealthConnex for Certain Providers
  24. HB 9: Bessemer City Charter Amendment
  25. HB 201: Randolph Co. Register of Deeds Tax Cert
  26. SB 252: Dental Bill of Rights
  27. SB 138: Even-Yr Municipal Elections/Town of Black Mtn.
  28. SB 139: Even-Yr. Municipal Elections/Town of Montreat
  29. HB 336: Extend Suspension of Spencer Mountain
  30. SB 235: Franklin/Nash Municipalities/Unfit Dwellings
  31. SB 30 Stanly CC/Contracting Date Extension
  32. SB 381: Reconstitute/Clarify Boards and Commissions
  33. HB 301: CIP Revisions/Juvenile Code
  34. HB 179: Mini-Truck Classification
  35. HB 131: Repeal Map Act
  36. HB 82: Railroad Crossings/On-Track Equipment
  37. SB 648: Support Shellfish Aquaculture
  38. SB 448: Amend Appt For Compact on Education/Military
  39. SB 255: State Board Construction Contract Claim
  40. SB 151: Break or Enter Pharmacy/Increase Penalty
  41. HB 617: Allow Repeat Referral to Teen Court
  42. HB 578: Modify Legitimations Provisions
  43. HB 548: Modify Physical Therapy Definition
  44. HB 383: Topsail Beach Charter/Board Vacancies
  45. HB 1016: UNC Boards of Trustees Appointments
  46. HB 1017: Special Master Wake House Plan
  47. HB 415: Photos of Juveniles/Show-Ups
  48. SB 148: Public Records/Release of LEO Recordings
  49. SB 11: ABC Regulation and Reform
  50. SB 466: EDPNC Modifications
  51. HB 57: Create Term for Public Schs. & Codify NCVPS
  52. HB 389: ABC/Univ Athletic Facility
  53. HB 531: Tenants at Foreclosure Act Restored
  54. HB 658: Allow Donations of Unexpired Drugs
  55. HB 664: myFutureNC/Postsecondary Attainment Goal
  56. HB 432: Water/Sewer to Contiguous Dwelling Units
  57. HB 219: NAIC Accreditation Amendments.-AB
  58. SB 80: China Grove Satellite Annexation
  59. SB 242: Recreational Land Fee Changes
  60. SB 227: TP3/Principal Fellows Consolidation
  61. SB 84: Walkertown Zoning Authorizations
  62. SB 262: Union/Prohibit Certain Hunting Acts
  63. SB 674: Surry Co./Mt. Airy/Elkin City/Bd. Ed Partisan
  64. HB 15: Lexington/Dissolve Utilities Commission
  65. HB 240: Albemarle/City Labor for Business Ctr
  66. HB 299: Henderson City/Build Community College Bldgs
  67. HB 6: Burlington Airport/Lease/Contract Authority
  68. SB 225: Repeal Tuition Surcharge
  69. HB 537: Hwy Use Tax Vehicle Subscriptions
  70. HB 934: Right to Try Adult Stem Cell Treatments
  71. SB 219: Modify Teacher Licensing Requirements
  72. SB 55: Continuing Education for General Contractors
  73. SB 483: Vacation Rental Act Changes
  74. SB 610: Authorize Northern Peaks Trail
  75. SB 95: Veterans Memorial Funds/Do Not Revert
  76. SB 556: GSC People First Language 2019
  77. SB 529: Fees/Returned Checks
  78. SB 88: Electrician Requirements for Certain Orgs
  79. SB 313: Guar. to Streamline Afford. Housing
  80. SB 127: Protect Governmental Accountability
  81. HB 656: Medicaid Changes for Transformation
  82. HB 924: Teacher Contract Changes
  83. HB 474: Death by Distribution
  84. HB 67: Road Barrier Prohibition
  85. HB 310: Clarify Insurance Prod'r Crim. Bckgrd Check
  86. HB 812: Nutrient Offset Amendments
  87. HB 886: Study Participation of Operators in NC Pre-K
  88. HB 529: Utilities/Water and Wastewater Consumption
  89. HB 917: Emergency Declaration/Clarify Rd Closure
  90. HB 747: NC Missing Person Information Sharing
  91. HB 770: Freedom to Work/OLB Reform
  92. HB 871: Fair Contracts
  93. HB 4: Claremont Deannexation
  94. HB 52: Wrightsville Beach Local Act Amendment
  95. HB 204: Town of Beaufort/Annexation
  96. HB 349: Wilkes County Fire Tax-Procedure
  97. HB 489: Lincolnton-Lincoln County Airport Authority
  98. HB 80: Roanoke Rapids Lake/Unattended Equip
  99. HB 237: Brunswick County Zoning Procedure Changes
  100. HB 368: Bermuda Run/Speed Restrictions
