NCGA Week in Review July 2-6

July 6, 2012

Pardon Our Dust

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After a long day (and night) of deals, debate and overrides, the 2011-12 Legislative Session officially adjourned Sine Die on Tuesday, July 3rd. The adjournment marked the end of the first session in over a century in which Republicans had control of both chambers of the General Assembly. Most of the heated partisan work, however, was done the night before with legislators taking up override votes on Governor Perdue’s vetoes of the state budget, Racial Justice Act amendments and fracking. All three were overridden. The actual final hours of session were anti-climactic. The Senate had finished their business in the early hours of the morning and the House only had a handful of bills left to finish before adjourning including two “Technical Corrections” bills that included bargaining provisions on the veto overrides.

In interviews following adjournment, House Speaker Thom Tillis and Senate President Pro Tem praised legislation passed by the Republican majority. They cited medical malpractice reform, tort reform, worker’s compensation changes and annexation reform and the successful override of eleven of Gov. Perdue’s vetoes as major achievements that should lead to more economic growth in North Carolina.
The State Budget
The House and Senate agreed to a $20.2 billion state government spending plan for next year—giving state employees and public school teachers their first raise in four years and restoring money to public schools. While key employee associations were pleased with a 1.2 percent proposed salary increase and 1 percent increase for retirees, the bill still didn’t completely eliminate the $503 million that school systems were expecting to return to the state next school year. Under the budget agreement, the amount was reduced by $143 million.
The House accepted some of the Senate education policy changes at a cost of $27 million, while the Senate moved toward the House’s position on reducing school district spending cuts. The final measure, however, left out a Senate provision ending job-protecting tenure for veteran teachers and a House initiative that would give tax credits to businesses that give money to nonprofits that in turn provide scholarships to attend private schools. The compromise also left out money that the House had hoped to give to living victims of the state’s defunct forced sterilization program. Republicans said the final budget gave both the UNC and community college system more flexibility to offer merit pay and bonuses; provides $2.7 million in federal block grants for smoking prevention; and moves ahead with plans from 2011 to increase the number of coastal ferry routes that are subject to tolls.
Gov. Perdue’s Decision to Veto
After making several appeals to legislators to put additional money into the state budget, Gov. Perdue vetoed the state budget plan. “I am committed to ensuring that a portion of this revenue source, along with other funds, be dedicated to schools, jobs, probation and parole officers and other urgent needs,” Perdue said in a statement.   The Senate, which holds a veto-proof majority was able to easily override Perdue’s veto. The House, needing only 72 votes to override, managed to muster 74 votes, including six Democrats, throughout a lengthy day of bargaining. This year’s override saw some new Democratic faces join the Republicans in opposing the governor, many of whom said they did not want to deny the teachers and state employee raises for another year. The six Democrats that voted for the override were; Reps. Marcus Brandon, William Brisson, Jim Crawford, Dewey Hill, Darren Jackson and Marian McLawhorn.
The Shortfall and New Director
Estimates of this year’s Medicaid budget gap were initially estimated to be around $139 million, then grew to $149 million as the result of a federal court order which reinstates coverage of personal care services for disabled adults. Legislative leaders and the Office of State Budget and Management agreed to revise the estimate of the current-year Medicaid shortfall upwards to $205 million—this increase was prompted by higher-than-estimated program utilization. Not long after the General Assembly agreed to spend an additional $206 million to close that gap, another shortfall of about $75 million dollars was predicted.  The General Assembly then approved another measure that would set aside $94 million from the state’s repair and renovation fund to reimburse medical providers for Medicaid patients. On the heels of this new shortfall, acting Department of Health and Human Services (DHHS) Secretary Al Delia announced a reorganization of the state’s Medicaid leadership team that included the removal of the director, Dr. Craigan Gray.  Michael Watson, Chief Deputy Secretary of DHHS, will become the new head of the Division of Medical Assistance.
New Software
A new software program designed to seek out potential fraud yielded questionable billing by over 200 outpatient behavioral health care providers, according to North Carolina’s Medicaid office. Health and Human Services Secretary, Al Delia said that the unusual Medicaid billing is valued at up to $191 million. Ten cases have been investigated and referred to state attorneys; funds could also be recovered. Auditors and investigators made surprise visits to providers to examine billings—the analysis found cases where providers have billed more than 24 hours of service for a patient in a single day, or double-billed for the same service.
Legislature Overrides Governor’s Veto on Fracking
On Sunday, July 1st, Governor Perdue vetoed S 820, Clean Energy and Economic Security Act; legislation that would authorize the state to lay the framework for hydraulic fracturing. Just 36 hours later, the North Carolina legislature overrode Purdue’s veto. With a veto-proof majority, the Senate quickly voted to override Perdue. The vote barely squeaked by in the House with a vote of 72-47 (the exact number needed for an override). Rep. Becky Carney, D-Mecklenburg, said that she did not intend to cast the key vote that overrode the governor’s veto. Without Carney’s vote, the veto would have been sustained. Carney said her vote was a mistake and attempted to change it but House rules prohibit a member from changing his or her vote if it changes the outcome and Rep. Skip Stam, R-Wake, made a procedural motion that prevented Rep. Carney from moving for a reconsideration of the vote. Rep. Susi Hamilton, D- New Hanover, who had previously voted against proposals to explore fracking, voted to override because she felt this was the best compromise legislation that would pass. She expressed fears that if the veto were sustained there would be a bill with less environmental and consumer protections pushed through the General Assembly next year. Other House Democrats who voted for the override include Reps. Kelly Alexander, Rodney Moore, Bill Brisson, and Dewey Hill.
Key provisions of the bill:
  • Creates the Mining and Energy Commission and authorizes the Commission to begin rulemaking on horizontal drilling and hydraulic fracturing
  • Replaces oil and gas developers on the state commission with local governmental officials, and one representative of a publicly traded natural gas company.
  •  Prohibit the issuance of permits, pending subsequent legislative action
  • Creates an “Energy Policy Oversight Committee”
Cherokee Gambling
A divided Legislature gave approval to changes to the North Carolina gambling laws, which allows live table games at the Cherokee Indian casino. The House chamber voted 66 to 49 in favor of the Senate bill (which passed in the Senate chamber with a 33-14 vote). This bill eases state gambling restrictions so that the Harrah’s Cherokee casino can offer games like poker, craps and roulette—in accordance with a compact between the tribe and Gov. Beverly Perdue. Advocates anticipate that this change will bring more than 400 jobs to the casino and give the state a cut of the gross proceeds from the new games.
Gov. Beverly Perdue took no action on legislation that would allow people who live in unincorporated areas to vote against forced annexations—allowing it to become law. Perdue had the option of either signing the bill into law, vetoing it, or letting it become law without her signature. Perdue urged legislators to reconsider the bill, saying it “provides no alternatives for managing urban growth.” She also said the new bill still may not address the constitutional issues raised with the bill that allowed a petition to block annexation. The bill Perdue refused to sign was passed in response to a court ruling in March that overturned the first annexation reform attempt. The original version provided for a petition process that would allow the annexation to be blocked if 60 percent of the landowners owners in the area to be annexed signed the petition. The new law allows a traditional referendum requiring a simple majority vote.
Dental Divide
An agreement on who will control North Carolina dental practices breezed through the Legislature after both dentists and companies that perform back-office work for dental practices reached a compromise. The North Carolina Dental Society wanted more scrutiny upon the practices of dental service organizations; they were concerned that the companies were making medical decisions for dentists. Dental management group lobbyists say the society was trying to push the businesses out-of-state, in addition to discouraging lower-priced care to consumers. The bill’s linchpin is a task force, created to recommend rules to a state dental licensing board to review dentist contracts with management groups.
DOT Letters: Outcome of the Hearing
The Senate Rules Committee decided to refer the results of its inquiry into altered Department of Transportation letters to the state Ethics Commission. Senator Tom Apodaca, chair of the committee, said the commission “must review the actions of state employees who took steps to change letters sent to lawmakers that altered the position of a top DOT official on a roads funding issue.” Apodaca said the commission must review it and could take further action, or simply let the issue die. Apodaca had previously referred to the letters as “fraudulent” and suggested that a district attorney may need to review what occurred, but later softened his position, stating that the letters were “fictitious” but he did not believe there was any criminal intent, but strongly believes that there are ethical violations.
Governor Perdue’s Overrides
Over the past two years, Governor Perdue has vetoed 19 bills that have been sent to her by the General Assembly; Republicans have been able to override 11 of these vetoes, with varied assistance from House Democrats. Below is a list of the 19 bills that Perdue has vetoed, and their current standing: 


