July 21, 2014

Weekly Update from the NC State House - July 2014: The Senate was busy this week with the Rules committee meeting Tuesday, Wednesday and Thursday mornings to push last minute legislative priorities through the chamber as lawmakers continue to creep towards adjournment...

Maynard Nexsen

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Welcome to the Nexsen Pruet Weekly Legislative Update!

This Week

The Senate was busy this week with the Rules committee meeting Tuesday, Wednesday and Thursday mornings to push last minute legislative priorities through the chamber as lawmakers continue to creep towards adjournment. Budget negotiations also continued to press onward, slowly but surely as the two chambers of the General Assembly inched ever closer to a final spending plan.

In the Senate, a controversial worker’s compensation provision that would have denied medical benefits to illegal immigrant workers was removed from a bill on criminal law changes. Critics argued the piece would have allowed employers to ignore false documentation without consequence and that it would lead to increased medical expenses for all others.

Wednesday, Senator’s Pate (R-Wayne) and Hise (R-Mitchell) unveiled the Senate’s Medicaid reform proposal, followed by a vote in the Rules committee Thursday morning. The Senate Finance committee brought forward the perennial Revenue Laws Technical Changes bill Wednesday as well but has not taken any action on it yet.

A bill to require mopeds be registered and insured also made its way through the Senate this week. The House version of the bill lacked the requirement that operators purchase insurance but the Senate reinserted the provision and passed the bill Wednesday. It now awaits concurrence in the House.

Meanwhile, the House Wednesday held its first voting session since Independence Day which excited some, as the Speaker said last week that he would call the full House back once there was a budget agreement. Instead of a budget, Representatives held a vote to accept the conference report, passing it 74-31, eliminating Common Core in NC. The Governor indicated Wednesday that he did intend to sign the bill.

House Rules Chairman Rep. Moore (R-Cleveland) filed the House Adjournment Resolution Wednesday which has “sine die” adjournment scheduled for next Friday July 25^th. While this may bring some joy to those ready for session to end, remember the Senate Adjournment Resolution, filed in early June, had the General Assembly scheduled to finish June 27^th. We are not too excited yet.

$50,000 a day, but do you care? – WRAL

Rep. Fulghum

Wake County Republicans recently chose John M. Alexander, Jr. to replace Rep. Jim Fulghum (R-Wake) on the NC Senate district 15 ballot, to face former Raleigh Mayor Tom Bradshaw (D-Wake) in the November general election. Rep. Fulghum, who was seeking to succeed the retiring Sen. Neal Hunt (R-Wake) in the Senate has been diagnosed with cancer and withdrew his name from the ballot to focus on his recovery. We wish him a speedy recovery.

Republicans choose candidate to replace Fulghum in state Senate race – N&O

Budget Negotiations

The House scheduled a joint budget conference committee with the Senate for Monday afternoon, to which none of the Senate conferees attended. This was not an encouraging start to the week. Tuesday however, the Senate scheduled a joint budget conference committee to present their latest budget offer, which the House committee members did attend. This followed news of Gov. McCrory having lunch with Senate Pro-Tem Phil Berger (R-Rockingham) and House Speaker Thom Tillis (R-Mecklenburg).

The most recent Senate offer includes an 8% raise for teachers rather than the 11% increase in previous proposals. The most recent House offer would raise teachers’ salaries 6%. The offer would also split the difference between the previous House and Senate proposals for funding of teachers assistants, cutting third grade teaching assistants and providing nonrecurring funding for second grade assistants. Senators also scaled back their proposed Medicaid cuts by over $100 million, reducing the estimated number of aged, blind and disabled Medicaid recipients removed in their previous proposal from 30,000 to 5,000.

House Budget Chair Rep. Dollar (R-Wake) still expressed some concern with the Medicaid funding but indicated they were much closer to a deal. A further concern is the lack of recurring funds for teaching assistants after next year. An option to allow local school districts to use teaching assistant funds to fund full time teachers or teachers’ assistants has been offered as a potential compromise.

House leaders: Budget gulf remains wide – WRAL

Is the key to a budget deal bologna? – WRAL

Medicaid Reform

Senators unveiled their Medicaid Reform proposal H1181 Wednesday and passed it out of the Rules committee Thursday morning. The proposal would:

Remove Medicaid from under DHHS and create a new state agency, the Department of Medical Benefits to oversee Medicaid
Direct DHHS to develop a detailed plan for implementation and present it to the General Assembly by March 1, 2015
Create a 7 member advisory board to oversee the new agency appointed by the House (2), Senate (2) and Governor (3) to serve 4 year terms
Create a Joint Legislative Medical Benefits Oversight Committee for the new agency to report to
Disallow individuals employed by a provider within the previous year from serving on the board
Allow both ACO’s and MCO’s to manage Medicaid
Move to full capitation by 2018

The proposal drew criticism from provider groups, the Sate Employee’s Association, the House, DHHS and the Governor.

Senate moves ahead on Medicaid restructuring – WRAL

NC Senate’s proposal for Medicaid overhaul draws criticism – N&O

Senate Medicaid Plan Relies on Competition – Carolina Journal

Local Sales Tax

H1224, which would cap the sales tax that a local government may levy at 2.5% and would restrict the distribution of the proceeds, is on the Senate calendar for Monday evening. The bill was removed from Thursday’s calendar after a lengthy Senate GOP caucus that took place during the recess. The bill would require voter approval for raising the local-option tax and would also require the local government to determine whether the additional revenue should go to either education or transportation, but not both. This is strongly opposed by the County Commissioner’s Association and other groups, not wanting the counties to be required to choose between education and transportation.

Vote delayed on NC Senate bill that could stop sales tax hike – Charlotte Observer

Revenue Laws Technical Changes

On Wednesday, the Senate Finance Committee offered a PCS to S763 replacing it with Revenue Laws Technical Changes. The PCS offers several technical corrections and clarifying changes to the tax statues. While the PCS was heard by the Senate, no vote was taken. Although nothing appears to be controversial in the current draft, additional provisions may be added. It will take 5 separate legislative days to enact this legislation, so it seems adjournment is at least 5 days away. Some of the proposed changes include:

Clarifies the conditions under which a retailer is or is not liable for the collection of tax on the rental of private residences rented for fewer than 15 days
Makes a technical change that allows North Carolina manufacturers of vapor products to collect the new vapor tax on internet retail sales, while still allowing the manufacturers to apply to the Secretary of Revenue to be relieved of the tax for vapor products shipped to wholesale and retail dealers, when the tax is paid by the wholesale or retail dealer.
Clarifies in the personal income tax statutes that income of a partnership that is apportionable to multiple states is allocated in accordance with the rules of allocation and apportionment, no longer to a ratio.
Clarifies that the exemption for items used to maintain or repair tangible personal property applies to those items used pursuant to a service contract subject to sales tax. If the service contract is not subject to tax, then the item used to maintain or repair the property is subject to tax.
Clarifies that the exemption provisions applicable to fuel also included piped natural gas.