2017 Session

After 23 weeks of session, lawmakers adjourned the 2017 long session of the North Carolina General Assembly on June 30th.  The Adjournment Resolution passed by both bodies reconvenes the legislature on August 3rd, September 6th, and potentially on November 15th for various reasons. It also sets May 16th, 2018 for lawmakers to reconvene for their short session. When lawmakers reconvene on August 3rd, among other matters, the parameters of the session provide that lawmakers may address any vetoes from the Governor, as well as several unresolved Conference Reports. Additionally, if the courts do not require lawmakers to draw new legislative districts prior to November 15th, lawmakers will reconvene on that date for a legislative redistricting session. A hearing has been scheduled in U.S. District Court for Thursday July 27th. Prior to adjournment, Sen. Berger (R-Rockingham) and Speaker Moore (R-Cleveland) appointed Sen. Ralph Hise (R-Mitchell) and Rep. David Lewis (R-Harnett) to Chair their respective chamber’s Redistricting Committee.

Hearing on NC redistricting set for later this month – NSJ

The following bills in Conference Committee are eligible when lawmakers return in August:

House Bill 56 – Amend Environmental Laws

House Bill 90 – NC Truth in Education

House Bill 162 – Amend Administrative Procedure Laws

House Bill 403 – Behavioral Health and Medicaid Modifications

House Bill 482 – County Commission Role in School Building Acquisition

House Bill 770 – Amend Environmental Laws

Senate Bill 16 – Business & Agency Regulatory Reform Act of 2017

Senate Bill 99 – Report Certain CTR Data/Auto Insurance Accuracy

Senate Bill 335 – Study/Fair Treatment of College Athletes

Senate Bill 582 – Agency Technical Corrections

Senate Bill 628 – Various Changes to Revenue Laws

Senate Bill 656 – Electoral Freedom Act

Since the legislature adjourned for more than 10-days, lawmakers are permitted to raise funds from lobbyist principals and their Political Action Committees between now and when they reconvene in August.  They are prevented from doing so during session. 

Loophole lets lawmakers take campaign cash with legislation still pending – WRAL

Future of mental health service management stuck in legislative conference – Carolina Journal

A link for the list of the remaining 88 bills pending on the Governor's desk can be found here.  A link for the list of the 113 bills that have become law of the 1,612 total bills filed, can be found here.  The Governor has until July 30th, 30-days after the legislature adjourned, to sign, veto, or let a bill become law without his signature, for legislation pending on his desk.

So far through 2017, Gov. Cooper (D), has vetoed seven bills, five of which have been overridden by the legislature.  He vetoed the two remaining bills following the legislature’s adjournment.  These bills are subject to an override vote when lawmakers return in August and September, as well as any of the remaining 88 bills awaiting his action that he chooses to veto.  The Governor has vetoed the following bills so far this year, with an (*) indicating an override:

*House Bill 100 – Restore Partisan Elections/Superior & District Court

*House Bill 239 – Reduce Court of Appeals to 12 Judges

*Senate Bill 68 – Bipartisan Board of Elections & Ethics Enforcement

*House Bill 467 – Agriculture & Forestry Nuisance Remedies

*Senate Bill 257 – Appropriations Act of 2017

House Bill 576 – Allow Aerosolization of Leachate

House Bill 511 – Game Nights/Nonprofit Fund-Raiser

Notable Legislation

House Bill 142 – Reset of S.L. 2016-3 (House Bill 2)

This law was a compromise between the Governor and legislative leaders to reset the controversial 2016 law commonly referred to as “HB2” or “the bathroom bill”, which put NC in national and international headlines.  Discussions regarding a compromise continued for over two-months and delayed nearly all other substantive legislation.  Negotiations finally broke through the day before the NCAA’s deadline to remove NC from consideration for events through 2022.  The compromise sharply divided both the Republican and Democratic caucuses in each chamber and drew opposition from various influential interest groups on both the left and the right.  The bill repeals House Bill 2.  It also preempts regulation of access to multiple occupancy restrooms, showers, or changing facilities by any State or local government, except in accordance with an act of the General Assembly.  In addition, it prohibits a local government from enacting or amending an ordinance regulating private employment practices or regulating public accommodations until after December 1, 2020.  The State has since recovered numerous sporting events. 

