From the N.C. Association of County Commissioners:

Senate passes budget, sets stage for negotiations with House

The Senate passed its budget plan Thursday, setting the stage for a protracted negotiation process with the House. Drastic differences between the two versions, particularly sweeping policy shifts the Senate included such as tax changes and Medicaid reform, likely mean the legislature will have to pass a temporary budget to continue state government operations past the end of this fiscal year. The sales tax redistribution and economic development plan revealed last week was rolled into the budget bill; the version in the budget maintains the Medicaid hold harmless money to counties that was repealed in the first version.

The Senate spends $700 million less overall than the House, putting more money in reserves such as the rainy day fund. It continues allocating $100 million from lottery funds for school construction, but adds $100 thousand for a study of school construction needs in 50 low-wealth counties. It spends less than the House on new mental health initiatives, but does provide additional community psychiatric hospital beds. Medical examiner and autopsy fees increase more than in the House budget, to $2,800 and $250 respectively.

The NCACC will post a detailed analysis of the Senate budget on its Web site this afternoon.

Senate, House remain at odds over Medicaid reform

We mentioned last week that the House began rolling out its Medicaid reform package in H372 (2015 Medicaid Modernization). The bill passed House appropriations on Thursday and will be on the House floor next Tuesday. Similar to previous House Medicaid reform packages, this bill would transition the State’s Medicaid and Health Choice programs over five years to a fully capitated model delivered by provider-led organizations and implemented by the N.C. Dept. of Health and Human Services. Mental health services would remain largely unchanged as the existing LME/MCO model would remain and contract with the new provider-led entities.

Meanwhile, the Senate rolled its Medicaid reform model into its budget proposal. While both plans move toward a capitated service model, the Senate’s plan has some significant differences from the House’s proposal. The Senate would transition to a fully capitated model delivered by privately managed care organizations and provider-led entities competing for contracts to deliver Medicaid services. The existing LME/MCO model for mental health services would remain and contract with these organizations for at least the first three years of this new plan. This plan would be implemented over a two-year period by an independent, cabinet level entity outside DHHS called the Health Benefits Authority.

Local government regulatory reform bill sent to conference

On Wednesday the House voted not to concur with the Senate’s changes to H44 (Local Government Regulatory Reform 2015). We noted the Senate’s changes to the bill in last week’s legislative bulletin. The bill now goes to conference, where the Senate and House will negotiate differences in the bill. Of note to counties in the Senate’s version of the bill, Section 6 streamlines the pre-audit process while Section 19 gives counties more flexibility when entering into development agreements. Section 17 requires counties to accept and approve an engineering plan without further responsibility for inspection if the plan is sealed by an engineer; the same engineer conducts field inspections and provides a signed statement that the plan complies with building codes.

Bill opens door for local governments in State Health Plan

The House approved the Senate version of a bill permitting local governments to participate in the State Health Plan. Since 2004, 18 local governments have been authorized to enroll in the State Health Plan, but without any specific uniform conditions for their participation. H154 (Local Governments in State Health Plan) allows any county or municipality with fewer than 1,000 employees and dependents enrolled in health coverage to participate in the plan, provided that they meet certain conditions outlined in the bill. The bill caps the total number of local government participants at 10,000 and gives any local government already participating in the plan the option to elect to be subject to the new requirements. H154 passed the House on Thursday and will be sent to the Governor.

House passes watered-down builders’ inventory bill

After a hearing in the House Finance committee this week, the full House passed H168 (Exempt Builders’ Inventory) 107-10. Several amendments on the floor mitigated fiscal impacts to counties, but the bill will still mean a revenue loss. As currently written, the improvements in value to property developed for single-family homes and residential duplexes that are for sale will be exempt from property taxes for up to three years. This includes improvements both to land and to structures. The owner of the property does not have to be a licensed contractor. Property that is being used for commercial purposes, such as rentals or model homes, are not eligible for the exemption.

Thanks to former county commissioners Rep. Ted Davis (New Hanover) for his comments on the floor supporting counties and Rep. Becky Carney (Mecklenburg) for her comments and for negotiating an amendment narrowing the types of property eligible for the exemption.

House committee approves bill to extend sunset for special assessments authority

This week the House took steps to approve a Senate bill that would preserve a county tool to finance infrastructure investments associated with economic development. Currently counties have the authority to levy special assessments on property to help finance infrastructure projects over a 30-year period; however, this authority expires July 1, 2015. The property owners must bring forward the petition for an assessment, and those owners must represent at least two-thirds of the assessed value of the property to be assessed.

These infrastructure project investments can include water and sewer systems, public transportation facilities, school facilities, gas systems, electric systems, industrial parks, parks and recreation facilities, as well as streets and sidewalks. S284 (Infrastructure Assessment/Extend Sunset) is sponsored by Sen. Fletcher Hartsell and would extend the sunset on this policy to July 1, 2020. The bill passed the Senate 49-0 in April and passed House Transportation and Finance Committees this week. S284 is scheduled on the House floor on Monday night. If the bill passes without any additional changes, it will go to the Governor for his consideration.