State Budget Negotiations Begin

The House voted not to concur with the Senate’s budget proposal Tuesday in a unanimous vote of 112-0, setting off budget negotiations between the two chambers that could last well into the summer. In rejecting the Senate’s $22.4 billion spending plan, House members were critical of major policy changes senators made in the areas of Medicaid, taxes and economic incentives, among other things. The House Finance committee met Tuesday and Thursday to gain a better understanding of the Senate budget’s finance provisions by reviewing major changes the proposal would make in tax formulae affecting hospitals, non-profits, cities, counties and others. Committee members gave a largely cool reception to the plan, part of which calls for dropping the current $45 million cap on sales tax refunds for non-profits down to just $1 million over five years, in addition to redistributing sales tax revenue among North Carolina’s counties.

Many hospitals and non-profits have been critical of repealing the non-profits cap, saying they rely heavily on sales tax refunds to balance their budgets and the proposed change could lead to the closure of struggling rural hospitals. House Finance chairman Jason Saine (R-Lincoln) said that the Senate wants “serious changes” which require careful study and that he felt members had “a long way to go before we get any sort of agreement.” Review a full summary of the Senate’s tax and economic development provisionshere.

The state’s fiscal year ends next week on June 30 and House Speaker Tim Moore (R-Cleveland), along with Senate President Pro Tempore Phil Berger (R-Rockingham), has already said he feels it is “unrealistic” for members to have a budget in place before then. In the absence of a budget deal, a continuing resolution (CR) would need to be passed to fund state government on a temporary basis until final agreement on a spending plan could be reached. A budget conference committee, made up of appointees from both chambers and charged with ironing out differences between the two bodies is expected to be appointed early next week, though members do plan to take a break for the July 4 holiday, meaning that budget conferees may not formally meet until the week of July 6. Yesterday, it appeared as though the House and Senate were close to agreeing on a CR, but no deal was made. This means that a vote on a CR could come next Monday at the earliest, or possibly Tuesday, the final day of the fiscal year.

Review summaries of each subsection of the Senate budget here and the House budget here.

H372, 2015 Medicaid Modernization Passes House

House Bill 372, 2015 Medicaid Modernization, passed the House on Tuesday with a final vote of 105-6 after previously clearing both the House Health and Appropriations committees. Sponsored by Representatives Nelson Dollar (R-Wake) and Donny Lambeth (R-Forsyth), H372 would permit provider-led entities (PLEs) to bid for contracts and allow them to manage networks of at least 30,000 of NC’s Medicaid recipients. Similar to the Senate proposal, the plan would do away with the state’s present fee-for-service system in exchange for full-risk capitated plans. Within five years of becoming law, 90 percent of Medicaid recipients under H372 would be required to enroll in full-risk, capitated health plans for all physical health services (the final 10 percent, those with the highest-cost needs, would continue to be covered under the current fee-for-service system). A year later, each PLE would have to meet the risk, cost, performance, and quality goals that are in their contract with the state.

H372 will now be sent to the Senate where it will face long odds due to significant differences between the House and Senate Medicaid proposals. Speaking to reporters after Tuesday’s vote, Rep. Lambeth said he had been working on “transformational” legislation that would draw bi-partisan support and keep oversight for Medicaid within the state Department of Health and Human Services (DHHS). 

Read H372 here

State Leaders React to ACA Ruling

The U.S. Supreme Court's 6-3 ruling yesterday in King v. Burwell, upholding federal health insurance subsidies for over 400,000 NC citizens means insurance companies offering subsidized coverage in NC as part of the Affordable Care Act (ACA) will not face the threat of thousands of customers dropping their policies due to lack of subsidies. Speaking to reporters following yesterday’s decision, Insurance Commissioner Wayne Goodwin (D-NC) said he felt the high court, by ending the eminent possibility that the ACA would be eliminated, helped to stabilize the state’s insurance markets and would make it more likely insurers would compete for customers throughout the state. “There will be more insurance companies coming to NC…if more companies enter the market and more people are insured, that will lessen the cost for everyone,” Goodwin said. Currently, just three insurers sell ACA policies in NC and only Blue Cross and Blue Shield offers coverage in all 100 counties.

Governor Pat McCrory (R-NC) has been looking at Medicaid expansion options for the past year, but has declined to offer an opinion on what path the state should take until after the U.S. Supreme Court made a decision. Following yesterday’s ruling, Gov. McCrory told reporters that his administration is looking at the experiences of other states that did expand Medicaid.

Even if Gov. McCrory’s administration did find that expanding Medicaid was right for NC, he could not do it without the legislature’s support, which seems unlikely right now. After yesterday’s ruling, Speaker Moore and President Pro Tempore Berger maintained their skepticism of expansion. President Pro Tempore Berger stated that the state cannot afford the current Medicaid system, never mind an expanded one. Speaker Moore said that “expanding Medicaid is not the right decision,” and also stated that the state is having a hard time controlling the costs of the current Medicaid program in the state.

