Last week, North Carolina lawmakers formally adopted a state budget for the current fiscal biennium. The budget, HB 259: 2023 Appropriations Act, includes an average 7% raise for state employees and educators over the next two years, and a one-time 4% cost-of-living adjustment for retired state employees. Additionally, the budget lowers the state’s personal income tax from 4.75% to 3.99% by 2026. The budget also provides nearly $2 billion in water and sewer grants to local governments and expands North Carolina’s Opportunity Scholarship program which provides vouchers to parents who send their students to private schools. Perhaps most consequential though, the budget formally allows the Department of Health and Human Services to begin the process of expanding Medicaid under the Affordable Care Act. On Friday, Democratic Governor Roy Cooper announced he would not veto the budget bill, instead allowing it to become law without his signature.

Legislators are not scheduled to return to Raleigh for votes for a few more weeks, but in the meantime, members are beginning the process of redistricting, as required by recent court orders. Throughout the week, legislators who oversee redistricting in both chambers held public forums in Elizabeth City, Hickory, and Raleigh to hear from residents. Maps for the legislative and congressional districts have not yet been publicized, but Senator Ralph Hise (R-Mitchell) said during one of the sessions that legislators are aiming to have a plan for congressional districts the week of October 9. Currently, Democrats and Republicans both represent seven of the state’s fourteen congressional districts, but Republicans are highly anticipated to pick up several more seats through the upcoming redistricting process.

Additionally, House Speaker Tim Moore (R-Cleveland), who previously announced that he would not seek reelection to another term as speaker, announced that he would not be running for his House seat again in 2024 either. Speaker Moore announced that he plans to finish out his term as a member of the legislature and as Speaker, continuing to serve through the end of the short session next spring. Speaker Moore remains undecided on what will be next for him in 2024.

Regulatory Reform

Although the state budget passing last week generated the most news coverage, the General Assembly also adopted their annual regulatory reform bill after months of deliberation. The bill, HB 600: Regulatory Reform Act of 2023, is a comprehensive piece of legislation that aims to amend state regulations across various sectors, from water protection and agriculture to energy and construction. Representative Dennis Riddell (R-Alamance), who typically sponsors the bill every year, spoke on the House floor last week in support of the annual regulatory reform process, saying it is one of the reasons North Carolina has been rated as the best state in the nation for business in several high-profile news publications.

The 46-page bill includes a plethora of sections dealing with various industries, local government policies, and state regulations. Most of this year’s bill deals with agriculture, energy, and stormwater management, and several provisions included in bills that passed one or both chambers earlier in the year also made their way into the final version of HB 600, including:

Section 1: Water Supply Watershed Protection Changes

• Modifies the ability of property owners to voluntarily elect to treat stormwater from preexisting development or redevelopment for the purpose of exceeding allowable density by changing how they treat the stormwater.

Section 2: Stormwater Program Changes

• Adjusts rules concerning stormwater management, sets clearer guidelines on redevelopment projects, introduces new submission options for stormwater permit applications, and makes changes to the conditions under which the Department of Environmental Quality (DEQ) would rescind stormwater permits.

Section 3: Amend Stormwater Fee Considerations

• Introduces the ability for stormwater control measures in use by a property to influence the variation in stormwater fees.

Section 4: Exemption from Requirement of Post-Construction Stormwater Rule

• Expands exemptions for certain "public linear transportation projects," potentially including those as part of a "common plan of development."

Section 7: 401 Certifications for Dredging Projects or Energy Transmission

• Standardizes DEQ's process for applications related to dredging and energy transmission projects, setting strict timelines for approvals and public comment periods. Recent reports have asserted that this section may make it easier for the MVP Southgate project, which would be an extension of the Mountain Valley Pipeline in Virginia and West Virginia, to enter North Carolina.

Section 8: Environmental Management Commission (EMC) Review

• Mandates a review by the EMC to ensure water quality standards for certain pollutants are based on sound science and protect public health.

Section 9: 1,4-Dioxane in Drinking Water

• Directs DEQ to assess the health risks of 1,4-dioxane in drinking water while also examining technological solutions to remove it from wastewater.

Section 10.5: Prohibit Dredging Moratorium Periods Not Required by Federal Law

• Prohibits DEQ from imposing certain restrictions on dredging activities unless otherwise required by federal law.

Section 15: Clarify Certain Environmental Permitting Laws Applicable to Agricultural Activities

• Simplifies the permit process for those managing animal waste, focusing on reducing overlapping requirements. Many environmental groups and legislators voting against the bill opposed this section, arguing that pathogens from the decomposition of dead animals could harm groundwater.

Section 18: Wastewater Design Flow Rate Modifications

• Establishes new standards for wastewater flow rates concerning newly developed dwelling units.

Section 19: Prohibit Disposal of Lithium-ion Batteries in Landfills

• Bans the disposal of lithium-ion batteries in unlined landfills and introduces restrictions for solar panel disposal, directing the disposal towards lined landfills and approved facilities.

Section 25: Commissioner of Agriculture Supply Chain Powers

• Authorizes the Commissioner of Agriculture to develop and implement and implement emergency measures and procedures to help mitigate threats to or a disruption of the agricultural or food supply chains.

Section 27: Prohibit Counties and Cities from Regulating Certain Online Marketplaces

• Bars counties or cities from regulating the operation of online marketplaces and from requiring online marketplace platforms provide user information unless mandated by a subpoena or court order. The term "online marketplace" encompasses entities that offer a platform for services through online mediums and facilitate transactions between users.

Section 31: State Ownership of Health Information Exchange Network Data

• Mandates that patient identifiers created by the Health Information Exchange (HIE) Network for the integration of identity date into the HIE Network be shared with the North Carolina Government Data Analytics Center (GDAC) and the Department of Health and Human Services. This section also clarifies that these identifiers are not deemed public records.

Section 34: Information Technology Procurement Changes

• Allows the North Carolina Department of Information Technology to fund its procurement activities through a combination of administrative fees.

Section 40: Clarify Reservation of Water and Sewer Capacity for Proposed Charter School Facilities

• Authorizes local school boards to reserve water and sewer capacity for a proposed charter school construction for up to 24 months, provided the relevant public water or sewer provider has the necessary capacity.

HB 600 passed with bipartisan support, however, most Democrats, in addition to one Republican, voted against the measure. Representative Deb Butler (D-New Hanover) criticized the bill, stating it represented "yet another loss for North Carolina’s natural environment."

Representative Jimmy Dixon (R-Duplin), who frequently champions farmers and the agricultural industry, rebutted claims by Democrats, saying the “overwhelming majority of the family farmers engaged in livestock operations… raise their children, their grandchildren, and their great grandchildren [on those farms].”

Governor Cooper has not yet indicated what, if any, action he will take on the bill. After the state budget bill passed, the Governor stated he would not sign or veto it but would instead allow it to become law without his signature. If the Governor does veto HB 600, Republicans would have to corral all of their members to vote in favor of overriding the veto, as they have already done several times this session.

Upcoming Legislative Meetings

Monday, October 2

1:00PM: House Session
4:00PM: Senate Session