North Carolina General Assembly Week in Review

June 9, 2023

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Following both the House and Senate passing their respective versions of the state budget, lawmakers in Raleigh have begun to meet to negotiate a compromise. On Monday, legislative leadership appointed conferees to the conference committee tasked with working out the differences between the two chambers budget proposals, including a bipartisan list of legislators, led by the senior appropriations chairs in each chamber. While negotiations ensue, policy committees have continued to meet to take up local and public bills, sending a handful of bills to the desk of Governor Roy Cooper for action.

Legislators on both sides of the aisle will be busy this weekend as national leaders of both party’s plan to visit North Carolina. Former President Donald Trump, former Vice President Mike Pence, and Florida Governor Ron DeSantis will attend the North Carolina Republican Party’s annual state convention in Greensboro. Meanwhile, President Joe Biden and First Lady Dr. Jill Biden will be in North Carolina to visit service members at the newly named Fort Liberty.

Bills Sent to Governor

Public bills continue to pass out of the legislature, making their way to Democratic Governor Roy Cooper’s desk for action. Governor Cooper has a few options once bills reach his desk. The governor may sign the bill into law, veto the bill, or, if no action is taken on the bill within ten days, allow the bill to become law without his signature. Several bills were sent to the governor this week, including:

SB 299: Reimburse Late Audit Costs with Sales Tax Revenue – authorizes the Local Government Commission (LGC) to withhold a county or municipality’s sales tax distribution if they fail to submit an annual audit report. The withheld amount would be 150% of the audit’s cost. The bill allows the LGC to issue a notice of noncompliance and grants the county or municipality the right to appeal. If the appeal is successful, any withholding would be delayed or returned. The withholding would come from sales tax distributions, not exceeding 5% of the county or municipality’s annual general fund budget. The Department of Revenue must release withheld funds after specific conditions are met. The bill passed the House this week with bipartisan support, 84 to 30, with only some Democrats voting in opposition.

SB 729: CBBC Working Group Changes – amends the Teachers’ and State Employees’ Retirement System (TSERS) contribution-based benefit cap law. The bill addresses disputes related to the application of the anti-pension spiking law and exempts public school units from paying additional contributions for the retirement of a public-school employee if certain conditions are met. The bill also authorizes the State Treasurer to resolve pending legal actions and prohibits interception of state appropriations for unpaid contributions related to retirements between July 2021 and June 2023. Additionally, the bill allows the Treasurer to designate legal counsel for benefit program administration, including private counsel, despite current limitations and requirements. The bill passed both chambers unanimously.

SB 331: Consumer Finance Act Amendments – is part of the North Carolina Consumer Finance Act and makes several changes to Article 15 of GS Chapter 53. SB 331 amends the statutes to clarify that interest on loans made under the section will not be compounded but rather computed and paid only as a percentage of the unpaid portion of the amount financed. Additionally, the bill amends the statutes to reduce the interest rate on loans not exceeding $12,000 from 36% to 33% for the portion of the balance not exceeding $4,000. The bill also adjusts the calculation of interest to be applied to the unpaid portion of the amount financed and caps the 1% fee charged for loan amounts over $3,000 at $150. Furthermore, it removes a proposed new section related to inflation adjustment and reduces the cap on late fees from $20 to $18 in GS 53-177. Proponents of the bill argue that it provides easier access to capital for individuals with lower credit scores. The bill passed the House this week with bipartisan support, 87 to 28, with some Democrats voting in opposition.

Sports Wagering

North Carolinians are one step closer to being able to legally bet on sporting events after state lawmakers gave final approval to HB 347: Sports Wagering/Horse Racing Wagering this week, sending the bill to Democratic Governor Roy Cooper for his signature. The governor has previously indicated his support for legalized sports betting in North Carolina, though he has not commented specifically on the final version of HB 347. A similar bill passed the Senate in 2021, but that measure failed in the House by a single vote, forcing lawmakers to renew their efforts during this year’s session.

If enacted, the bill would permit any North Carolinian who is at least 21 years of age to place online wagers through an approved list of operators as early as January 8, 2024. The North Carolina Lottery Commission would issue up to 12 interactive sports wagering licenses, which would be valid for five years. Operators would be required to pay a one-million-dollar application fee, a one-million-dollar renewal fee, and a one-million-dollar fee to transfer a license.