House Bill 589 – Competitive Energy Solutions for NC

Amends various laws relating to energy policy, creates a competitive bidding process for new renewable energy facilities, and authorizes leasing solar panels owned by third parties for both rooftops and community projects.  One major reform included in the bill involves the State implementation of the Public Utilities Regulatory Policy Act of 1978 (PURPA).  Part of the reform includes aligning the definition of a small power producer in State law with that of federal law.  The bill also helps to create standard contracts for small power producers.  Additionally, it includes an expedited review of interconnection of swine and poultry waste to energy projects of 2 megawatts or less, contrary to current law, while allowing the adoption of rules to establish standards for projects of 10 megawatts or less.  Under the bill, the North Carolina Policy Collaboratory at UNC would be required to study whether or not energy storage can provide value to North Carolina, based on job creation, customer savings, value to the grid, and capital investments among other things.  Also included in the bill is an 18-month moratorium on wind farm permits in the State. The moratorium temporarily bans the consideration of applications and the issuance of permits for both wind energy facilities and wind energy expansions. Further, the wind energy section of the bill directs the General Assembly to study the effect of wind farms on military operations in the State.  The bill did not pass the House with a veto-proof majority and it now awaits action from the Governor.

Cooper will decide immediate fate of proposed wind farms – Carolina Journal

Senate Bill 155 – ABC Omnibus Legislation

Sponsored by Sen. Rick Gunn (R-Alamance), the law makes a number of alcohol-related changes, the most notable of which permits local governments to authorize the sale of alcohol at 10:00AM on Sundays, two-hours earlier than current law, for restaurants and retail locations.  Among the other numerous changes, the bill also allows the holder of a distillery permit to sell up to five bottles of spirituous liquor per year, up from one bottle, at the distillery to each consumer who takes a tour.  The bill also includes tax compliance and reporting provisions for breweries and distilleries.  In addition, it establishes a special event permit to allow distilleries to give free tastings, allows the sale of “crowlers” by retail permittees, and clarifies that breweries are allowed to provide free tastings on tours and are authorized to sell other alcoholic beverages in their taprooms with a proper permit.  Gov. Cooper signed the measure into law and several local governments have already adopted ordinances permitting earlier Sunday sales.

Senate Bill 615 – North Carolina Farm Act of 2017

• The perennial Farm Bill, sponsored by Sen. Brent Jackson (R-Sampson), makes a number of changes to the various agricultural laws of North Carolina, including:
• Requires the Agriculture and Forestry Awareness Study Commission to determine any updates needed to the Handlers Act. The Handlers Act addresses unfair practices by handlers of fruits and vegetables. Also, the bill requires the Commission to study the advisability of providing property tax abatement to aging farm machinery;
• Requires the Environmental Management Commission (EMC) to classify facilities for the purposes of exempting additional facilities from Control and Prohibition on Odorous Emissions protocol;
• Adds grazing fees for livestock, and the sale of bees or products derived from beehives other than honey to all eligible categories for gross income;
• Clarifies what constitutes abandoned livestock, and further clarifies what action can be taken by the owner;
• Clarifies the transfer of authority of administering the Forest Practice Guidelines for the purposes of the Sedimentation Pollution Control Act from the Department of Environmental Quality to the Department of Agriculture and Consumer Services;
• Allows a building or structure used for agritourism to constitute a bona fide farm purpose, if the farm has previously met the requirements for both farmer sales tax exemption, and eligibility in the present use value program. “Agritourism” includes weddings among other private and public events;
• Eliminates the exemption allowing counties to adopt zoning regulations governing swine farms previously allowed for the public’s health and general welfare.
• Authorizes the sale of wine at farmers markets;
• Disqualifies agricultural property on which solar energy electric system is located from present-use value classification, when the energy generated is not used for the sole benefit of the property itself;
• Exempts the requirement of a professional engineer to close hog lagoons, as previously required by Chapter 89C of the General Statutes (Engineering and Land Survey).

Farm bill with anti-union language signed by Cooper – N&O

Senate Bill 68 – Bipartisan State Board of Elections and Ethics Enforcement

The law, currently being challenged by the Cooper administration, consolidates the powers and duties of the State Board of Elections and the State Ethics Commission, and the Secretary of State’s oversight of lobbyists, into a single board.  A three-judge panel ruled in favor of the Governor regarding a lawsuit over lawmakers’ first attempt to create the board.  This new law retains the Governor’s authority to appoint the members and the Chair of the board, but would still require a bipartisan 4-4 split, and would require the Governor to select members from a list provided by each of the two largest political parties.  A judge has allowed the board to move forward, but Gov. Cooper has yet to appoint board members as he appeals the ruling.

