July 3, 2014

Weekly Update from the NC State House - June 27, 2014: As the legislature begins to wind down, nearing adjounrment, tension seems to just be getting wound up...

Maynard Nexsen

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Welcome to the Nexsen Pruet Weekly Legislative Update! The Nexsen Pruet Public Policy team provides attorneys and clients with a newsletter summarizing the week's activities and conveying the inner workings of the legislative process and state government in Raleigh.

Waning Days

As the legislature begins to wind down, nearing adjournment, tension seems to just be getting wound up. Disagreements have been prevalent between the House and the Senate over Medicaid, teacher pay, Common Core standards and charter schools. The House passed a “mini-budget”, addressing teacher pay, their version of the Regulatory Reform bill which looks much different now than it did when it came over from the Senate, and their version of the Common Core bill, among other issues. The Senate took no action on either the “mini-budget” or Regulatory Reform and voted not-to-concur on the Common Core legislation, sending it to conference committee. The Governor from time to time has also gotten involved in the disagreements.

A few other items from the week to note, a number of House committee’s indicated this week’s meetings were their last for the session. Senate Rules Chairman Sen. Apodaca (R-Henderson) announced on the floor Monday evening that the Senate would not have any further committee meetings beyond Thursday of this week. A separate bill received its initial approval from the House Thursday to remove the SBI from the Attorney General’s office to the Department of Public Safety. Governor McCrory issued the third gubernatorial veto of his tenure as Governor and the first of this session, sending the Unemployment Insurance bill back to the General Assembly. And Senators used an Appropriations committee Thursday morning to grill State Budget Director Art Pope over Medicaid.

A Joint Resolution honoring the late Sen. Martin Nesbitt (D-Buncombe), sponsored by Senators Blue (D-Wake), Stein (D-Wake), and Apodaca (R-Henderson) also passed through both chambers Tuesday. Sen. Nesbitt passed away suddenly earlier this year after serving 31 years in the state legislature. A link to the Joint Resolution remembering his life can be found here.

The “Budgette”

With a compromise on the state’s budget adjustments remaining unresolved, the Governor and House leadership held a press conference Wednesday to unveil a 41 page “mini budget”, S3, a far cry from the 286 page budget bill the House recently passed. In lieu of an agreement on the full budget, this proposal, in theory, would allow the state to give the pay raises to teachers and state employees that they proposed earlier in the year and then adjourn, leaving most of the two-year budget passed last year unchanged. The proposal was released following a Senate suggestion to open up the budget conference committee negotiations to the public as a possibility. To date no public negotiations have been held.

The new proposal is similar to the House education budget, providing 5% raises for teachers and a $1000 raise for most state employees, more funding for textbooks and restore funding for master’s degrees. Three important items to note in the proposal, the raises are neither tied to projected lottery revenues or cuts to teacher’s assistants and are not conditional on teachers forfeiting their tenure. The bill also provides funding for staffing coal ash clean-up in DENR and adjusts costs of living for retired state employees.

The proposal has sparked testy remarks from Senate leadership whom were unaware of the press conference or the proposal. The idea of a “mini budget” to address teacher raises was first publicly mentioned earlier in the week by Senate Rules Chairman Sen. Apodaca (R-Henderson). The House’s “mini budget” sets aside $134 million to cover unprocessed Medicaid claims which Senate leaders have since denounced for not adequately addressing Medicaid costs. The key point of contention thus far in the budget negotiations has been the Medicaid funding debate, with the Senate favoring an overhaul of the entire Medicaid structure to make budgeting more predictable. The House has been more hesitant, favoring a model that moves towards capitation over a period of several years. Senate Pro-Tem Sen. Berger (R-Rockingham) also said that a 5% raise for teachers was not enough. The Senate’s version of the budget included an 11% raise for teachers.

The bill received a unanimous favorable vote Thursday in the full House, 117-0.

McCrory, Tillis move education budget to separate bill – N&O

With state budget in limbo, NC House approves education spending plan – N&O

House sends new budget to Senate – WRAL

Medicaid Reform

The House and Senate both agree that reform in the Medicaid system needs to happen, however the approach each chamber visualizes for that reform are at odds. Both chambers now also agree that Medicaid should move towards capitation, although the Senate plan would move much more quickly towards capitation, as early as 2015. Although there was no movement on the House proposal this week, the topic of Medicaid was still a hot one.

