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NC Legislative Update: June 5, 2017

June 5, 2017

This Week

Lawmakers returned to Raleigh Monday morning with the intention of beginning the budget reconciliation effort through the Conference Committee process.  However, the U.S. Supreme Court temporarily altered that plan as it upheld a lower court opinion that 28 NCGA legislative House and Senate relied too heavily on race in their drawing, and remanded the matter back to the lower court.  Although the order does not specifically require lawmakers to redraw districts immediately, the potential new districts will be a primary focus until they are redrawn.  The goal will be to make as many whole-county and whole-precinct districts as possible, while using partisan statistics to craft the new maps.  When lawmakers drew the 2016 congressional maps they indicated that the maps were indeed a partisan gerrymander, which is currently legal, but is being challenged.  The lower court that made the initial determination on the validity of the districts could now decide as to whether a special election should be held in 2017, rather than 2018 when they are currently scheduled.  Governor Cooper (D) will have no say in the new legislative maps as redistricting bill do not require the Governor’s signature.  Democrats need to pick up 3 seats in the House and 6 seats in the Senate to break the veto-proof majorities.

U.S. Supreme Court throws out North Carolina redistricting ruling – NSJ
US Supreme Court affirms NC legislative districts as racial gerrymanders – N&O
Supreme Court: NC lawmakers racially gerrymandered state House, Senate districts – WRAL

Last Tuesday, the House Finance Committee reviewed the revenue related provisions of the budget, followed by the Pensions & Retirement Committee that afternoon.  The full Appropriations Committee met throughout most of Wednesday, addressing more than 60 amendments. Second reading took the majority of Thursday and lasted late enough into the evening for third reading just after midnight Friday morning. The budget passed the House by a vote of 80-31, with 13 Democrats voting alongside the Republican majority on third reading and one Republican, Rep. John Blust (R-Guilford), voting against it.  The Senate will reject the House proposal and the two chambers will then begin meeting this week in a Conference Committee to resolve the differences between the two versions.  House and Senate leaders are still optimistic that they will adjourn before the 4th of July. 

House OKs $22.9B budget in early morning vote – WRAL
NC House votes 80-31 to approve budget, with support from a few Democrats – N&O

The House gave its final approval to House Bill 310, entitled Wireless Communications Infrastructure Siting, sponsored by Rep. Jason Saine (R-Lincoln).  The bill addresses the permitting of “small cell” technology, which is the wireless infrastructure that is being deployed by providers for “5G” wireless communication.  The bill establishes uniform rules for the location of small cell technologies in the State.

Another bill the House was able to advance through two Committees was House Bill 746, sponsored by Rep. Chris Millis (R-Pender) entitled Omnibus Gun Changes.  The bill contains “constitutional carry” provisions endorsed by 2nd Amendment activists.  It would allow individuals who are 18 or older, US citizens, and not otherwise prohibited by law, to carry a handgun, open or concealed, without a concealed handgun permit.  Current law allows individuals to open carry without a permit, but prohibits the carrying of concealed weapons, including handguns, without obtaining a concealed handgun permit, subject to certain restrictions.  It also allows an individual to carry concealed where open carry is currently allowed.  Individuals would still be able attain a permit for out-of-state reciprocity.  The bill would also allow District Attorneys and Assistant District Attorneys to carry a concealed handgun into a courtroom.  This proposal is expected to be on the house floor this week.

Concealed weapons bill advances in House – N&O
Gun-control groups muster against concealed-carry bill – N&O

House leaders are expected to unveil this week, a Proposed Committee Substitute (PCS) to House Bill 589, entitled Utilities Commission Fees and Charges, sponsored by Rep. John Szoka (R-Cumberland).  The PCS is being touted as a compromise to the Renewable Energy Portfolio Standards (REPS) between stakeholders including House and Senate leaders, as well as renewable energy groups, utilities, and consumer advocacy groups.  Elimination or capping the REPS has been a regular topic of discussion at the NCGA and this consensus bill has potential to address the matter.  The House Energy & Public Utilities Committee is scheduled to debate and vote on the PCS tomorrow morning at 8:30.

NC House members unveil major energy reform bill – NSJ

After passing the Senate Transportation Committee on Wednesday, and the Senate Rules Committee Thursday morning, the full Senate voted Thursday afternoon to kill House Bill 110, entitled DOT/DMV Changes - Megaproject Funding, sponsored by Rep. John Torbett (R-Gaston), by a vote of 44-1.  Most notably, the bill would have established a Megaproject Fund to fund higher cost and larger scale transportation projects.  The bill would have given control over where certain projects were built back to politicians, a practice that was changed several years ago to take the politics out of road construction.

