This Week 

A budget agreement was unveiled late Monday evening that spends $21.734 Billion, an increase of 3.1% from the previous fiscal year. Chief budget writers reached a tentative agreement Friday and spent the weekend cleaning up the remaining technical aspects. Leadership in both chambers presented the deal to their caucuses Monday morning. The Conference Committee for the budget was made up of 82 of the House’s 120 total members including 19 Democrats. The Senate had 32 Conferees, all of whom were Republicans. A majority of Conferees from both the House and Senate sides approved the final deal behind closed doors Monday afternoon and the budget was released to the public late that evening. 

NC legislators release 429-page budget bill; a look at a few highlights – N&O

The Senate began the process immediately, holding second and third readings on Tuesday and Wednesday. It ultimately passed the Senate in a bipartisan vote of 37-13 with Sen. Clark (D-Cumberland), Sen. Smith-Ingram (D-Edgecombe) and Sen. Smith (D-Columbus) voting with Republicans on third reading. The House however has a rule that requires a budget bill to be available to the public for two days before any action can be taken. Rep. Floyd (D-Cumberland) offered a motion Tuesday to suspend the House rules allowing a vote on the budget Wednesday and Thursday. The vote on the motion was 62-41, which was not enough to meet the two-thirds threshold to suspend the rules. 

NC House rejects plan to speed up budget vote – N&O 

Budget picks up Democratic votes as it clears Senate – WRAL

The House voted on the budget Thursday evening and just after midnight Friday morning, the last day before the Continuing Resolution was set to expire. The final vote count was 81-33 with 11 Democrats joining Republicans in voting for the budget. Governor McCrory (R) announced his support of the bipartisan budget Thursday and signed it into law this morning.

21 NC House conservatives back budget deal – N&O 

Some NC House Democrats back budget deal – N&O 

House OKs $21.7B budget deal – WRAL 

McCrory signs NC budget after House gives final approval – WNCN

While the House was working on the budget, the Senate began addressing legislation in the Rules Committee. One bill in particular that drew some attention was House Bill 20. The bill began the day as “Reegan’s Rule”, encouraging healthcare providers to educate parents on the warning signs and symptoms of Type I diabetes in toddlers. Without notice, a Proposed Committee Substitute (PCS) added several other provisions to the bill, including allowing the now closed Belhaven and Yadkinville hospitals, to bypass the State’s Certificate of Need (CON) laws and reopen. It also would eliminate the Certificate of Public Advantage (COPA), which both restricts Mission Hospital from expansion, but allows protection from antitrust laws. The House sent the bill to the Rules Committee and the bill’s fate going forward is unclear.

Committee gives nod to bills helping Belhaven hospital, laying groundwork for Graham statue – WRAL

Rules Chairman Sen. Apodaca (R-Henderson) warned members of the Committee to be prepared to meet several times leading up to adjournment. The House and Senate will likely remain in session another week or two to pass stalled legislation. Historically the waning days of session are associated with late nights, Proposed Committee Substitutes, and potentially controversial legislation. Items that have been agreed on but have not yet passed include Medicaid reform, economic incentives, moving up the presidential primary and the bond package.  Sen. Apodaca announced there would be a Finance Committee meeting on Monday afternoon where Senators will be presented with the bond package. Conferees for both Medicaid reform and the NC Competes Act signed Conference Reports Thursday and both bills are expected to be heard early next week. Speaker Moore (R-Cleveland) said that the two chambers had agreed to hold all primaries in March instead of holding a separate presidential primary. He also announced that he and Sen. Berger (R-Rockingham) had agreed to a tentative adjournment date of September 30th and that next week, members should expect to work through Saturday as the legislature nears adjournment.