H255, Building Code Reg. Reform Passes Senate, Sent to House for Concurrence

House Bill 255, Building Code Reg. Reform, passed the Senate Thursday by a final vote of 40-0. Sponsored by Rep. Mark Brody (R-Union), the bill reforms various laws relating to NC building code inspections and creates a council to study the state’s building code licensing and approval requirements. Under the terms of the proposal, building inspections would have to completed in a “timely manner” and include a full report of all items which fail to meet code so that permit holders can make needed fixes. Further, the newly created Building Code Council would be charged with studying the feasibility of streamlining the application process so final permit decisions could be made within 30 days or less. The bill would also raise the threshold for requirement of a building permit from $5,000 to $15,000 to adjust for inflation.

H255 has drawn varied reactions from the state’s construction and building inspection industry, with some expressing concern that the language regarding “timely manner” of inspections is too vague and could result in inspectors falling out of compliance during periods of high demand. Proponents of the measure, however, argue that inspection time frames vary widely in different jurisdictions, something that is a source of great frustration to builders.

The original proposal featured a residential code subcommittee that would serve as part of the larger Building Code Council and whose membership would include an engineer, plumber, heating contractor, fire service representative and electrical contractor. A number of building inspectors spoke out against the creation of the subcommittee on the grounds that it would not feature a representative from the building inspection community. After receiving a favorable report on Wednesday in the Senate Agriculture, Environment and Natural Resources committee, the bill was sent to the Senate floor where Sen. Tommy Tucker (R-Union) offered an amendment to add building inspectors to the residential code subcommittee. The amendment passed, 48-0. H255 will now go back to the House for concurrence with the changes the Senate has made.

Read H255 here

S600, Study/Autonomous Vehicles Passes Senate

A bill which would require the NC Department of Motor Vehicles (DMV) to study how to incorporate driverless vehicles to NC’s roads and highways passed the House Transportation committee on Tuesday. Senate Bill 600, Study/Autonomous Vehicles, asks the DMV for an in-depth examination, due no later than February 1, 2016, of the complications that driverless vehicles might bring and requests detailed analysis on the potential impact the technology could have on the state’s research and development sector, as well as an assessment of any legislative changes needed to prepare for its advent. Bill sponsor Sen. Paul Lowe (D-Forsyth) told committee members that the bill was not reflective of a far-off vision of the future, but represented existing technology. “Driverless cars might not be on our roads today, but within a few years they will be. They are even being tested in NC as we speak,” Lowe said.

DMV Commissioner Kelly Thomas said the study would cost taxpayers no money and indicated that his office had heard from automaker Honda North America, who expressed interest in partnering with DMV on the study to better educate NC citizens on the benefits of driverless technology.

Read S600 here

Bills on the Governor’s Desk

A number of bills passed the House and Senate this week and were sent to the desk of Gov. McCrory for his signature or veto. Those bills include the following:

  • House Bill 148 Insurance Required for Mopeds 
    The legislation requires moped drivers to carry liability insurance to drive on roads and comes in the wake of last year's law, House Bill 1145, Registration for Mopeds, which requires all moped drivers in NC to register their vehicles with the DMV. The registration requirement takes effect July 1 of this year. If H148 becomes law, the new insurance requirement would take effect on July 1, 2016.
  • Senate Bill 286 Regulate the Sale of E-Liquid Containers 
    The bill requires child-resistant packaging and warning labels on liquids used with electronic cigarettes and vaporizers. It also bans the sale of any e-liquid product without the requisite packaging and warning labels. S286 was passed by the Senate 48-0 in April and 106-0 this week by the House.
  • Senate Bill 423 Foster Care Family Act 
    The bill gives foster parents more discretion in deciding whether to allow children in their care to participate in extracurricular activities, such as field trips and sleepovers and provides for greater protections for adoptees. The proposal would also remove laws currently in place that prohibit foster children from getting driver's licenses. It passed the House 118-0 and the Senate 47-0.
  • House Bill 640 Outdoor Heritage Act 
    The proposal allows hunting with shotguns and rifles on Sunday except between the hours of 9:30 a.m. and 12:30 p.m., among other provisions. The bill represents a compromise proposal worked out between House and Senate members that proponents say will ensure Sunday continues to be honored as a day for religious observance.
  • H652 Right to Try Act for Terminally Ill Patients 
    The proposal allows terminally ill patients to try experimental drugs prescribed by doctors, including new medicines and technologies not yet approved by the FDA. It passed the House 118-0 and the Senate 47-0. The bill is modeled after similar legislation already on the books in 21 states.

Bills that Became Law This Week

Gov. McCrory signed a large amount of bills into law this week. Those bills are as follows:

Senate Bill 7 Food Stand Seating & Outdoor Food Service

House Bill 86 Utility Line Relocation/School Board

House Bill 154 Local Governments in State Health Plan

Senate Bill 212 Handgun Standards for Retired Sworn LEO

Senate Bill 301 DOT/Purchase of Contaminated Land.-AB

House Bill 339 Add Fonta/Flora Trail to State Parks System

Senate Bill 478 In State Tuition for Certain Vets/Fed Program

Senate Bill 488 Amend Uniform Interstate Family Support Act.-AB

Senate Bill 596 Protection Against Unconst. Foreign Judgments

Senate Bill 621 Registration Renewal Notice/E-Mail-AB

Senate Bill 682 Modify Sunset Re: Contingent Audits

Senate Bill 716 Mountain Energy Act of 2015

House Bill 812 Grant Recipients Posted on Grantor Web Site

House Bill 836 Election Modifications

House Bill 909 ABC Omnibus Legislation