NCGA Week in Review

March 13, 2020

Pardon Our Dust

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The General Assembly has announced that it will suspend all activity until at least April 1st due to COVID-19. All interim committees and other legislative meetings will be on hold until further notice. Earlier this week, Governor Cooper declared a State of Emergency amid concerns that the virus was spreading across the state. Gov. Cooper explained the main purpose of declaring a State of Emergency is to allow increased flexibility to respond to the crisis and allocate funds when needed. It can also speed the disbursement of supplies and provides more flexibility to both the Department of Health and Human Services (DHHS) and the Emergency Management Division of the Department of Public Safety (DPS). Additionally, the declaration of a State of Emergency protects consumers against price gouging. The confirmed number of cases across the state has risen to at least 15, and is expected to grow as testing kits become more readily available. The General Assembly hopes to reconvene for short session on Tuesday, April 28th at 12:00PM noon, but there have been rumors of the start date being pushed back due to the virus. During the short session, bills eligible for consideration will include bills affecting the budget, local bills, pensions and retirement, constitutional amendments, redistricting bills, bills responding to redistricting litigation, and bills vetoed by the Governor. There could also potentially be federal disaster relief funds eligible for allocation in response to the virus outbreak.

Revenue Laws Study Committee

The Revenue Laws Study Committee met on Wednesday, March 11th to receive an update from Department of Revenue officials on modernizing the state’s local sales tax distribution, a draft proposal on the taxability of online education materials, reviewing expiring tax and finance provisions, various sales tax changes and the review of technical, clarifying, and administrative changes. The sales tax redistribution issue wound up not being discussed, but committee members still had plenty of material to review.

Denise Canada of the legislative Fiscal Research Division presented the committee with a bill draft entitled Clarify Digital Property Tax/Online Learning.The proposed bill, if introduced and passed, would clarify exemptions of certain digital education programs from a digital sales tax involving the sale of intangible goods. Legislators debated whether or not the provisions of the bill would have a negative or positive revenue impact for the state.The committee will continue to study the bill before short session. 

The committee was also presented with expiring tax and finance provisions with fast-approaching sunset dates. Members were presented with a series of recommendations and suggested actions for these expiring tax issues including: 

  • Compromise of liability
  • Property classified and excluded from the tax base
  • Reduced assessment for improved property in certain roadway corridors
  • Contribution of tax refund to the Cancer Prevention and Control Branch of the Division of Public Health
  • Special Assessment District (SAD) Revenue Bond authority

Members heard more on the Various Sales Tax draft bill. The bill would would, among other things, provide some relief to auctioneers and estate sale companies in light of recent law changes. It also would expand the scope of the sales- and-use tax exemption for equipment purchased by a large fulfillment facility that maintains an investment of $100 million in the state employs a minimum of 400 North Carolinians.

Finally, the committee heard the bill draft part II for Revenue Law Technical, Clarifying, and Administrative changes. Among other items in the bill, one part would allow for nonprofits and local government entities to benefit from taxes collected in their local jurisdiction.


Joint Legislative Oversight Committee on Health and Human Services

The Joint Legislative Oversight Committee on Health and Human Services and the Joint Legislative Oversight Committee on Medicaid and NC Health Choice both met on March 10th. DHHS Mandy Cohen addressed both committees to give them an update on what the state is doing to address the COVID-19 outbreak. The Governor has put together a formal task force that includes government leaders and private health partners to address to containment of the virus. Secretary Cohen told the committee that the state is working to ramp up its testing capacity in state labs and that the Department is looking to make changes to its Medicaid policies to allow things such as multiple refills to limit pharmacy visits and eliminate pre-authorization on essential items such as oxygen. The Secretary reassured the committee that the state is working to mitigate the spread of the virus. The Department is still facing financial pressure due to the budget stalemate and has been working to get additional federal relief funds. 

The committee also heard a presentation from the Duke University School of Medicine on telehealth. Members heard the benefits of telehealth, including how patients being treated and monitored at home allows more access to care for those who may not be able to visit in person. The presentation gave members a look at how the healthcare sector is evolving to meet the needs of patients across the state, but also pointed out the issue of the lack of broadband connectivity in some of the most rural parts of the state. The lack of connectivity to give patients access to basic health services and internet is a topic that the General Assembly will continue to tackle as it moves into the short session. 

Joint Legislative Oversight Committee on Medicaid and NC Health Choice

Following the trend of healthcare throughout the day, the Joint Legislative Oversight Committee on Medicaid and NC Health Choice met to receive an update on Medicaid transformation and NC Health Choice enrollment. DHHS explained that while they have not suspended their work on the transformation to managed care, the delay means that they would have to go back to once again review and revalidate enrollment broker readiness, re-hire staff, re-send material, and again confirm who would be eligible for the program. The Department expressed to the committee that while  they did not have a lot of new updates to present,  they are constantly analyzing  and preparing for a  day to go live.

