July 7, 2014

Weekly Update from the NC State House - July 2014: As budget hostility between the chambers seemingly settled down Wednesday afternoon, the eerie end-of-season feeling began to loom the halls of the General Assembly...

Maynard Nexsen

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Welcome to the Nexsen Pruet Weekly Legislative Update! The Nexsen Pruet Public Policy team provides attorneys and clients with a newsletter summarizing the week's activities and conveying the inner workings of the legislative process and state government in Raleigh.

Thank You

As we commemorate our nation’s freedom with parades, fireworks, BBQ and sweet tea, we at the Nexsen Pruet Public Policy Team would like to take a moment and thank our brave men and women who serve each of us every day. As we reunite with our families and friends, we will celebrate their courage and sacrifice and the courage and sacrifice of their families. Thank you for laying your lives on the line to protect ours and for preserving our freedoms which we hold so dear.

This Week

As budget hostility between the chambers seemingly settled down Wednesday afternoon, the eerie end-of-session feeling began to loom the halls of the General Assembly. Earlier in the week, Senate Pro-Tem Phil Berger (R-Rockingham) announced that best case scenario for adjournment was late July. That, or even later seemed all too likely as of Wednesday morning, following banter over the “mini-budget” and the Senate not scheduling any committee meetings. But Wednesday, Senate leaders scheduled a public budget conference committee with the House, which was proposed as a possibility last week and appears at face value, to have eased the negotiation process.

Speaker Tillis (R-Mecklenburg) announced Wednesday evening that the House was done with committee meetings as well and that next week’s floor sessions would all be “skeleton sessions” with no votes until a budget deal is reached. The House also moved their versions of the coal ash clean-up legislation and the Medicaid reform legislation through the chamber this week. House members worked through Thursday to get the coal ash legislation to the Senate for concurrence, meanwhile Senators left town and went home to their districts Wednesday afternoon.

Other notes: Governor McCrory signed the hemp oil bill that passed the legislature last week. The embattled NC TRACKS program, which has stalled millions of dollars in Medicaid payments to providers, was implemented one year ago Tuesday. DHHS sent out a press release praising the efforts of the program thus far, which can be found here. It’s doubtful that many providers sent happy birthday cards.

Budget

Monday evening, the Senate used an uncommon procedural move in handling the House’s “mini-budget”, but then again, the “mini-budget” itself is not a common method of funding the state. Sen. Apodaca (R-Henderson), the Rules Chairman of the Senate, returned the House’s serve and volleyed S3 back across the rotunda for further consideration, without a vote.

The legislature is constitutionally required to balance the state’s budget and according to Sen. Apodaca, the “mini-budget” was out of balance. Upon receiving the message from the Senate, House Rules Chairman Rep. Moore (R-Cleveland) Tuesday in a similar fashion, returned the bill back to the Senate, saying Senators had “failed to follow their own rules”. The bill now sits in the Senate where Sen. Apodaca said that he “might just put it in the trash can”.

Then Wednesday, it seemed as if the last few weeks of budget tension was only imagined as the House and Senate abruptly changed positions and held a very civil and public conferee discussion moving towards compromise on the full budget. Some public give and take signaled the two chambers were getting closer, especially on Medicaid spending which has been the biggest hindrance to progress in the budget talks. Things seem to be getting back to normal, for better or worse, as negotiations between budget leaders will continue through the weekend and into next week in private. Speaker Tillis told House members that it would not be necessary for most of them to be in Raleigh next week and legislators would be given at least 48-hour notice to return for the budget vote. He also indicated that once they return, it should take about three days before adjournment. A list of conferees can be found here

Senate & House break stalemate, move closer to N.C. budget deal – The Voter Update

Late Budget From NCGA Nothing New – Carolina Journal

Senate swats House 'plan B' budget – WRAL

NC budget talks by lawmakers, McCrory turn feisty – WRAL

McCrory demands a Senate vote on education spending plan – N&O

Medicaid Reform

The House and Senate both agree that reform in the Medicaid system is necessary, however the approach each chamber visualizes for that reform are at odds. Both chambers agree that Medicaid should move towards capitation, although the Senate plan would move much more quickly, with full capitation as early as 2015.

The House continued their work on their Accountable Care Organization model of Medicaid reform this week, moving the bill, H1181, unanimously Wednesday through the full Appropriations Committee and then onto the floor that afternoon, where it passed second and third reading unanimously as well. The bill directs DHHS to develop a detailed plan, with significant provider input, to implement the system transformation and report back to the General Assembly by March 1, 2015.Some of the provisions include:

• Retain DMA under DHHS
• Designate the management of Medicaid services to provider led Accountable Care Organizations (ACO’s)
• Transition Medicaid providers from fee-for-service to capitation
• Study creating a pilot program for the intellectually and developmentally disabled (IDD) population to be managed by an LME/MCO to coordinate both their mental and physical care.

The Senate philosophy still revolves around an HMO model and any action on this bill in that chamber will likely strip the House version entirely. It is still unlikely an agreement in the near future on the direction of Medicaid reform will be reached.

Coal Ash

The House began hearings on the Senate coal ash plan, S729, Tuesday which would set regulations for the clean-up of coal ash in North Carolina. Wednesday, the House introduced a PCS to the Senate version that was largely the same and moved the legislation through the Environment and Finance committees that day. The bill was then brought to the floor for second reading that afternoon where it eventually passed 85-27after a lengthy debate that extended well into the evening and a number of attempted amendments. The House came in Thursday morning for third reading before heading home to their districts for the 4th of July weekend. The bill now awaits action in the Senate where we anticipate it will be sent to a conference committee.

Should the bill pass in its current form, North Carolina would adopt the most environmentally responsible restrictions regarding coal ash ponds in the country. The bill would:

• Establish nine member commission for clean-up oversight
• Require the Commission determine whether entity responsible for the spill should bear the cost of clean-up and prohibit rate increases to customers to fund it and prevents the entity form requesting a rate increase until January 2017
• End the disposal of wet coal ash
• Requires the entity to provide an alternative source of drinking water to residents whose wells have been found to be contaminated, within 24 hours
• Designate new ash be recycled for beneficial use or put in lined facility
• Set 15 year tiered deadline to close existing ash ponds and requiring “high risk” sites be closed by 2019
An attempt to require the responsible entity and its shareholders to pay the costs of clean-up without raising rates, rather than leaving that decision up to the Commission, failed as it did in the Senate.

House gives revised coal ash plan preliminary approval – WRAL

NC House, After Heated Debate, Tentatively Approves Coal Ash Bill – WUNC

N.C. House gives initial OK to coal-ash bill – Charlotte Observer

NC vs Cities

Rep. David Lewis (R-Harnett) went On the Record last weekend on WRAL to discuss the moves the state's government has made to limit the power of cities. A link to the video can be found here.

In Other Words…

Sen. Berger released a statement on the House passage of their mini spending plan, “The Senate stands ready to negotiate a fair compromise, but we want to give teachers more than a five percent raise and cannot accept unrealistic Medicaid estimates that create an unbalanced, unsustainable budget.”