‘Megaproject’ bill killed by NC Senate – Star News

The Senate passed Senate Bill 155, entitled Economic & Job Growth for NC Distilleries, more commonly referred to as the “Brunch Bill”, sponsored by Sen. Rick Gunn (R-Alamance).  Among various provisions loosening several restrictions on distillers, the bill would allow distilleries to sell 5 bottles of bottles of spirituous liquor per year at the distillery to a consumer who takes a tour of the distillery.  It would also allow distilleries to obtain a special event permit to offer free tastings at events.  It gained notoriety as the Brunch Bill due to a provision allowing counties to adopt an ordinance to allow the Sunday sale of alcohol two hours earlier, at 10:00 AM.  The bill passed 32-13 in a bipartisan vote with 10 Democrats voting with 22 Republicans in favor.

‘Brunch bill’ passes NC Senate, moves to the House – WNCN

Lawmakers were victories in the courts last week, after a three-judge Superior Court panel upheld the legislature’s most recent efforts to merge the Ethics Commission, the State Board of Elections, and the oversight of lobbyists into the Bipartisan State Board of Elections and Ethics Enforcement (BSBEEE).  Under the new law, BSBEE would consist of eight individuals registered to vote in North Carolina.  Members would be appointed by the Governor for a two-year term, from lists of nominees submitted by the State party chairs of the two parties with the highest voter registration, in this case four Republicans and four Democrats.  County boards of elections would increase from three to four members. Two members would be Republican and two Democrat.

Legislative leaders win this round in court in power struggle with governor – N&O

A link to next week’s announced Committee calendar can be found here.  A cumulative list of House and Senate bills filed this year, with links, and their current status can be found here.

The House Budget

The House version of Senate Bill 257, the Appropriations Act of 2017, spends $22.9 Billion.  Highlights of the proposal include:

Education

  • Fully funds enrollment growth for K-12, Community Colleges, and the UNC System;
  • Provides funds for 10 new positions at the Department of Public Instruction (DPI);
  • Provides DPI with an additional $300,000 for legal fees;
  • Establishes a joint legislative task force to review how school funding is allotted;
  • Transfers the Apprenticeship program from the Division of Workforce Solutions at the Department of Commerce to the Community College System;
  • Establishes a high achieving student scholarship for up to 4 semesters of free tuition at Community College with a certain GPA;
  • Provides $3 Million for faculty recruitment and retention for the UNC System;
  • Establishes a revamped teaching fellows, forgivable loan program for STEM and special education teachers of $8,250 per-year for 4 years, with one-year of the loan amount forgiven for every year taught in a low-performing school, or one-year of the loan amount forgiven for every two-years taught at schools that have not been identified as low-performing;
  • Restricts out of state students from utilizing the NC Promise program, which lowered tuition for in-state students to $500 per-semester at UNC Pembroke, Elizabeth City State University, and Western Carolina University;
  • Allows senior citizens to audit classes at community colleges or the UNC System with the instructor’s approval;
  • Does not make cuts to the UNC Law School as was proposed in the Senate;
  • Establishes a pilot program for a financial literacy elective course for high school students to teach personal finance;
  • Provides $2.3 million to East Carolina University to construct a new medical education building at the Brody School of Medicine.

Health & Human Services

  • Doubles the money provided for community health centers and free clinics;
  • Provides funding to eliminate the Pre-K waiting list to serve an additional 4,700 children;
  • Reduces single stream funding for the LME/MCO’s by $20.2 Million in recurring funds and $37.4 Million in non-recurring funds;
  • Provides additional funding to address drug overdoses and substance abuse;
  • Earmarks $19 Million from the sale of the Dorothea Dix campus to 7 hospitals across the State for behavioral health services and construction of new beds;
  • Provides funding for Medicaid to transport behavioral health patients by ambulance to an appropriate facility for treatment other than the emergency room;
  • Funds graduate medical education (GME) $30 Million in each year;
  • Does not make deep cuts to the SNAP program as the Senate proposal did, does not eliminate Certificate of Need (CON), and does not contain the balanced billing language from the Senate proposal.

2017 – Senate vs. House Health & Human Services Budgets – NC Health News

Agriculture, Environment, & Natural Resources

  • Eliminates positions in various Departments that have been vacant for more than 6 months;
  • Shifts rural grant funds to the Department of Agriculture and Consumer Services (DACS) for legal fees to challenge the federal Waters of the U.S. provision;
  • Allocates $2.3 million to DACS in nonrecurring funds for the purchase of an airplane for “firefighting and readiness response”;
  • Increases funding for the International Marketing Program in DACS for the enhancement of the State;
  • Provides $900,000 in additional funding for the Tobacco Trust Fund ($900,000) which provides grants to tobacco-related farms and businesses;
  • Transfers $1.1 million from Expanded Gas Products to Agriculture Fund which will be used in part for the Beehive Grant Program;
  • Provides additional $1.1 million to the Agricultural Development and Farmland Preservation Trust Fund;
  • Does not include the level of cuts to the Department of Environmental Quality (DEQ) in the Senate proposal;
  • Provides $850,000 to the Clean Water Trust Fund recurring in addition to $3 million nonrecurring;
  • Provides an additional in $7 million nonrecurring funds to the Parks and Recreation Trust Fund;
  • Provides $5 Million to Fort Fisher to create a new museum and visitor center;
  • Provides $9.4 Million to Western Carolina University for a new energy production facility.

