The North Carolina General Assembly has been hard at work over the last week as the House put together their proposal for the state budget and both chambers faced a fast approaching crossover deadline. Friday, in a 61-51 vote, House lawmakers passed the $23.9 billion budget proposal that is now up for debate in the Senate. The Senate will begin their budget process on Tuesday, May 14, as the Finance committee takes up SB 622: Tax Reduction Act of 2019.

The House held their final floor vote session before crossover on Tuesday and will not hold another voting session again until Wednesday of next week, May 15. The Senate wrapped up their final voting session before the deadline on Wednesday. Both chambers will reconvene for no vote sessions on Monday, May 13, with the House at 12:00PM and the Senate at 7:00PM.

House Budget Highlights

The House sent their proposed version of the state budget over to the Senate last week. HB 966: 2019 Appropriations Act contains a $23.9 billion budget for FY 2019-20, an increase of $689 million from the 2018-19 budget. In the second year of the biennium, the proposal includes a $24.9 billion budget for FY 2020-21, a 4% increase from the FY 2018-19 budget.

$14 billion in the first year and $14.3 billion in the second year of the biennium will be used to fund education related programs throughout the state. Laid out in the education section of the budget, teachers, assistant principals, and school principals would see salary increases at an average rate of 4.6%, 6.3%, and 10% respectively. An additional $30 million in FY 2019-20 and $53.2 million the following year would be used to fund five School Safety Grants: one for school resource officers, services for students in crisis, school safety training, safety equipment in schools, and additional school mental health support personnel. The budget would eliminate the current classroom and teacher supply fund and replace it with a $15 million appropriation annually to establish the Teacher Directed Classroom Supplies Allotment that would allow teachers to use an app to purchase textbooks and other supplies specifically for their classrooms. A provision was also included that would maintain the 15-point grading scale to measure school performance, changing the weighting of the school achievement component to 51% and the school growth component to 49%.

Medicaid Transformation projects will receive a nonrecurring appropriation of $232.9 million in the first year of the biennium and $198.4 million in the second in order to support the efforts of transitioning the state to a managed care system. Additionally, the Health and Human Services portion of the budget allocates $150.2 million and $11.4 million in respective years of the biennium to pay for the runout of claims for individuals transitioning to managed care.

The Department of Transportation will receive $98 million in additional funds for the contact resurfacing of roads and other general maintenance projects. The budget also allocates approximately $58 million in funding for Rail Infrastructure efforts and includes provisions to remove restrictions specific to light rail projects. $15 million recurring dollars from the State Capital and Infrastructure Fund will be used for the GREAT grant program to help bring broadband providers to rural areas of the state.

The budget contains several provisions to change North Carolina’s tax laws. Multistate corporations would be required to calculate their sales based on the percentage of their income that is due to products and services provided throughout the state. Tax and regulatory relief would also be granted to out-of-state businesses conducting disaster related work in North Carolina after a natural disaster, such as Hurricane Florence.

Crossover Deadline

Thursday, May 9, marked North Carolina lawmaker’s crossover deadline, the date by which a bill must pass through one chamber in order to be considered in the other.

The House passed 297 bills through to the Senate prior to the crossover deadline, including:

• HB 77: Electric Standup Scooters which defines exactly what an electric standup scooter is.
• HB 144: Hands Free NC prohibits engaging in distracted driving behavior that results in reckless driving, including the use of a handheld mobile telephone or other handheld electronic device.
• HB 184: Study State Health Plan Design follows the State Treasurer Dale Folwell’s plan to implement changes to the state health plan, which received a great deal of pushback from state employees throughout North Carolina.
• HB 377: Reduce Testing eliminates NC Final Exams and graduation projects for high school students and replaces EOGs for third through eight graders with three interim assessments.
• HB 555: Modernize Medicaid Telemedicine Policies allows DHHS to be reimbursed for telemedicine services performed in-home and covers the delivery of services over the phone or by video call.

On the opposite side, Senate legislators moved over 150 bills to the House for their consideration, including:

• SB 86: Small Business Healthcare Act expands businesses eligibility for Association health plans to include employers under an association that has been established for at least two years, share a common interest, and covers at least 500 people.
• SB 429: Utilities/Water and Wastewater Consumption allows public utilities commissions to adopt, implement, or eliminate a rate adjustment mechanism so long as it is in the best public interest.
• SB 438: Excellent Public Schools Act of 2019 establishes individual reading plans for students below grade level proficiency, establishes local reading summer camps with incentives for retired teachers, and expands the Wolfpack Works program.
• SB 621: Testing Reduction Act of 2019 tasks each local board to education to review the number of tests administered to students and the length of time they are spending on each test.

There are a few exceptions to the deadline, though. Redistricting bills are not required to meet the crossover deadline. Committees on Appropriations, Finance, or Rules are also granted an exception to the rule and are allowed to introduce bills through their committee reports.

Virtual Charter Schools

In 2015, North Carolina lawmakers established a 4-year pilot program for two virtual charter schools; Connections Academy and NC Virtual Academy. Both programs received 4-year extensions until 2023. However, critics of the programs are concerned with the schools performance scores.

Wednesday, in a 25-18 vote, Senate lawmakers voted to remove the cap on the virtual charter schools enrollment number, even though they are considered low performing schools, and enroll students at the 20 percent growth rate that in-person charter schools are granted. Among other changes, SB 522: Various Changes to Charter School Laws removes the maximum enrollment cap of 2,592 students in the schools fourth year of operation and allows the school to increase enrollment by 20% each year. The State Board of Education is allowed to waive the maximum student enrollment threshold once the school has been in operation for four years.

The Charter School Advisory Board met Monday to discuss the pilot-programs enrollment cap. The Board agreed with the legislative changes in SB 522, with members noting that, while the argument can be made that low-performing schools should not be able to increase enrollment at all, if the 20 percent growth rate is how all other public charter schools are being treated, than the virtual pilot-programs should be subject to the same rules.

In the budget proposal passed through the House last week, a $1 billion appropriation was included to fund another virtual learning pilot program for three years. The program is aimed at providing access to quality preschool education for at-risk children. 

Expunction Bill

A unanimous, 43-0 vote in the Senate on Wednesday sent a bill to revise North Carolina’s expunction laws over to the House. SB 562: The Second Chance Act coincides with the state’s Raise The Age legislation, allowing for expunctions of offenses committed prior to the laws effective date. The bill allows for an individual who was charged for a crime, but never convicted, whether the charges were dropped or they were found not guilty, to have those charges removed from their criminal record. Currently, state law requires the individual to hire an attorney in order to get the charges removed. The bill would also allow for non-violent criminal records to be expunged, so long as the individual has completed their sentence and no other charges have been filed against them within the last 10 years.

Upcoming Legislative Meetings

Monday, May 13

12:00PM House: Session Convenes

7:00PM Senate: Session Convenes

Tuesday, May 14

1:00PM Senate: Finance