A key point during the bill’s negotiations was the revenue that will be generated for the state from sports wagering. The House proposed a 14% tax on gross wagering revenues, but the Senate raised the rate to 18%. The House agreed with the Senate changes this week when they gave the bill it’s final vote of approval in the General Assembly.

Some legislators have expressed concerns that the taxation portion of the bill could be challenged within the court system. A state constitutional amendment approved by voters in 2018 caps North Carolina’s maximum personal and corporate income tax rate at 7%. HB 347 includes a caveat that maintains if one provision of the bill is found to be unconstitutional, the rest of the bill will not be affected.

After expenses, legislative analysts estimate the state would bring in $71 million from sports wagering annually by 2028. The revenue the state is expected to generate after paying for expenses is as follows:

  • $2 million annually for the Department of Health and Human Services to address gambling addiction.
  • $1 million annually to North Carolina Amateur Sports to fund grants to local governments and nonprofits to expand opportunities for youth sports participation through sports equipment and upgrades to public facilities.
  • $3.9 million ($300,000 each) to support the athletic departments at Appalachian State University, East Carolina University, Elizabeth City State University, Fayetteville State University, North Carolina A&T, North Carolina Central University, UNC-Asheville, UNC-Charlotte, UNC-Greensboro, UNC-Pembroke, UNC-Wilmington, Western Carolina University, and Winston-Salem State University.
  • $1 million to the North Carolina Heritage Advisory Council for grants to assist youth teams travel to events or attract events to North Carolina.

All remaining revenue will be split between the state’s General Fund and the newly created North Carolina Major Events, Games, and Attractions Fund which will be designed to bring in large events to the state.

Members on both sides of the aisle opposed the bill, arguing it would increase gambling addictions and harm families. However, proponents of the bill, including Republican leaders in the General Assembly and Governor Cooper, argue that North Carolinians are already wagering bets on sports with no financial benefit to the state. Proponents also argue that legalizing sports wagering will help bring accountability and regulation to the industry.

The bill passed the House this week by a final vote of 69 to 44, with both Democrats and Republicans voting in favor and in opposition. Last week, the bill passed the Senate in a similar, bipartisan vote of 37 to 11.

Local Elections Bills

This week the General Assembly made numerous changes to areas across the state as to how different local elections would be ran. The bills made changes to partisan elections, local electoral and residency districts, and the terms of office. The following bills advanced through the legislature this week:

HB 31: Rowan-Salisbury Board of Educ. Filing Period – would change the election method for the Rowan-Salisbury Board of Education from nonpartisan to partisan and alter the process for filling vacancies on the Board, beginning in 2024.

HB 66: Board of Education Elections – would change the Catawba County Board of Education, Hickory City Board of Education, Newton-Conover City Board of Education, and the Polk County Board of Education so that now their elections will be partisan instead of nonpartisan. While other election bills went through committees with little disagreement, HB 66 brought some heated debate about how Buncombe County Board of Education members would be elected. Current board members discussed how these changes would cost the county lots of money to pay for redrawing districts and would only allow someone to vote for the person that represented their district.

HB 99: Wake Co. Board of Comm. Elections – would add two new board members to the Wake County Board of Commissioners so the number of seats would go from seven to nine. Along with the addition of the new seats, the members would have staggered terms. The bill was a result of negotiations between the Wake County Board of Commissioners and Representative Erin Pare (R-Wake) and has been applauded by members for being a bipartisan effort.

HB 174: W-S/Forsyth Bd. Of Ed./Rural Hall Even-Year – would create staggered terms for members of the Winston-Salem/Forsyth Board of Education, starting in 2024.

Upcoming Legislative Meetings

Monday, June 5

3:00 PM: House Session
3:00 PM: Senate Session

Tuesday, June 6

10:00 AM House: Banking
1:00 PM Senate: Commerce and Insurance

Wednesday, June 7

8:45 AM House: Finance, Subcommittee on Annexation
9:00 AM House: Finance
10:00 AM Senate: Health Care