What’s next? Lawmakers on a whirlwind week – Jones & Blount 

NC leaders want to move all 2016 primary elections to March – N&O

Legislation in the News: 

Bill redefines sex education 'expert' – WRAL 

N.C. charter school oversight change gets final legislative OK – News & Record 

State Senate OKs bill to clamp down on cheating on tax and labor laws – N&O 

NC Senate backs Billy Graham statue for US Capitol – Citizen-Times 

Buffer restrictions in, bike lane restraints out in bill – WRAL

What's in the Budget? - Conference Report

Links to news articles on the final budget: 

Money for lawsuits, special needs savings among ongoing stories linked to budget – WRAL 

NC budget details: Some teacher increases, major tax changes – WNCN 

General Assembly passes final NC budget – Citizen-Times 

Transportation

  • Ends transfer of money from the Highway Trust Fund to the general fund, allocating $216 Million each year towards road construction
  • Imposes $500,000 limit on State funds for light rail projects
  • Raises various DMV fees roughly 30%
  • Increases highway use tax on certain commercial vehicles
  • Gives DOT authority to plan and build additional toll roads and bridges
  • Establishes DOT report program, requiring the Department to fix minor problems, such as filling potholes, within two business days after a complaint is filed
  • Eliminates 29 specific positions at DOT and gives discretion to the Department to select an additional 21 positions the budget mandates it to eliminate

Legislature to Durham-Orange light rail: Stop dead in your tracks – N&O 

Legislative leaders squelch light rail, boost roads and bridges – N&O 

Education 

  • Increases base teacher pay from $33,000 to $35,000
  • Maintains funding for teacher assistants with spending flexibility in year one but removes flexibility in year two
  • Funds drivers education for the biennium
  • Increases funding for opportunity scholarships by $14 Million, which is the voucher program established to aid students from low income families who attend private school
  • Reduces funding for UNC system by approximately $18 Million
  • Provides an additional $3 Million to Elizabeth City State University for improvements to technology and to enhance recruitment
  • Provides $8 Million to the Brody School of Medicine at East Carolina University to stabilize the medical school’s budget deficit
  • Increases tuition for Community Colleges from $72 to $76 per credit hour

State budget retains monies for teacher assistants, driver education – WNCN 

Budget expands private school help for low-income families – N&O 

Health & Human Services 

  • Discontinues State funding for Planned Parenthood
  • Provides $225 Million in nonrecurring funds for the newly created Medicaid Transformation Fund
  • Increases funding for three-way psychiatric beds by 7%
  • Funds new mental health treatment units in 8 prisons
  • Increases the age that children may remain in foster care to 21
  • Does not make changes to the State’s Certificate of Need laws

Plan includes health care changes – Winston-Salem Journal 

Planned Parenthood targeted in budget – WRAL 

Natural & Economic Resources 

  • Retains the State’s renewable energy portfolio standards (REPS)
  • Provides $500,000 for shale gas exploration
  • Transfers the State’s park system, zoo, aquariums and the Natural Sciences Museum from the Department of Environment & Natural Resources (DENR) to the Department of Cultural Resources, forming a new Department of Cultural & Natural Resources and a new Department of Environmental Quality

DENR sheds attractions under budget – N&O 

Budget reshapes state agencies – N&O 

N.C. budget opens door to new fees at state parks – Winston-Salem Journal 

DENR could get $500,000 for shale analysis, if N.C. budget is approved – Winston-Salem Journal 

Justice & Public Safety 

  • Increases funding for court operations by 11.4% the first year and by 20.1% the second year
  • Increases funding for interpreters, expert witnesses, and juror fees by 31.3%
  • Provides funding for 5 new business court judges
  • Provides$1.8 Million for the planning and implementation of the eCourts initiative
  • Funds pay step increases for assistant and deputy clerks, magistrates and highway patrolmen
  • Moves the Capitol Police from its own independent force and places it under Highway Patrol
  • Provides $4 Million to fund outside counsel for current and pending litigation costs in legal challenges against the State.

Budget funds mental health reforms in some prisons – WRAL 

Various Tax Changes

  • Phases in single sales factor apportionment over 3 years beginning in 2016 and includes a study to review market based sourcing
  • Cuts corporate tax rate from 5% to 4% in 2016 and if revenue targets are met, to 3% in 2017
  • Cuts personal income tax rate by 5.759% to 5.499%
  • Increases standard deduction beginning in 2016 by $500, from $15,000 to $15,500 for married filing jointly
  • No change in distribution model for existing sales tax revenues
  • Broadens sales tax base to include repair, maintenance and installation services, revenues from which are earmarked to benefit 79 of the State’s suburban and rural Counties
  • Restores unlimited medical deduction
  • Restores historic preservation tax credit
  • Maintains unlimited charitable deduction
  • Maintains cap on sales tax refund for nonprofits at $45 Million
  • Allows State’s 35% renewable energy tax credit to sunset at the end of the year