  • H2 Protect Health Care Freedom. Vetoed 3/5/2011. SUSTAINED.
  • H7 Comm. Colleges/Opt Out of Fed’l Loan Program. Vetoed 4/13/2011. OVERRIDDEN.
  • H200 Appropriations Act of 2011. Vetoed 6/12/2011. OVERRIDDEN. 
  • H351 Restore Confidence in Government. Vetoed 6/23/2011. SUSTAINED. 
  • H383 Extend UI Benefits/Continuing Resolution. Vetoed 4/16/2011. SUSTAINED.
  • H482 Water Supply Lines/Water Violation Waivers. Vetoed 6/27/2011. SUSTAINED.
  • H854 Abortion-Woman’s Right to Know Act. Vetoed 6/27/2011. OVERRIDDEN.
  • H950 Modify 2011 Appropriations Act. Vetoed 6/29/2012.  OVERRIDDEN. 
  • S9 No Discriminatory Purpose in Death Penalty. Vetoed 12/14/2011. SUSTAINED.
  • S13 Balanced Budget Act of 2011. Vetoed 2/22/2011. SUSTAINED.
  • S33 Medical Liability Reforms. Vetoed 6/24/2011. OVERRIDDEN.
  • S265 State Health Plan/Appropriations and Transfer. Vetoed 4/13/2011. SUSTAINED.
  • S416 Amend Death Penalty Procedures.Vetoed 6/29/2012. OVERRIDDEN. 
  • S496 Medicaid and Health Choice Provider Req. Vetoed 6/30/2011. OVERRIDDEN.
  • S532 ESC/Jobs Reform. Vetoed 6/30/2011. OVERRIDDEN.
  • S709 Energy Jobs Act. Vetoed 6/30/2011. SUSTAINED. 
  • S727 No Dues Checkoff for School Employees. Vetoed 6/18/2011. OVERRIDDEN.
  • S781 Regulatory Reform Act of 2011. Vetoed 6/30/2011. OVERRIDDEN.
  • S820 Clean Energy and Economic Security Act. Vetoed 7/1/2012. OVERRIDDEN.