  101. HB 98: Macon/Clay/No Right-of-Way Spotlighting
  102. HB 134: Filling Vacancy/Onslow County Board of Comm
  103. HB 170: Various Satellite Annexations
  104. HB 187: Amend Town of Elon Charter/Parking Ordinances
  105. HB 285: City of Sanford/Town of Beaufort/Vol Annex
  106. HB 239: Pitt County Animal Control Records
  107. HB 324: Local Hunting Omnibus
  108. HB 429: Navigable Waters/Manteo/Hyde
  109. SB 191: Out-of-State Law Enforcement/2020 Rep Convtn
  110. SB 399: Rehire High-Need Teachers
  111. SB 355: Land-Use Regulatory Changes
  112. SB 378: Local Economic Development Modifications
  113. SB 394: Changes to Estates & Trusts Statutes
  114. SB 311: Massage Board Membership
  115. HB 257: Motorcycles/Face Masks
  116. HB 224: Assault w/ Firearm on LEO/Increase Punishment
  117. SB 594: Register of Deeds Updates
  118. SB 525: Textile Hist. Site/Operate SE NC Museum
  119. SB 220: Removal of Political Signs by Citizens
  120. SB 500: Modify Advanced Math Course Enrollment
  121. SB 186: Beaufort-Morehead Cty Airport Authority/Amend
  122. SB 686: Appointments Bill 2019
  123. HB 492: Simplify Builder Inventory Exclusion
  124. HB 402: UNC Capital Projects
  125. SB 384: Clarify Motor Vehicle Dealer Laws
  126. HB 761: Clarify Wastewater Permitting Liability
  127. HB 758: MSD Expansion and Governance/DACS Study
  128. HB 755: Travel Insurance Amendments
  129. HB 735: Adopt Rules Incorporating 2017 Food Code
  130. HB 629: Law Enforcement Mutual Aid
  131. HB 495: No Municipal Reg/Off-Site Wastewater Systems
  132. HB 329: Renewable Energy Amends
  133. HB 156: Swain County Settlement Trust Fund
  134. HB 138: Damage Jail & Prison Fire Sprinkler/Penalty
  135. HB 106: Inmate Health Care & 340B Program
  136. HB 18: Allow Absentee Ballots/Fire District Election
  137. HB 757: Pender County/Butner Property Transfers
  138. SB 535: Authorize State Park/Clarify Corps Name
  139. HB 668: Various Higher Education Changes
  140. HB 590: Amend Administrative Procedure Laws
  141. SB 444: Allow Use of Oyster Shells As Serving Dishes
  142. HB 411: Modify School Qual./Student Success Indicator
  143. SB 210: Organ & Tissue Donation/Heart Heroes
  144. SB 316: Affordable Housing
  145. SB 297: Cancer Research Advisory Panel
  146. SB 462: Modifications to NC Appraisal Board
  147. SB 508: Civil Procedure/Deponent Declaration
  148. SB 606: Prioritize Native NC Plants on Highway ROW
  149. HB 107: PED Oversight/EPP Changes
  150. HB 323: Assess Costs of Local LEO Crime Lab Analysis
  151. HB 268: Amend On-Site Wastewater Laws/Misc. TC
  152. HB 243: State Human Resources Act Amendments.-AB
  153. HB 337: Change Salvage Vehicle Transfer Requirements
  154. HB 362: 15-Point Scale For School Performance Grades
  155. HB 546: Prohibit Counterfeit/Nonfunctional Airbags
  156. HB 620: Street Database/Manual/Public Record Except
  157. SB 29: Move Over Law/Increase Penalties/Amber Lights
  158. HB 198: Human Trafficking Commission Recommendations.-AB
  159. HB 325: Opioid Epidemic Response Act
  160. SB 194: West Jefferson/Saluda Satellite Annexations
  161. SB 420: NC Servicemembers Civil Relief Act
  162. SB 218: Clarify State Recognition - Lumbee Indians
  163. SB 145: Allow Sports/Horse Race Wagering Tribal Lands
  164. SB 332: Civil Procedure/Limitations/Land Surveyors
  165. SB 343: Various Education Law Changes
  166. SB 391: Expand Youth Internship Opportunities
  167. SB 478: Modify Appointment Reporting
  168. SB 493: DVPO Abuser Treatment/Time of Expiration
  169. SB 523: Laws Clarifying & Administrative Changes
  170. SB 604: Amend NC Veterinary Practice Act
  171. SB 108: PED/Safekeeper Health Care Cost Recov. Pract
  172. HB 469: Various Family Law Changes