 N.C. killing tax credits, but mandates for renewable power remain – CBJ 

New sales tax on services would benefit only rural counties – N&O 

NC budget bill includes provision to spur restoration of historic buildings – News & Herald 

Business owners concerned about more taxes in NC budget – WNCN

Miscellaneous

  • Provides one-time $750 bonus to all State employees
  • Establishes new cabinet level Department of Military & Veteran’s Affairs
  • Establishes new cabinet level Department of Information Technology
  • Increases the State’s Saving Reserve Account by $200 Million, bringing the balance of that account to roughly $850 Million
  • Provides $30 Million in nonrecurring funds for film grant fund for each year of the biennium
  • Provides $1 Million for study of beneficial reuse of coal combustion residuals

Budget compromise includes broader 'terrorism exemption' to public records law – WRAL 

Eugenics victims get another payout in budget conference report – Jones & Blount 

State budget maintains funding for N.C. Biotechnology Center and Wake Forest Innovation Quarter – Winston-Salem Journal 

Lights! Camera! Action! - N.C. legislators approve $60M in incentives to fuel film industry – TBJ

Medicaid Reform - Conference Report

Conferees reached an agreement Thursday on House Bill 372, legislation that reforms the State’s Medicaid system among other provisions. This bill will likely be adopted by both chambers next week.

  • Creates a new Division of Health Benefits (DHB) to administer Medicaid, retaining it under the Department of Health & Human Services (DHHS)
  • Gives lawmakers confirmation powers over the Governor’s appointment to oversee the Division
  • Moves the state to capitated, full-risk contracts one year after CMS approval
  • Allows both Managed Care Organizations (MCO) and PLE’s to bid on an RFP to manage the State’s Medicaid population, defining them under the category of Prepaid Health Plans (PHP’s)
  • Allows 3 statewide contracts to be awarded to PHP’s and up to 10 regional contracts which are limited to PLE’s. PLE’s may bid on more than one regional contract provided the regions are contiguous
  • Phases in LME/MCO’s, which manage mental health in the State, 4 years after the capitated PHP contracts begin
  • Keeps dental Medicaid as the lone carve out remaining fee for service
  • Establishes Joint Legislative Oversight Committee on Medicaid and Health Choice to oversee and review budgetary, financial, administrative and operational aspects of DHB
  • Gives DHHS full authority to write waivers and State Plan Amendments (SPA), but must notify the Oversight Committee and post the amendment publicly online no fewer than 10 days before submission

North Carolina to privatize Medicaid – N&O 

Compromise reached on how to privatize Medicaid – WRAL 

NC lawmakers to address Medicaid reform in new bill next week, officials say – WNCN

Economic Incentives - Conference Report

Conferees reached an agreement Thursday on House Bill 117, the NC Competes Act. This bill will likely be adopted by both chambers next week. 

  • Job Development & Investment Grant (JDIG) modifications:
    • Increases the available funds in JDIG to $20 Million per calendar year with no high yield project
    • Provides additional $15 Million in flexibility to attract high yield projects ($500+ Million in investment/1,750 jobs) bringing maximum JDIG availability per calendar year to $35 Million
    • Extends program three years to January 1, 2019
    • Requires tier three counties to have local government participation in recruitment of the project and to have offered additional incentives to be eligible for JDIG funds
  • Requires local match for One NC fund on a tiered requirement: 3 State dollars for 1 local dollar for tier 1, 2 State dollars for 1 local dollar for tier 2, and an even local match for tier 3
  • Makes various tax changes for data centers and aviation

Compromise state incentives bill pending, officials say – Charlotte Observer 

Incentives cap for N.C. urban areas removed from compromise bill – CBJ

In Other News

Former Raleigh Mayor Charles Meeker (D) officially announced his campaign for Commissioner of Labor. Current Labor Commissioner Cherie Berry (R) has served in the role since 2000 and is expected to run for reelection. Read more here from the N&O.