Commerce

  • Provides $12.7 million nonrecurring funds for the Site and Building Development Fund in order to attract major manufacturing employers by supporting site acquisition and onsite preparation;
  • Provides $8.8 Million for the Job Maintenance and Capital (JMAC) Development Fund;
  • Provides for additional funds to the Economic Development Partnership of North Carolina (EDPNC) for both tourism and marketing;
  • Provides $1 Million to the One North Carolina Small Business Fund;
  • Reduces funding for the Job Development Investment Grants based on the estimation of their needs for the following year;
  • Provides $5.8 million in nonrecurring funds to rural grants for local governments in need of infrastructure, building improvements, and demolition that will lead to the creation of new, full-time jobs;
  • Provides $1 Million in nonrecurring funds to aid planning agencies and small businesses with the revitalization of downtown areas.

Justice & Public Safety

  • Allows the Lieutenant Governor to pick 3 State Highway Patrol troopers for a new “executive protection detail” to provide protection for both he and his immediate family. His trooper detail is currently selected by the State Highway Patrol;
  • Provides $250,000 for an opioid pilot program in Wilmington in order to establish a Quick Response Team;
  • Provides $2 million of nonrecurring funds for both local and county law enforcement officers to purchase either body or dashboard cameras.

Transportation

  • Accelerates funding for certain projects;
  • Increases the Highway Trust Fund by 13% in 2017-18 and 15.8% in 2018-19;
  • Provides $81.1 million to various airports throughout the state for capital improvements;
  • Provides $45 Million to modernize the State Ports;
  • Provides $2.5 Million for a pilot program for student transportation for charter schools;
  • Removes a cap on state funding to light rail projects.

Miscellaneous

  • Provides $263 Million to the State’s reserve account of “rainy day fund”;
  • Provides an additional $150 Million for disaster relief;
  • Provides an across the board $1,000 pay increase for State employees in the first year and an additional $1,000 in the second year;
  • Provides a one-time 1.6% bonus for retirees;
  • Funds $325,000 in receipts for a security team to protect the General Assembly’s property.

Finance

  • The House’s tax proposal would reduce revenue by $122 million in the fiscal year beginning in July, and by $234 million in the following fiscal year, the Senate tax cut package reduces revenue by $324 million in the coming fiscal year, and then by $710 million in the following year;
  • The House’s proposal does not lower individual income tax as the Senate bill proposed;
  • For married couples filing jointly, the standard deduction increases from $17,500 to $18,500;
  • Raises the mortgage deduction cap from $20,000 to $22,000;
  • Reduces the franchise tax rate from $1.50 to $1.40 per $1,000, applicable to the highest of the three tax bases: net worth apportioned to the State, book value of property in the State, and 55% of appraised value of property in the state;
  • Creates a new sales tax refund for “rural research and development issues”
  • Repeals the privilege tax for mill machinery and other manufacturing or industrial equipment;
  • Provides a sales tax exemption for fulfillment centers such as Amazon or Walmart for their “distribution equipment”.  Facilities would be required to invest at least $100 million in real and tangible personal property within five years of the first property investment, as certified by the Department of Commerce, and maintain an employment level of 400 people;

Prohibits cities, counties, or water and/or sewage authorities/districts from imposing fees on low-income housing developments in order to allow for expansion of a water and sewer system.

In Other News

Over the weekend, the North Carolina Republican Party elected Chairman Robin Hayes to continue serving as Chairman of the GOP.  Hayes, a former Congressman and former Party Chairman, was appointed by the executive committee to again serve in the role after the 2016 ouster of former Chairman Hassan Harnett. 

Hayes tops Womack for chair of NC Republican Party – NSJ

In the News

A ‘scorecard’ for North Carolina’s redistricting battles – Carolina Journal
Millions in state flood relief money unused as Cooper pushes for more – WBTV
Elections date fix headed for vote – WRAL
Superior Court Judge Andrew Heath to run for Appeals Court – N&O
House panel takes brief budget detour to debate keeping the trust – JLF
Health-care protest leads to arrests at legislative building – N&O
House eyes fees for sex offender registry – WRAL
Your utility bill could go up: Duke Energy Progress seeking 16.7% rate increase – N&O


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. Please feel free to pass this along to your clients or other interested parties, email Kdjones@nexsenpruet.com to be added to the list.

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