NCGA Week in Review: Long Session Preview

After months of campaigns, the General Assembly will be getting down to business with a new Governor, administration and 24 new legislators. Next Wednesday, the long session, which has no session limits and generally runs six to nine months long, will begin. The bill filing period will also open on Wednesday and will run until March 7^th. During the long session, there are no limitations on what types of legislation can be filed, but bills must cross chambers by April 27^th. The House and Senate will retain the supermajorities they have held in both chambers since 2011 and will be led by House Speaker Tim Moore (R-Cleveland) and Senate President Pro Tem Phil Berger (R-Rockingham). With a Republican supermajority and a Democratic Governor, what is on the forefront of anticipated policy debates? 

McGuireWoods Consulting News

Harry Kaplan Honored with the Order of the Long Leaf Pine

On Tuesday, Senior Advisor at McGuireWoods Consulting Harry Kaplan was honored by Governor Pat McCrory with the Order of the Long Leaf Pine, the highest honor the Governor can bestow. The Order of the Long Leaf Pine is awarded for exemplary service to the state and the community that is above the call of duty. Please join us in congratulating Harry on receiving this outstanding honor!

ICYMI Political News

Governor Appointment

Yesterday, Governor Roy Cooper made his eighth cabinet appointment of ten, appointing Rep. Susi Hamilton (D-New Hanover) to be lead the Department of Natural and Cultural Resources, where she began her career 20 years ago. Hamilton is currently in her fourth term representing Brunswick and New Hanover counties in the House of Representatives and is the CEO of a consulting firm that offers business development services in the Wilmington area.

The Governor also named Reid Wilson to be Chief Deputy Secretary of the Department. Wilson has spent a decade as the executive director of the Conservation Trust for North Carolina. In recent years, Gov. McCrory has shifted responsibilities from the Department of Environmental Quality to the Department of Natural and Cultural Resources, included the Clean Water Management Trust Fund and the Natural Heritage Program, a shift which Governor Cooper referred to in his press release. 

Committee Announcements

On Wednesday, Sen. Phil Berger announced the final set of committee chairs for the 2017-18 biennium:

• Appropriations/ Base Budget:  Sens. Harry Brown (R-Onslow), Brent Jackson (R-Sampson), Kathy Harrington (R-Gaston).
• Appropriations Subcommittee on Agriculture, Natural and Economic Resources: Sens. Bill Cook (R-Beaufort), Rick Gunn (R-Alamance), Trudy Wade (R-Guilford).
• Appropriations Subcommittee on Education/ Higher Education: Sens. Chad Barefoot (R-Wake), David Curtis (R-Lincoln), Michael Lee (R-New Hanover).
• Appropriations Subcommittee on General Government and Information Technology: Sens. John Alexander (R-Wake), Tamara Barringer (R-Wake), Jeff Tarte (R-Mecklenburg).
• Appropriations Subcommittee on Health and Human Services: Sens. Ralph Hise (R-Mitchell), Joyce Krawiec (R-Forsyth), Louis Pate (R-Wayne).
• Appropriations Subcommittee on Justice and Public Safety: Sens. Warren Daniel (R-Burke), Shirley Randleman (R-Wilkes), Norman Sanderson (R-Cateret).
• Appropriations Subcommittee on Pensions, Compensation and Benefits: Sens. Ron Rabin (R-Harnett), Bill Rabon (R-Brunswick), Andy Wells (R-Catawba).
• Appropriations Subcommittee on Transportation: Sens. Jim Davis (R-Macon), Tom McInnis (R-Richmond), Wesley Meredith (R-Cumberland).

To view all Senate committee assignments follow these links:

Senate Appropriations Committees

Senate Committees on Education, Finance, Health Care, State and Local Government, Transportation

Senate Committees on Rules, Judiciary, Commerce, Agriculture

To view all House committee chair assignments, click here.