With elections board vacant, Cooper wants NC Supreme Court to block board designed by GOP – N&O

House Bill 467 – Agriculture and Forestry Nuisance Remedies

Sponsored by Rep. Jimmy Dixon (R-Duplin), lawmakers overrode the Governor’s veto of this legislation 74-40 in the House and 30-17 in the Senate.  The law limits the amount of compensatory damages awarded in a private nuisance action against an agricultural or forestry operation to the fair market value or fair rental value of the plaintiff's property.  The law, which will likely receive a legal challenge, was opposed by environmental interests and supported by agricultural interests.

House Bill 310 – 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 being deployed by providers for “5G” wireless communication.  The bill establishes uniform rules for the location of small cell technologies in the State.  The bill awaits action from the Governor.

House Bill 155 – Omnibus Education Law Changes

Creates various changes to education laws in North Carolina.  Changes include conforming changes to the career statuses of teachers in accordance with the North Carolina Supreme Court Decision pertaining to teachers who had already attained the status.  Additionally, the bill focuses on studying both student health issues and the expansion of computer science classes under the direction of the Superintendent.  The bill also includes delaying the implementation of certain policies, including the delay of developing and training in accordance to the School-Based Mental Health Initiatives.

House Bill 527 – Restore/ Preserve Campus Free Speech

Requires the Board of Governors to work on various policies involving free expression on their campuses.  The Board of Governors would conduct this work by forming a committee on free expression, and providing an annual report to the Board of Governors, General Assembly, and the Governor.  Currently the Board of Governors have only adopted a policy that “supports and encourages freedom of inquiry for faculty members and students,” alongside other broad language allowing the institutions to create their own policies through compliance with the First Amendment.  There are no statutes that actually address free speech within the University of North Carolina school system.

Senate Bill 338 – Disaster Recovery Act

Designates $1,000,000 in disaster relief funds as a result of various natural disasters across the state including, Hurricane Matthew, Tropical Storms Julia and Hermine, and the western wildfires. The bill apportioned a majority of the funds to housing needs, the State Emergency Responses and Disaster Relief Fund, and the Department of Agriculture and Consumer Services, Division of Soil and Water Conversation.

Senate Bill 285 – Equal Representation for Asheville

Sponsored by Sen. Chuck Edwards (R-Henderson), this legislation mandates that the City of Asheville adopt six districts, drawn by the City Council for the 2019 election by November 1, 2017 or the NCGA will draw the districts.  Legislation breaking the City Council of Asheville into districts, which currently elects its council at-large, has incurred previous legal hurdles.  Asheville currently has a ballot referendum for the voters regarding the matter this election cycle, which takes place on November 1, 2017.  Proponents of the measure argue this will expand the geographical footprint of Asheville’s City Council, as the Council is regularly elected from a few dense parts of the city. 

Senate Bill 410 – Marine Aquaculture Development Act

The bill seeks to create a fish farming industry off the coast of North Carolina by leasing anywhere from 100 to 1,500 acres of the State’s sounds as well as the Atlantic Ocean.  The bill now awaits action from the Governor.

Central Staff of the NCGA released a document showing 2017 laws that have passed so far this year, that become effective over the next 6-months.

2017 Legislation with Effective Dates of July 1, 2017 through January 1, 2018 – NCGA

Left on the Table

A substantially larger number of bills failed to pass than those that did pass, in fact the majority of them never even moved.  Many of the bills that had action but did not cross the finish line were also high profile, news making, and sometimes sweeping proposals.  Although, nothing in the NCGA is every really dead, and several measures are still eligible.  Notable items that had traction, but ultimately failed to pass or make it to conference before the session adjourned include:

• Redrawing district maps for District Attorneys, and Superior Court and District Court judges;
• An Article V Convention of the States to make amendments to the U.S. Constitution;
• Legislation loosening restrictions on billboards and outdoor advertising;
• Beginning impeachment proceedings on NC Secretary of State Elaine Marshall (D) over allowing undocumented immigrants to become notaries public;
• Constitutional Amendment limiting eminent domain;
• Constitutional carry of concealed firearms without a permit;
• Voter ID modifications;
• Repeal or reform of Certificate of Need (CON);
• A Constitutional Amendment preserving the right to hunt and fish;
• $1.9 Billion bond measure for new school construction;
• The regulation of fantasy sports;
• Establishing a Megaproject Fund for larger scale, high-cost transportation projects.

