Legislative Hostage -Taking/Legislative Update

This has certainly been the week of legislative hostage-taking, unhappy people and bad feelings.

Although the Senate made a mid-week budget offer to the House that looked promising to us, the House's lack of enthusiasm over it does not bode well for adjournment. Aside from the public meetings of the budget conferees most other conference committee reports are being prepared away from public's eye, and even those of some conferees. A conference committee report on criteria for NC's Adjutant General of the NC National Guard was later rejected by the House; we don't often see a brokered agreement fail on a floor vote.

Many bills which have received considerable debate and input during the session have now been yanked from floor calendars to wait it out in Rules Committees, or even Ways and Means. But we're not exactly sure what they're waiting for to spring these bills loose. The House Rules Committee currently has about 130 bills parked and the Senate Rules Committee has roughly double that number.

A new adjournment resolution ending the  2014 session was introduced with adjournment set for next Friday, July 26th but it's the third session-ending bill we've seen this summer.

Congress is preparing for its August Recess but Speaker Tillis, Republican candidate for US Senate in the country's "Senate race to watch" against incumbent US Senator Kay Hagan is tethered to Raleigh. The outcome of this election may tip the balance of power in Washington, yet legislative Republicans aren't making his job any easier.

Jones Street was shocked to see Phil Berger Jr., candidate for US House from the 6th District, popular District Attorney, and son of powerful Senate President Pro Tempore Phil Berger lose his primary election runoff. In a lopsided election, Mr. Berger, who led the crowded Republican field in the May Primary Election lost every county to his opponent, Mark Walker, who will face Democrat Laura Fjeld in November.

If Democrats in Raleigh weren't so unhappy they would be happy.

A few examples of the week's big ticket legislative controversies are below:

LOCAL SALES TAX

On Wednesday the Senate rolled out a new PCS for HB 1224 - Economic Development Changes that added what local government groups were expecting to be additional authority over local taxes but was instead a limitation of those powers.

In additional to making changes to NC's JMAC economic development funding tool, NC counties were expecting additional local sales tax flexibility and instead were presented a new bill section which contained a provision allowing counties to increase local sales tax in increments of 1/4 %, by referendum, to fund education OR local transportation projects, but not both at the same time. The total local sales tax in a jurisdiction must not exceed 2.5%, and the funds cannot be shared with municipalities. This provision proved to be very controversial and the bill was returned to committee for further consideration. We understand that two counties already collect 2.5% local sales tax and so their ability to levy even a voter-approved tax increase would be curtailed.

View HB 1224 here: http://www.ncleg.net/Sessions/2013/Bills/House/PDF/H1224v2.pdf

MEDICAID

The Senate budget position including reducing their proposed trimming of the Medicaid rolls and leaving only $30 million between House and Senate funding levels. Then Senators Hise and Pate rolled out a new plan for the structure and operation of Medicaid and the machine has screeched to a halt - and the screeching you hear is doctors and hospitals objecting to the introduction of managed care providers running our Medicaid system.

Under the proposal provider-led accountable care organizations or managed care organizations would run the state's Medicaid system and pay a flat per patient amount for all care for that patient. A spokesperson representing physicians testified that the additional administrative paperwork related to this approach, should it be enacted, would certainly hurt access to medical care for the poor. Currently nearly 90% of primary care physicians in NC take Medicaid. Florida, which uses this managed care approach have a much lower participation rate.

The House and the Governor have already voiced their opposition to the plan. And we don't need to remind you that this brand new proposal was unveiled two weeks after the Legislature should have adjourned for the year.

Have a look at the Senate's plan here: http://www.ncleg.net/Sessions/2013/Bills/House/PDF/H1181v4.pdf

BUDGET

Still no white smoke. And negotiations seem to now be in the hands of a few until the big items like Medicaid, teacher raises, teacher assistants and state employee pay raises are resolved.

Topics:  Legislative Agendas, Sales & Use Tax, SALT, State Taxes

Published In: Elections & Politics Updates, Finance & Banking Updates, Health Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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