Secretary Cohen addressed the  committee to give them an update on COVID-19 and recommendations to prevent the spread. The state has put out new recommendations around travelers returning to NC from both domestic and international travel. Additionally, the Department is recommending reimbursements for high-risk patients for masks and eliminating pre-authorization for oxygen. Sen. Ralph Hise (R-Mitchell) asked if the state would look into using correctional enterprises to increase production for masks, hand sanitizer, and wipes, a model that other states have begun to move towards to eliminate price gouging. Secretary Cohen acknowledged that every option is open and the state would consider ramping up production if needed. 

Joint Legislative Oversight Committee on Justice and Public Safety

The Joint Legislative Oversight Committee on Justice and Public Safety discussed alternative reimbursement to providers for inmate healthcare, penalties associated  with violations of laws regarding taking shellfish and shellfish aquaculture operations, the use of state funds appropriated in the Survivor Act, and an update of the Raise the Age legislation. 

The Department of Public Safety was asked to look at how they paid contract providers for inmate hospital visits specifically. DPS decided to move toward a Medicare-based rate to mirror what is being done around the country. During the presentation, the Department announced that since using alternative methods they have saved the state $2.5 million. The Department has partnered with UNC Health Care to provide hospital services to inmates at negotiated rates. Committee members were concerned about the budget and whether or not the Department accounted for the fact that one inmate could sue them for lack of proper care. Members were reassured that all inmates were receiving adequate care while using the most cost-efficient method for the state. 

Committee members subsequently heard from Director Vanessa Martinucci of the State Crime Lab. Director Martinucci started in August and was tasked in part to clear the backlog of 16,000 untested sexual assault test kits across the state. The lab has been able to test over 3,000 kits and looks to continue to outsource the older kits to help clear the backlog. Currently, it costs $700 to test each kit. That price is expected to rise to $1,000 due to the rise of demand across the country and associated court costs. Director Martinucci did not express a need for additional appropriations to the committee, but did let them know that the lab will continue to seek grants to help them with their mission. Additionally, to avoid further backlog, the lab has adopted a 45-day test policy, and does not require an accuser’s name for test to be accepted. The lab will release an RFP next week for contract labs to test older kits.

Finally, the committee received an update from Deputy Secretary for Juvenile Justice William Lassiter on Raise the Age Implementation. The legislation went into effect December 1, 2019. Individuals who are 16- and 17-years-old who commit crimes in North Carolina are longer automatically charged in the adult criminal justice system. As a result, the state has faced the challenge of creating and funding new juvenile detention facilities. In January, DPS had 565 new juveniles come into the system. Per policy, every juvenile that enters a facility undergoes an initial mental health screening. DPS found that 70% of the juveniles in their facilities had mental health issues. This prompted a hiring surge of counselors and other health professionals to help stem recidivism. The Department hopes to get an additional $6.7 million as they see an increased need for detention beds across the state. The committee will continue to receive updates on the implementation of Raise the Age in the coming months.

Joint Legislative Education Oversight Committee

Rep. Craig Horn (R-Union) presided over the Joint Legislative Education Oversight Committee March 11th. The committee heard a presentation on computer coding in schools and an update on wireless and broadband access in North Carolina Public Schools, an on computer curriculum instruction by DPI, a presentation on Girls Who Code and some teacher retirement system trends.

Chris Beal, Chief Information Security Officer at the Microelectronics Center of North Carolina, more commonly known as MCNC, presented an overview of the current state of K-12 connectivity and cybersecurity throughout the state. MCNC is a private, non-profit telecommunications provider that owns and operates 4,000 miles of fiber-optic network infrastructure across the state. The public-private partnership provides assistance to K-12 schools and community colleges, and trains them on technology needs and cybersecurity issues. Additionally, Ray Zeiz, Director of Technology Infrastructure at the Friday Institute for Education Innovation updated the committee on the School Connectivity Initiative (SCI). SCI seeks to leverage economies of scale to provide equitable high-quality internet access to every school, regardless of location or economic status, at the lowest cost possible. Legislators voiced concerns on how the state might close the homework gap, considering the widespread lack of technology in homes and ransomware attacks against school districts. The Department of Instruction (DPI) has requested $5 million for cybersecurity needs, and that requested appropriation will be discussed during an April 2nd education connectivity meeting at the Research Triangle Park. 

DPI updated the committee on their computer curriculum implementation. DPI currently has nine policies that they put in place: a state plan for K-12 computer science, a definition of computer science, funding for course support and professional development for teachers, certification pathways, higher institution programs, establishment of computer science positions in state and local education agencies, a requirement for secondary schools to offer computer science courses, allowing computer science to satisfy a core graduation requirement, and allowing computer science courses to satisfy admission requirements at higher education institutions. DPI expects that they will need about $2.5 million to scale and sustain the work. Currently they are working with a $500,000 budget. 

The General Assembly continues to work on increasing teacher pay and providing better retirement models for career educators. Members received an overview on different teacher retirement models across the country. Members voiced concerns over changing the retirement system, but want to look at how to revamp the system to offset benefits for state employees. The Treasurer’s office, which runs 14 of the state’s 16 retirement systems, echoed the sentiment that while change is needed to help teachers, there must be adequate time taken to consider all options and evaluate what best fits the needs of the state. 

Upcoming Legislative Meetings

Meetings cancelled until April 1, 2020