Legislative session filled with hits, misses – WRAL
No voter ID revival before lawmakers left Raleigh – N&O

2017 State Budget

The legislature overrode the Governor’s veto of Senate Bill 257, the Appropriations Act of 2017, which spends $23 Billion, $100 Million more than either chamber’s original proposal.  With a $580.5 Million surplus, lawmakers increased this year’s spending by 3.1% from the previous fiscal year, and put an additional $323 Million into the State’s reserves, bringing that total to $1.8 Billion.  The proposed tax reductions, which are not scheduled to be in effect until 2019, would reduce overall State revenues by $530 Million.  Forecasts project that revenue growth in coming years will be sufficient to cover the proposed cuts.  It also provides across the board $1,000 salary increase for State employees, an across the board 1% cost of living adjustment (COLA) for retired state employees, and eliminates retiree lifetime health benefits for new State employees hired after January 1, 2021.

Reviewing North Carolina’s FY2017-19 Budget – John Locke Foundation

House Bill 7, entitled LRC/Strengthen Savings Reserve, which also passed this year, mandates that the General Assembly continue to strengthen the State’s “rainy day fund” in future budgets by transferring 15% of each fiscal year's estimated revenue growth to the savings reserve.

House Bill 528, entitled Budget Technical Corrections, made various technical changes and clarifications to the budget.  The changes include, removing a requirement to include building security as a part of a plan to improve school cybersecurity, and cutting $100,000 of the funds awarded to Caldwell County for a bookmobile.  Further, the legislation eliminated $1.3 million of the original $1.5 million awarded to the Museum of Natural Science for an upgrade to their dinosaur exhibit. The technical corrections did not include any alterations to approximately $10 Million in cuts made to the Attorney General’s Office. As a result, the 30-day notice required before a layoff has already begun for many of the lawyers in the office.  This bill still awaits action from the Governor.

Highlights of the 2017 State Budget include:

Education

• Fully funds enrollment growth for K-12, Community Colleges, and the UNC System;
• Increases teacher pay on average by 9.6% over the biennium;
• Reduces targeted funding to the Department of Public Instruction (DPI) by 6.2%, or $3.2 Million;
• Provides DPI with an additional $300,000 for legal fees;
• 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 $1 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;
• Reduces funding for the UNC Law School by $500,000;
• Provides $1 million in funds for advanced planning of a new business school building at  UNC-Chapel Hill

Health & Human Services

• Provides funding over the biennium to reduce the Pre-K waitlist, serving an additional 3,525 children, or 75% of the waitlist;
• Reduces single stream funding for the LME/MCO’s by $31.5 Million in recurring funds and $55.4 Million in non-recurring funds;
• Adjusts the budget to reflect LME/MCO intergovernmental transfers on a recurring basis in each year of the biennium to fund a portion of the State's Medicaid spending for behavioral health services;
• Provides additional funding to address drug overdoses and substance abuse;
• Earmarks $17 Million from the sale of the Dorothea Dix campus to designated hospitals across the State for behavioral health services and construction of new beds;
• Funds graduate medical education (GME) $30 Million in each year;
• Eliminates funding provided to establish a residency program at Cape Fear Valley Medical Center;
• 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.

Agriculture and Natural and Economic Resources

• Allocates $2.3 Million in nonrecurring funds to the Department of Agriculture and Consumer Services (DACS) for the purchase of an airplane for “firefighting and readiness response”;
• Provides $500,000 in funds to the Department of Agriculture to construct a warehouse for storing foam sprayers in response to a potential avian flu outbreak;
• Increases funding for both the International Marketing Program and the Domestic Marketing Program for the enhancement of marketing opportunities of North Carolina agricultural products;
• Provides additional $900,000 to the Tobacco Trust Fund;
• Provides an additional $2 Million will be given to the Agricultural Development and Farmland Preservation Trust Fund;
• Reduces the net appropriations for the department of Environmental Quality (DEQ), making the revised net appropriations $77.0 million for fiscal year 2017-18, and $76.8 million in the following fiscal year;
• Reduces funding for DEQ to use for the university energy centers to $400,000;
• Eliminates various positions both vacant, and not vacant within DEQ;
• Provides $1 Million to implement a required algaecide trial in Jordan Lake, despite DEQ deciding not to pursue the trial;
• Provides funding for the Clean Water Management Trust Fund (CWMTF) for funding water pollution issues, $18.3 Million in FY 2017-18, and $14.3 Million in FY 2018-19;
• Reduces funding for the Wildlife Resource Commission by 4.4% in FY 2017-18 and 8.4% in FY 2018-19, based in part on positions that have been vacant for more than 12 months.

