KTS Strategies brings years of experience providing clients in a diverse range of industries with comprehensive policy and advocacy advice before federal, state, and local agencies. In North Carolina, we advise local municipalities, corporate transportation entities, nonprofit organizations, statewide associations, government vendors, and Fortune 500 companies before the North Carolina General Assembly and executive branch.
Below is an update on the activity at the NC General Assembly this week.
Consensus Revenue Forecast
The Legislative Fiscal Research Division and the Office of State Budget and Management issued their consensus revenue forecast. The forecast anticipates a one-time budget surplus of $3.25 billion for FY 2022-23. This brings total state General Fund revenue collections to $33.76 billion. The main drivers for the surplus as detailed in the forecast include:
- A smaller than expected decline in individual income tax collections, especially due to larger than expected tax payments from pass-through businesses electing to be taxed at the entity level,
- Persistently high corporate profits, particularly among large multi-national corporations,
- Resilient consumer spending despite longer-lasting inflation in goods and services subject to sales tax, and
- Higher than expected investment returns on the General Fund balance.
Senate President Pro-Tempore Phil Berger (R-Rockingham) issued the following statement on the forecast, "While this year's surplus is welcomed news, we need to be cautious as we prepare the budget. We must continue to prioritize responsible spending, addressing our state's workforce needs, and providing additional tax relief to our citizens.”
An updated joint revenue forecast will be issued in May following Tax Day in April.
Medicaid Expansion
The House passed their version of Medicaid expansion this week. H76, Access to Healthcare Options, would provide Medicaid coverage to adults aged 18-64 with incomes up to 133 percent of the federal poverty level beginning on January 1, 2024. The bill also directs the Secretary of Commerce to create a “seamless, statewide, comprehensive workforce development program” and for the Department of Health and Human Services to develop a method to assist Medicaid enrollees in accessing appropriate workforce development services.
H76 passed the Finance and Rules Committees on Tuesday with little debate. The bill passed third reading on Thursday with a vote of 92-22. It remains to be seen if the Senate will file their own expansion bill or take up this plan. The House version does not include any provisions related to Certificate of Need reform which has been a sticking point for the Senate in the past.
House Permanent Rules
On Wednesday, the House adopted their permanent rules for operating the 2023 regular session. Many of the rules are the same as previous sessions regarding order of business, conduct of debate, and decorum. There will be a new rule related to veto overrides. Previously, a veto override vote could not be taken until 48 hours after being noticed on the calendar. The new rule states a veto override vote can be taken on the same legislative day it is received from the Senate or Governor or any day it is printed on the calendar. The Senate adopted their permanent rules in January. The Senate Rules Chair must give the Senate Minority Leader at least 24 hours’ notice that a vetoed bill may be considered by the Senate.
Medical Marijuana
The Senate Judiciary Committee heard S3, NC Compassionate Care Act, on Wednesday. This is the same legislation that moved through the Senate last year. Sponsored by Senate Rules Chair Bill Rabon (R-Brunswick) the bill would legalize medical marijuana for qualified patients with a debilitating medical condition. It would create an eleven-member advisory board to review petitions to add a new debilitating condition and create a Medical Cannabis Production Commission to oversee medical cannabis supplier licenses. The bill was up for discussion only in Wednesday’s committee meeting, but there may be amendments considered in next week’s meeting. Should the measure pass through the Senate again, it is unclear if there is enough support in the House to pass the legislation.