Thursday, the Senate Appropriations Committee heard from State Budget Director Art Pope regarding Medicaid and the amount of unpaid claims still owed by the state to providers. The meeting was intended to be a Senate lashing of the Governor’s proposals for Medicaid funding. However, Pope is widely regarded as one of the more budget-savvy minds in the state and he quickly turned the conversation to the consequences of over budgeting.

Governor, senators remain divided over Medicaid – WRAL

Art Pope addresses Senate on issues with proposed budget – WNCN

Unemployment Insurance

The Governor issued his first veto of this session, vetoing the Unemployment Insurance bill that the legislature passed last week. The bill would have changed the Board of Review, which reviews appeals of unemployment insurance claims, to stagger the terms to which the Governor recently appointed its members and make the appointments subject to legislative confirmation and modify the terms of existing members.

The interest in these positions may be due to the fact that they carry a $120,000 annual salary. The bill must now return to the legislature where it requires three-fifths of both chambers to override the veto. The Senate has the numbers to override, but the House numbers are much tighter, passing the bill initially with exactly a three-fifths majority.

The House Rules committee Thursday afternoon gutted a bill S388 and inserted language that largely follows the same lines as the previous Unemployment Insurance bill. The only differences are that it would extend the term expiring June 30^th by two years and would require board members to adhere to the judicial code of conduct. That bill now awaits action in the House Finance Committee.

Regulatory Reform

The House passed S493 Wednesday a bill containing a multitude of policy initiatives entitled Health and Safety Regulatory Reform. Among the provisions, the bill would:

Repeal protest petitions against a zoning map amendment
Require certain health benefit plans to provide coverage for autism treatments
Require every health benefit plan to provide coverage for prescribed, orally administered anticancer drugs
Regulate the setting of maximum allowable cost price by a pharmacy benefits manager
Prohibit persons under the age of 18 from using tanning beds
Create a state board to regulate behavior analysts
Waive conflict of interest in contracting for materials or services for commissioners and employees of hospital authorities as long as they are not involved in making or administering the contract.

Some provisions from the bill that moved last week were changed into studies, including:

Make mug shots confidential and exempt from public record disclosure unless the person is charged with a felony or the officer or agency determines release of the photo reasonably necessary to secure the public’s safety
Provide additional ethics requirements for members of city governing boards with a population of more than 75,000
Allow private companies to serve eviction papers

Another provision that would allow breweries to self-distribute unlimited amounts of “private label” beer was removed altogether. The bill now awaits concurrence in the Senate.

Coal Ash

The Senate unanimously passed a bill S729 Wednesday that would set regulations for the clean-up of coal ash in North Carolina, but not without a number of attempted amendments. The Senate version is a more comprehensive plan than that of the Governor, requiring all coal ash ponds in the state to be closed within 15 years. Should the bill pass in its current form, North Carolina would adopt the most environmentally responsible restrictions regarding coal ash ponds in the country. The bill would:

Establish nine member commission for clean-up oversight
Require the Commission determine whether entity responsible for the spill should bear the cost of clean-up and prohibit rate increases to customers to fund it.
End the disposal of wet coal ash
Designate new ash be recycled for beneficial use or put in lined facility
Set 15 year tiered deadline to close existing ash ponds and requiring “high risk” sites be closed by 2019

An attempt to require the responsible entity and its shareholders to pay the costs of clean-up without raising rates, rather than leaving that decision up to the Commission, failed.

Delayed Justice

WRAL aired an in-depth investigation of the State Crime Lab Thursday. Watch the segment here: Delayed Justice: Underfunded State Crime Lab could mean crisis for NC court system

In Other Words…

Gov. McCrory signed the Commerce reorganization Public Private Partnership legislation into law Tuesday. A top priority for McCrory, he called it “one of the most significant pieces of legislation in our state's history” while Commerce Secretary Sharon Decker called it a “great first cut”.

Senate Pro-Tem Phil Berger (R-Rockingham) penned and op-ed in the Charlotte Observer entitled Senate plan will fix teacher pay

Sen. Berger also released a statement on the House passage of their mini spending plan, “The Senate stands ready to negotiate a fair compromise, but we want to give teachers more than a five percent raise and cannot accept unrealistic Medicaid estimates that create an unbalanced, unsustainable budget.”