  173. HB 628: 2019 Banking & Mortgage Corrections & Changes
  174. HB 675: 2019 Building Code Regulatory Reform
  175. HB 50: Allow Hyperbaric Oxygen Therapy for TBI/PTSD
  176. HB 922: Enhance Insurance Coverage/Educ. Buildings
  177. HB 264: GSC Technical Corrections 2019
  178. SB 532: Amends Probate/Trusts/Wills Choice of Law
  179. HB 220: Insurance Technical Changes.-AB
  180. SB 302: Update ACH Svc & Care Plan/Bd of Nursing
  181. SB 385: Clarify/Auto Dealers Regulatory Req
  182. SB 290: ABC Regulatory Reform Bill
  183. SB 9: Female Genital Mutilation/Clarify Prohibition
  184. SB 301: Regional School Modifications
  185. SB 366: 9th/10th Grade/College Transfer Pathways
  186. SB 413: Raise the Age Modifications
  187. SB 498: Facilitate Response to Disasters
  188. HB 724: Truth in Caller ID Act
  189. HB 872: Underground Utility Safety Act/Changes
  190. SB 190: Expand Special Assessments for Dam Repair
  191. HB 228: Modernize Laws Pertaining to NC Medical Board.-AB
  192. HB 961: Ensuring Authorization of Federal Funds
  193. HB 760: Expand Loss Prevention Investigations
  194. HB 391: Passenger Protection Act
  195. HB 590: Modify Continuing Ed for Real Estate Brokers
  196. SB 321: Federal Motor Carrier Safety/PRISM
  197. SB 68: Relocation of Water/Sewer Line Costs
  198. SB 584: Criminal Law Reform
  199. HB 206: Various Transportation Changes
  200. HB 217: DIT Changes.-AB
  201. SB 230: NC Military and Veteran Act of 2019
  202. SB 86: Small Business Health Care Act
  203. HB 99: Transfer ALE/Move Boxing Advisory Commission
  204. HB 597: Wildlife Resources Commission Amends
  205. HB 604: Small Business Retirement Program
  206. HB 55: Cleveland County/Sheriff Vacancies
  207. HB 554: Funeral Practice Licensure Tech. Corrections
  208. HB 609: Salary Increases/Adult Correctional Employees
  209. HB 226: Pay Increases/State Employees
  210. HB 126: Pay Increases/State Highway Patrol
  211. HB 777: Pay Increases/SBI & ALE
  212. SB 621: Testing Reduction Act of 2019
  213. HB 449: Handicapped & Special Registration Plates
  214. SB 600: Vets Children/Short-Term Workforce Training
  215. SB 353: Amend Cartway Path/Septic Tank Laws
  216. SB 682: Implement Crime Victim Rights Amendment
  217. SB 574: Study Establish Gaming Comm/Sports Betting
  218. SB 270: Durham Deannexation
  219. SB 692: 2019 Senate Consensus Nonpartisan Map
  220. HB 1020: 2019 House Remedial Map
  221. HB 29: Standing Up for Rape Victims Act of 2019
  222. HB 75: School Safety Funds, Programs, and Reports
  223. SB 118: Prison Safety/TANF State Plan/Clarifications
  224. SB 429: Disaster Recovery - 2019 Budget Provisions
  225. SB 458: PTS Day/Cardiac Task Force/Titus's Law/Data
  226. SB 691: Emergency Operating Funds for Utilities
  227. HB 211: Various DMV Changes
  228. HB 283: Conner’s Law
  229. HB 1001: Raise the Age Funding
  230. HB 387: Growing G.R.E.A.T.
  231. HB 100: DOT Budget for 2019-2021 Biennium
  232. SB 572: University System Risk Management Provisions


More about Nexsen Pruet's North Carolina Public Policy Team
In addition to providing Government Affairs Services, 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 during the legislative session. Please feel free to pass this along to your clients or other interested parties. If you would like to receive the update in your inbox, please email shernandez@nexsenpruet.com to be added to the list. If you are interested in learning more about how Nexsen Pruet can help you achieve your public policy goals and acquiring legislative representation in North Carolina or South Carolina, please reach out to Sandy Sands at ssands@nexsenpruet.com or Ross Barnhardt at rbarnhardt@nexsenpruet.com.

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