North Carolina General Assembly Week in Review

August 14, 2015

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NC General Assembly passes new Continuing Resolution

Senate Bill 534, 2015 Continuing Budget Authority, commonly referred to as a Continuing Resolution (CR), expired Friday at 11:59 pm. It was passed at theend of June with hopes to have a budget agreement by August 14. In anticipation of Friday’s midnight deadline, the House introduced SB 560, another 2015Continuing Budget Authority bill. This CR extends the date of the prior CR and additionally, 1) appropriates funds for the 2015-16 fiscal year to both theJDIG Reserve and One NC Fund to satisfy grant obligations and statutory transfers; 2) appropriates funds for the Office of Technology Services; 3)appropriates receipts for the At-Sea-Observer Program fees; 4) appropriates additional TANF funds; 5) authorizes State agencies to spend certain grantfunds; and 6) revises child care subsidy policy to exclude a nonparent caretaker relative’s (grandparent’s) income in determining eligibility.

The new CR is set to expire at 11:59 pm on August 31, 2015. Both House and Senate leaders have indicated they are close to an agreement and are optimisticto have a budget agreement by that time.

Read the new CR here.

Sales Tax Redistribution

After House Bill 117, NC Competes Act, passed the Senate Finance Committee last Thursday, the bill was referred to the Senate Appropriations Committee.

The bill was presented as a compromise on several economic development measures and a redistribution of the local option sales tax (LOST). The economicdevelopment portion of the bill included changes to the JDIG program, One NC program, a three year transition to single sales factor corporate income taxapportionment, and tax exemptions for data centers and aviation fuel. The LOST redistribution would change the current formula (75% of the tax distributedby point of collection, 25% of the tax distributed per capita), to a 50/50 split, half to be distributed by point of collection and half to be distributedper capita.

HB 117 passed the Senate Appropriations Committee on Monday and was sent to the Senate floor that night. The bill passed second reading Monday night in theSenate with two minor amendments, 1) requiring transfers to the Highway Fund to occur within 75 days after the end of the fiscal year; and 2) reducing therequired amount of investing funds for a high-yield project from $750,000 to $500,000.

On Tuesday, the bill passed third reading in the Senate and was sent to the House for concurrence.

The two Senior Finance Chairman in the House, Rep. Bill Brawley (R-Mecklenburg) and Rep. Jason Saine (R-Lincoln), remain opposed to the redistribution ofthe LOST contained in the bill. Senate Leaders held a rally on Wednesday in support of their proposal to redistribute the LOST. Meanwhile an “Alliance” oflocal governments, calling themselves “Alliance For A Prosperous North Carolina,” sent a letter to General Assembly members calling for opposition to theplan.

The House may vote to concur, or vote not to concur and send the bill to conference.

Read HB 117 here. See the billsummary here.

Medicaid Reform passes the Senate

The Senate passed HB 372, Medicaid Transformation/HIE/PrimaryCare/Funds, on second reading Monday night with only one clarifying amendment. An attempt bySenate Democrats to expand Medicaid coverage to an additional 500,000 North Carolinians was defeated along party lines. The amended bill passed thirdreading in the Senate on Tuesday and will be sent to the House for concurrence. It is undetermined what the House will do with the proposed compromisebill.

The bill was proposed by the Senate as a compromise, creating roles for both managed care organizations (MCOs) and provider-led entities (PLEs). TheSenate’s version creates a new department, the Department of Medicaid (DOM). Under the Senate’s plan, the DOM would have full budget and regulatoryauthority, but the General Assembly would determine eligibility categories and income thresholds. The bill requires DOM to submit requests for waivers andstate plan amendments to the Centers for Medicare and Medicaid Services (CMS), and report recommended statutory changes to the newly created JointLegislative Oversight Committee on Medicaid by May 1, 2016. Twelve months after CMS approval, capitated full-risk contracts would begin.

Read HB 372 here.

TABOR passes the Senate

Monday night, the Senate heard debate on SB 607, Taxpayer Bill of Rights Act (TABOR). The bill proposes three amendments to the North Carolina Constitutionlimiting state spending and increasing the State’s savings. The first amendment would cap the tax on income at 5 percent. The current cap on income tax is10 percent. The second part would create a new constitutionally required Emergency Savings Reserve Fund. The third and final part would create a new limiton the growth of State spending, capping at the percentage of inflation plus population growth. Under this bill, the N.C. General Assembly could increasethe spending limit only if approved by a two-thirds vote of both chambers.

The bill was amended on Monday to 1) set a cap on the “rainy day fund” at 12.5% of the amount appropriated from the General Fund for capital and operatingexpenses for the prior fiscal year; and 2) put all three of the constitutional amendment questions contained in the bill into one question on thePresidential Primary ballot in Spring of 2016. Due to the amendment, the vote on second reading was postponed until Tuesday when it passed second and thirdreadings and was sent to the House for committee assignment.

Read SB 607 here.

House to hear continued debate on Unemployment Insurance changes Tuesday

The House took up and passed on second reading SB 15, Unemployment Insurance Law Changes. The bill, a committee substitute, passed the House FinanceCommittee on Tuesday. The committee substitute includes a provision requiring those collecting unemployment benefits to make a minimum of five contacts perweek. Under current requirements, recipients of the benefits must make at least two contacts per week. The House will hear third reading on Tuesday.

Read SB 15 here.

Transportation Network Companies bill receives Transportation Committee Approval

Tuesday, the House Transportation Committee gave approval to SB 541, Regulate Transportation Networks Companies. The bill will receive another committeehearing in the House Finance Committee before heading to the House floor. The bill requires companies to buy insurance coverage for their drivers andpassengers. The bill also requires the company to preform nationwide criminal background checks on drivers. Uber, Lyft, and other Transportation NetworkCompanies have provided input in the development of the proposed regulatory framework.

Read SB 541 here.

House passes Employee Misclassification bill

After being postponed from Monday evening’s calendar, HB 482, Employee Misclassification Reform, was given final approval by the House on Thursday.Wednesday, the House adopted changes, 111-2, that amends the factorsused to determine independent contractor status. These changes came in light of objections raised by FedEx regarding how it classifies its carriers.

The bill will be sent to the Senate for committee assignment. The Senate passed a similar bill earlier this year and it is unclear whether the Senate willadopt the House’s version or propose something else.

Read HB 482 here. Read the amendmentadopted Wednesday here.

What do dealer cars, drones, and boat regulations have in common?

SB 446, a bill addressing changes to dealer loaner cars, drones, and boat regulations in navigable waters, was given House approval on Thursday. The billdoes three things: 1) exempts dealer vehicles loaned to a customer of that dealer while the customer’s car is being serviced or repaired by the dealer frombeing classified as used motor vehicles; 2) permits local and state agencies to fly drones and authorizes the State Chief Information Officer to approvegovernment use of drones for purposes such as law enforcement, emergency management, and environmental regulation and scientific research; and 3) permitsBrunswick County to adopt and enforce specific ordinances for navigable waters within the county’s jurisdiction.

A committee substitute had been given a favorable report out of the Finance Committee on Tuesday. Due to a recent FAA decision authorizing commercialoperations of drones, the bill was amended on Thursday to remove a provision that would have prohibited commercial use.

Read SB 446here.


Senior Vice President 

Senior Vice President 

Franklin Freeman
Senior Vice President 

Bo Heath
Senior Vice President 

John Merritt
Senior Vice President 

Senior Vice President 

Kerri Burke
Vice President 

Assistant Vice President 

Sarah Wolfe
Assistant Vice President