The Senate needed a little more time to put the finishing touches on its budget, so we didn’t get to see it this week.  We’re now expecting it to be released on Monday and passed by the Senate by the end of the week. 

Veto Override

On Thursday, the House overrode the Governor’s veto of SB 2 – Magistrates Recusal for Civil Ceremonies, first approving an often-criticized motion precluding debate before the vote was put to the members. The Governor and House Leadership had been jockeying against one another for members’ support since the May 28th veto, with a margin so close that both sides were taking constant attendance. The final vote of 69 to 41 was a three vote cushion for the override with notable divergence from a party-line vote.  Three Republicans supported the Governor: Rick Catlin of New Hanover County, Leo Daughtry of Johnston County and Paul Tine (former Democrat) of Dare County.  Three rural Democrats voted with the Republican majority to override: William Brisson of Bladen County, Charles Graham of Robeson County and Ken Waddell of Columbus County – these Democrats had previously supported the bill.

Economic Development

The Senate has at last unveiled its economic development plan which includes lowering personal and corporate income taxes and expansion of the sales tax base.  The Senate stripped the language from the economic development bill backed by the House and Governor and inserted new language for its plan, which was presented to the Senate Commerce Committee on Wednesday.  No votes have been taken yet.

Some highlights of the plan include:

  • Reduction of corporate income tax rate to 4% effective January 1, 2016; 3% effective January 1, 2017
  • Repeals the privilege tax on banks
  • Phase-in of single sales factor over three years
  • Reduction of the franchise tax rate to $1.00 per $1,000, effective in 2017
  • Reduction of personal income tax rate to 5.5% in 2016
  • Expansion of sales tax base to include repair/maintenance services, pet car/veterinary services, and advertising services
  • Phase-down of the nonprofit sales tax refund
  • New formula for local sales tax distribution to give more to rural counties
  • Cap on total local sales tax rate at 2.5%

A final economic development bill will result from a compromise between the House and Senate on the competing plans.  

The Senate’s proposed committee substitute for HB 117 can be found here: http://www.ncleg.net/documentsites/committees/senate2015-67/06-10-15/PCS%20for%20H117.pdf

A summary of the plan can be found here:http://www.ncleg.net/documentsites/committees/senate2015-67/06-10-15/Summary%20of%20Plan%20Components%20for%20PCS%20H117.pdf

Medicaid Reform  

Another issue that the House and Senate have differing plans for is Medicaid reform.  While we’ve been hearing that the Senate budget will include a Medicaid reform proposal to allow private managed care companies to compete with provider-led organizations, the House has decided to move its Medicaid reform bill that excludes managed care companies.  HB 372 – 2015 Medicaid Modernization – received a favorable report in House Health Committee and now heads to House Appropriations.  Supported by the North Carolina Hospital Association, NC Medical Society, and the Department of Health and Human Services, the bill would transition the Medicaid program from fee-for-service to full-risk capitated health plans operated by provider-led entities to manage and coordinate the care over the course of five years.  Private managed care companies do not have a role in this framework.

The two chambers were unable to reach a compromise last year on Medicaid reform, but both insist that reform is imperative.  This long session might really live up to its name this year!

Residential Design Controls

SB 25 – Zoning/Design & Aesthetic Controls – has been approved by the legislature and sent to the Governor for his signature.  The new law will prohibit cities and counties from adopting regulations controlling building design elements for one- and two-family dwellings.  This would include:

  • Exterior building color
  • Type or style of exterior cladding materials
  • Style or materials of roof structure or porches
  • Exterior nonstructural architectural ornamentation
  • Location and architectural styling of windows or doors
  • Number, type, and interior layout of rooms

Exceptions include if the dwellings are located in historic districts, where regulation is substantially related to applicable safety codes, and where regulations are a condition of participation in the National Flood Insurance Program.