Commerce

• Provides revised net appropriations for the Job Maintenance and Capital (JMAC) Development Fund is $8.8 million in funding for the following companies: Bridgestone, Domtar, Evergreen, and Goodyear;

• The budget provides additional funds to the Economic Development Partnership of North Carolina (EDPNC) for both tourism and marketing;
• Transfers the North Carolina Industrial Commission (NCIC), which hears disputes hired by injured workers, from the Department of Commerce to the Department of Insurance;
• Allocates $300,000 in funds to the Industrial Commission for hiring private legal counsel for litigation related to the merger of the state elections and ethics board;
• Reduces funding for the Job Development Investment Grants (JDIG) based on the estimation of their needs for the following year;
• Decreases funds for the One North Carolina Fund based on the Department’s assessment of their needs, and as a result, the change will not impact the operation of the project;
• Provides $1 Million for local governments to aid planning agencies and small businesses with the revitalization of downtown areas.

Justice and Public Safety

• Incorporates the “Raise the Age” language which allows 16- and 17-year-olds to be charged as juveniles for non-violent crimes rather than as adults, effective in December of 2019;
• Reduces the budget for the NC Department of Justice (DOJ), headed by Attorney General Josh Stein (D), by $10 Million or approximately 11% of the overall DOJ budget which Stein predicts will require him to lay off 123 full-time employees;
• Provides $250,000 for each year of the biennium for an opioid pilot program in Wilmington in order to establish a Quick Response Team;
• Eliminates 69 positions in the Department of Corrections that have been vacant for more than 12 months;
• Requires the Division of Adult Corrections to report to lawmakers on the number of prison personnel charged with crimes on the job in the past five years, the number of employees disciplined, the agency’s hiring process and background checks and the effectiveness of efforts to prevent contraband;
• Reduces funding for emergency judges;
• Provides for the creation of various deputy clerk positions in districts throughout the state.

General Government

• Reduces funding for the Governor’s office by nearly $1 million;
• Requires state government agencies to get authorization from the General Assembly in order to hire private counsel;
• Establishes prohibitions against the use of lapsed salary proceeds in order to pay private attorneys;
• Allows the Senate Pro-Tem and the Speaker of the House to request Highway Patrol security 48 hours in advance of travelling within the State on State business;
• Authorizes the Lieutenant Governor to select three State troopers for his security detail;
• Authorizes the General Assembly to decide whether or not to defend actions against them, in addition to hiring private counsel;
• Transfers the Education and Workforce Innovation Commission from the Office of the Governor to the Department of Public Instruction.

Transportation

• Provides an additional $320 Million for the Strategic Transportation Initiative highway-building program over the biennium to fund 100 more highway projects over the next 10 years;
• Provides $241 Million to improve bridges throughout the state;
• Provides $143 Million for the improvement of existing road conditions;
• Provides $40 Million for infrastructure projects at various commercial airports.

Tax Plan

• Reduces the personal income tax rate from 5.499% to 5.25% in 2019;
• Increases the standard deduction for married couples to $20,000, and it will increase to $10,000 for individuals starting in 2019;
• Reduces the corporate income tax rate from 3% to 2.5 % in 2019;
• Repeals the privilege tax for mill machinery and other manufacturing or industrial equipment effective July 1, 2018;
• Sets the franchise tax rate for a C Corporation at $1.50 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 in 2019;

Sets the franchise tax for an S Corporation to a $200 tax on the first $1 million of a business’s net worth and $1.50 per $1,000 of its tax base that exceeds $1 Million in 2019.

In Other News

A study by Fit Small Business has determined the NC is the best State for starting a business.

Study: North Carolina is best state for starting a business – TBJ

Sen. Andrew Brock (R-Davie) resigned his seat after his appointment to the State Board of Review by Sen. Berger.  Former Sen. Brock served 15 years, halfway through his eighth term, in the NC Senate as a member of both the minority and the majority.  Most recently, he served a Co-Chairman of the powerful Senate Finance Committee.  The Board of Review is a paid position, which oversees unemployment insurance claims and appeals.  Brock also ran unsuccessfully in a crowded congressional primary in last year’s special election following the court mandated redistricting.  The Republican parties of Davie, Rowan, and Iredell Counties will appoint his successor on August 1st.  Salisbury Attorney Bill Graham, who has previously the Republican nomination for Governor as well, has indicated that he is interested in filling the seat.

After resignation, Sen. Brock reflects on time in N.C. Senate – Salisbury Post

Attorney Bill Graham interested in vacant NC Senate seat; GOP schedules Aug. 1 meeting – Salisbury Post

In the News and more

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