Weekly Update from the NC State House - July 2014: Sightings of the Governor, Speaker, and President Pro-Tem throughout the week fueled speculation that a deal was near with adjournment to follow shortly thereafter...

by Nexsen Pruet, PLLC

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.

Rep. Fulghum

The House Thursday honored the life of Rep. Jim Fulghum, who passed away Saturday evening after a brief battle with cancer, with House Resolution 1277.  North Carolina lost a true public servant and we offer our condolences to his family.

Rep. Fulghum dies after short battle with cancer – WRAL

Dr. Jim Fulghum: Citizen Legislator – Politics NC

Closing In On A Budget

Sightings of the Governor, Speaker, and President Pro-Tem throughout the week fueled speculation that a deal was near with adjournment to follow shortly thereafter.  Saturday, budget negotiations made tremendous progress as House and Senate leadership announced that the framework of the budget had been agreed upon.  Although the details will be worked out over the next few days between subcommittee chairs, leadership announced some pieces of the agreement:

  • Average 7% pay increase for teachers
  • Does not fire any teaching assistants but does take away some flexibility from school districts that have been using those funds to pay for full time teachers
  • $135 million reduction in Medicaid spending

Sparse committee schedules and light session this week should allow time for negotiators to reach a final agreement on the entire budget with a vote possible late in the week.  This agreement comes after it was reported Friday that the previously projected revenue for 2014-2015 is short $200 million as a result of reduction to individual income tax rates.  It is also worth noting that the Governor previously stated that he would veto any budget that uses Medicaid eligibility cuts or that has more than a 6% salary increase for teachers.

State tax cuts costs ballooning- WRAL

NC legislative leaders say they’ve struck a budget deal – N&O

Budget writers reach agreement on framework – WRAL

Budget battle sharpens with veto threat – WRAL (From 7/10/14)

More From Last Week

Senators started last week, readdressing a bill in the Finance committee which included a cap of local sales tax authority.  This bill had a rough road throughout the week but eventually passed.  The bill contained some economic development issues but the sales tax flexibility and cap dominated the debate.  Senators also gave their initial approval to a bill that would overhaul the Medicaid system in North Carolina.  Third reading is calendared for a vote this evening.

The House did not have session until Thursday last week, with the Rules committee meeting that morning to unveil a 55 page omnibus bill entitled Technical and Other Corrections.  This bill makes many technical changes to the law, but also makes a number of policy changes.  The procedural path of this legislation was as controversial as the substantive changes with a contentious vote to suspend the rules to have both second and third readings on Friday.  The bill passed and was sent to the Senate.

The House also addressed H1145, a bill to regulate mopeds.  The House version required only that they be registered with the state.  The Senate committee substitute required that they also be insured.  An attempt in the House to accept the Senate’s version to also require insurance failed in a very close vote.  The bill will now go to a conference committee.

The Senate adjourned Thursday, but the House was in session Friday to address a conference report dealing with charter school modifications and the Technical Correction bill.  The conference report addressed numerous issues, including conflicts of interest, expansion of the number of grades offered, length of renewal, enrollment of single gender schools, public records, and, of course, allowing permanent license plates.  There were several controversial provisions, too.  The Governor also signed legislation to repeal and replace Common Core.

Other legislative priorities that remain in limbo as Sine Die adjournment nears include legislation dealing with the clean-up of coal ash, changes to the revenue laws, and the regulatory reform bill.

Charter school bill loses LGBT protectionsWRAL

Records law applies to charter employees – Star News

Technical & Other Corrections

As signal that the end of session is near, the perennial technical corrections legislation H1133 moved through the House this week and makes both numerous technical and substantive changes to the statutes of North Carolina.  Among other items, some policy provisions of the bill include:

  • Authorizes local confinement facilities to give or sell electronic cigarettes to inmates in smoking cessation programs
  • Delays implementation of electronic vehicle titling by one year until July 1, 2015
  • Delays drug testing for welfare recipients until July 1, 2015
  • Excludes unpublished research of State institutions of higher education from public records laws
  • Provides the same immunity to real property held by spouses in a trust that would be immune if it remained a tenancy by the entireties
  • Amends Tobacco Grower’s Assessment to make clear the assessment is applied to tobacco produced in North Carolina, rather than marketed in North Carolina
  • Requires financial institutions to respond to certain subpoenas within four business days.