Long Session Preview

Interim Committee Reports

Twenty-one interim committees met during the period between the end of the 2016 short session and the beginning of the 2017 long session. These committees studied a range of issues and many approved of draft bills and legislative recommendations that will be formally introduced in the coming weeks, including:

• Reforming the state’s tier system for ranking economically distressed counties.
• Reevaluating how transportation projects are selected and funded.
• Revising and strengthening current gang laws.
• Revising the school administrator and teacher pay schedules.
• Expediting the process to approve applicants to become foster parents.

To read more about interim committees, follow these links to read McGuireWoods Consulting’s two part series on interim committees:

NCGA Week in Review: Interim Committees Part One

NCGA Week in Review: Interim Committees Part Two

Redistricting

After redrawing the state’s US Congressional maps in a special session in 2016, the legislature may have to look at redistricting again this year. 

Last August, a three-judge federal district court found that the state’s legislative district maps constituted an unconstitutional racial gerrymander by packing black voters into 28 House and Senate districts. The same panel later ruled that the General Assembly would be required to redraw the maps by March 15 and hold special elections in the fall. This decision was halted by the US Supreme Court last Tuesday while the Court decides whether to act on the legislature’s appeal.

If the Supreme Court decides to take up the appeal, the legislature will not have to redraw the maps until a decision is issued, but if the appeal is not taken up, new maps will be redrawn and a special election may be reordered.

Potential Changes to HB 2?

Shortly before the holidays, the Charlotte City Council, Governor Pat McCrory, and legislative leadership seemed to have reached a deal on the hotly debated law HB 2: Public Facilities Privacy & Security Act, now commonly referred to as the bathroom bill. After the City Council voted to rescind their non-discrimination ordinance, a special session was called by the Governor and the legislature convened, but the legislature adjourned at the end of the day with the bill still intact.

HB 2, as it did in the 2016 short session, will likely have some presence in the 2017 long session. Democrats have ardently fought for a full repeal of the bill, while the Republican Caucus is divided on what action, if any, to take.

Earlier this week, Governor Cooper, whose campaign was centered around repealing HB 2, commented that he has been in continued conversations with House Speaker Tim Moore and Senate President Pro Tempore Phil Berger since the deal fell apart in November, both of whom, have indicated willingness to continue negotiations. Rep. Moore and Sen. Berger are concerned that there is not a strong enough Republican consensus to repeal the bill, but Governor Cooper believes that there are enough votes overall to repeal the bill successfully without the approval of the full caucus.

Tax Reform

Since taking over control of the legislature in 2011, the GOP has enacted a series of policy reforms to encourage business growth in the Tarheel state, including substantial tax reforms. In the coming months, further debate on tax reform is likely and may include discussions on changes to the tax credit/incentive system and lowering individual and corporate income tax rates, prioritizing various mechanisms for economic development. Finance Chairman Sen. Jerry Tillman (R-Randolph) recently commented that the state still has “a ways to go” on tax reform.

Education Reform

During the legislative interim, several committees met and discussed reforms to the state’s education policies. The legislature will likely consider changes to the community college funding formula and the pay structures and schedules for teachers and school administers and other changes to education policy to encourage greater flexibility.  Additionally, the legislature will need to make some changes to state laws to comply with the federal Every Student Succeeds Act (ESSA).

During the interim, the Joint Legislative Program Evaluation Oversight Committee received a report on the current funding formula for NC’s community college system. President of the NC Community College System James Williamson recommended that the state address some recommendations of the report in the long session while continue to analyze and discuss larger reforms to the formula.

Teacher and school administrator recruitment and retention is a priority of many lawmakers and one that was thoroughly examined during the interim. Several interim committees examined the current pay structures for both teachers and school based administrators and have recommended changes to those systems to encourage education professionals. In their report, the House Select Committee on Education Strategy and Practices recommended that the General Assembly revise the school based administrator salary schedule and develop a multi-year plan for increasing teacher pay. This concern is shared by legislative leaders, including Sen. Phil Berger who included raising teacher pay as a priority in his opening remarks last week.

In recent years the legislature has adopted reforms to increase school flexibility and will likely consider issues including allowing local education agencies greater calendar flexibility, expanding the Opportunity Scholarship program and expansion of the Achievement School Districts pilot program.

The General Assembly may also have to implement some changes to testing and accountability statutes to be in accordance with ESSA and will sign off on the final state plan before it is submitted to the US Department of Education. The final regulations for ESSA were released in November and the State Board of Education’s draft plan was issued in December.

Comprehensive Transportation Funding Reform

North Carolina, which is currently the ninth most populous state, is expected to experience significant population growth in coming years, though growth will be uneven with urban areas growing and rural areas experiencing population loss. The state’s transportation policies will be shaped by this knowledge as NC will have to grow to accommodate millions of new residents, students and employees in the coming years while also accommodating rural areas.

This year, reforms to the state’s transportation funding structure are likely including the following bill drafts from the House Select Committee on Strategic Transportation Planning and Long Term Funding Solutions’ final report:

Transportation Megaproject Funding: If passed, this bill draft would establish a Megaproject Fund to be used for transportation projects that exceed $200 million in total project costs and would be separate from the Strategic Transportation Investment law (STI).

State Infrastructure Bank Revisions: Would expand the purposes which State Infrastructure Bank funds can be used for.

STI/ Regional & Division Weighting: Would adjust the formula used for regional and division need transportation projects to give Rural and Metropolitan Planning Organizations and division engineers greater influence in the decision making process.   

Blue Ribbon Committee/ Transportation Funding: Would establish the Blue Ribbon Committee on Transportation Planning and Long Term Funding Solutions, which would include 12 members of the legislature and eight members of the public. 

Annual Regulatory Reform Legislation

Though the annual regulatory reform bill failed in the final hours of the 2016 short session, deregulation efforts are likely in 2017. During the fourth special session of 2016 HB 3: Regulatory Reform Act of 2016 was filed in the House, but never received a committee hearing. The bill was nearly identical to a regulatory reform act that failed to pass in the final hours of the short session. It is likely that the deregulations in HB 3, as well as other possible issues, will be considered in the long session. Sen. Berger expressed this priority saying, “we’ll do even more to simplify outdated, job-killing rules and regulations and foster a better business climate, with the goal of sustaining North Carolina’s strong job growth,” in his opening remarks last week. 

Economic Development Modifications

Economic development is a top priority of the General Assembly and both chambers have explored alternative ways to boost the state’s economy and promote workforce development.

Last year, the legislature considered, but did not pass, several bills concerning the state’s Job Development Investment Grant (JDIG) and the current tier system that is used to rank counties by economic health. In the past, the legislature has considered changing the ranking system and reexamining strategies to assist chronically distressed communities. In general, the GOP favors moving away from incentive based systems and growing a healthier economy through regulatory and tax reforms.

Medicaid Expansion

Under the Affordable Care Act, states are able to expand Medicaid eligibility to include people with annual incomes below 138% of the federal poverty level. Under federal law, the cost of expansion is covered primarily by the federal government. However, it is likely that with the inauguration of President Donald Trump today, the Affordable Care Act is likely to change. 

NC has not expanded Medicaid, but in his first week in office, Governor Cooper announced plans to amend NC’s plan. Under state law passed in 2013, only the General Assembly has the authority to expand Medicaid. A federal judge has issued a temporary restraining order blocking the Governor from expanding Medicaid and a hearing has been set to hear complaints next Friday. The Governor’s plans to expand Medicaid will likely influence executive and legislative debate surrounding health care in the coming year.

Confirmation of Governor’s Cabinet 

Per law passed during the fourth special session of 2016, the Governor’s cabinet appointments will have to be confirmed by the state Senate. Last week, the Senate adopted their rules for the 2017 session which included rules for the confirmation of the Governor’s appointments. The Governor’s cabinet appointees are:

• Secretary of Commerce: Tony Copeland
• Secretary of Administration: Machelle Sanders
• Secretary of Natural and Cultural Resources: Susi Hamilton
• Secretary of Health and Human Services: Dr. Mandy Cohen
• Secretary of Veterans and Military Affairs: Larry Hall
• Secretary of Public Safety: Erik Hooks
• Secretary of Transportation: Jim Trogdon
• Secretary of Environmental Quality: Michael Regan

The Governor has not announced his appointments for the Secretary of Information Technology and Secretary of Revenue.