The first 17 sections of the bill are recommendations from the General Statutes Commission and are purely technical.  An amendment on the floor removed a provision that would have phased out the Child Fatality Task Force.  The bill now awaits action in the Senate.

Technical corrections bill eliminates Child Fatality Task Force – WRAL

New NC law requiring welfare applicants be tested for drugs delayed – N&O

Medicaid Reform

Senators gave initial approval to their Medicaid Reform proposal H1181 Thursday morning.  The proposal would:

  • Remove Medicaid from 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 to receive the reports
  • 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 has drawn criticism from provider groups, the Sate Employee’s Association, the House, DHHS and the Governor.

NC Senate votes for Medicaid overhaul – N&O

Local Sales Tax

The Senate gave its approval Thursday to H1224 which would cap the sales tax that a local government may levy in North Carolina at 2.5%.  Durham and Orange counties which already levy a local sales tax of 2.75% would be grandfathered.  Four other counties, Forsyth, Guilford, Mecklenburg and Wake currently have the authority to raise their local sales tax from 2.5% to 2.75% but under the proposed bill, that authority would be taken away.  A compromise amendment offered by Sen. Hartsell (R-Cabarrus) would have capped the rate at 2.75% statewide, but the amendment was defeated in a tie vote. 

Counties below the proposed 2.5% would be allowed to raise their tax in quarter percent increments subject to voter referendum, and have greater flexibility.  Senators did remove a provision that was in the bill last week that would have forced counties to choose between using an increase to fund either education or transportation and not both.  The bill now awaits concurrence in the House.

Rural-urban divide rears its head in sales tax debate – WRAL

Senate approves sales tax cap after efforts to raise limit fail – WRAL

2nd Quarter Campaign Finance Analysis

The North Carolina Free Enterprise Foundation released its analysis of campaign finance reports in North Carolina for U.S. Senate, U.S. Congress, NC House and Senate, NC Supreme Court and NC Court of Appeals candidates.

NCFEF Campaign Finance Tracker

In the News

'A Consummate Professional': Lawmakers Celebrate Retiring Special Counsel Gerry Cohen – WUNC

'Dialogue' but no progress on budget – WRAL

Governor, NC Senate Republicans talk about budget – WRAL

Wrangling over teacher pay prolongs 'short' legislative session – The Voter Update

NC senators push for new incentives to encourage relocating businesses – N&O

House rejects moped insurance provision – WRAL

House, Senate differ on moped insurance proposal – Port City Daily

N.C. Film Office on track to grow revenue, productions from last year – Charlotte Business Journal

Gov. McCrory signs bill to review Common Core standards – The Voter Update

Cotham: New NC Senate bill shields salaries of for-profit charter school staff – Charlotte Observer

NC commissioner: Some homeowner insurance rates 'very much a problem' – WRAL

Bill allowing photographs of license plates of drivers pulled by sponsor – Times-News

Patrick Gannon: Actions don’t match words on incentives plan – Rocky Mount Telegram

Longer session tests Tillis, US Senate race – WRAL

Other Useful Links

North Carolina General Assembly

Office of the Governor

North Carolina Center for Public Policy Research
Rankings of Effectiveness, Attendance, and Roll Call Voting Participation for the North Carolina General Assembly


North Carolina Government Efficiency and Reform - Its goals are to improve the efficiency, effectiveness, customer service, and sustainability of our state government by obtaining idea submissions from the citizenry on how to better your state government


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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