NCACC Legislative Update – June 26, 2015

The following legislative update was distributed by the N.C. Association of County Commissioners on June 26, 2015:

Senate finance package continues to generate debate

The Senate’s finance proposal – consisting of sales tax redistribution, other tax changes and economic development modifications – continues to generate much analysis and debate at the legislature and among stakeholders across the state. Included in the Senate budget, the plan is now in the hands of the House, which is giving it a full and thorough hearing in a series of meetings of its Finance Committee. That committee met for an hour and a half on Tuesday and Thursday this week, and will meet again Tuesday next week. During those meetings, legislative staff explained the package, committee members – in addition to other House members who were invited to participate – commented and asked questions, and committee chairs began allowing public comment. That comment period will continue next Tuesday, when your NCACC advocates anticipate having the opportunity to speak.

While House Finance committee members acknowledged the hard work of the Senate and the inclusion of some positive items, most of the comments were critical of the Senate’s plan. Former county commissioner Rep. Becky Carney of Mecklenburg County said the sales tax redistribution should not be part of the budget but discussed separately, and that it was “pitting counties against counties.” At the same time, she recognized that rural counties are hurting, with property tax being the main source of revenue they have. Rep. Bob Steinburg of Chowan County and others discussed the challenge of passing a referendum for a sales tax increase in their counties, while noting that some counties will have to pass a sales tax increase to meet some of the revenue estimates accompanying the Senate plan. Other legislators expressed concern about the sales tax base expansion, reduction in the non-profit sales tax refunds, and the Job Development Investment Grant changes.

Senior House Finance committee chairmen Reps. Jason Saine of Lincoln County and Bill Brawley of Mecklenburg addressed the NCACC board on Wednesday, sharing their concerns with the proposal. The next public comment opportunity will be Tuesday, June 30, 8:30 am in room 643 of the Legislative Office Building.

General Assembly in it for the long haul

All indications are that the General Assembly will be in session throughout the summer, and possibly beyond, as the House and Senate work to agree on a final budget for the next two years.  Earlier this week, the House voted not to concur with the Senate budget proposal, which spends hundreds of millions of dollars less than the House plan and contains several comprehensive policy changes. The budget conferees have not yet been named, but they will certainly have their work cut out for them.  The conference comparison report prepared by legislative staff, which outlines the various differences between the two plans, runs 372 pages long and does not include the Medicaid reform and sales tax redistribution proposals offered in the Senate proposal.

Since the budget will not be finalized by June 30, the end of the state fiscal year, the General Assembly will have to adopt a temporary budget, or continuing resolution, to fund state government operations until a budget is passed.  Although both chambers recessed yesterday afternoon with plans to reconvene later to take up a CR, the House and Senate were not able to reach an agreement on the interim spending plan.  Funding for teachers assistant positions and driver education courses were said to be the sticking points and where negotiations broke down between the two chambers.

The length of the CR itself also appears to be a matter in dispute.  Reports indicate that the House version would continue through the end of the year, while the Senate version would continue for only a couple of months.  It appears that the Senate nevertheless is anticipating a very long session—members have begun to decorate for the holidays, placing a small Christmas tree on the Senate Dias.

Three bills of interest to counties – Infrastructure projects, building code reform & local government regulatory reform

This week the legislature took action on three bills impacting local governments, approving one, amending another and sending a third to conference to work out differences between the House and Senate. On Wednesday, the Senate voted 48-0 to approve House changes to S284 (Infrastructure Assessment/Extend Sunset), a bill NCACC has supported that extends the sunset on a county tool to finance infrastructure projects associated with private development. The bill is now on the Governor’s desk for his consideration.

The Senate made changes to a bill impacting county code enforcement authority, passing two floor amendments to H255 (Building Code Regulatory Reform) before giving final approval to the bill 40-0 on Thursday. While the legislation has improved significantly from earlier editions, we are still concerned with some impacts on counties, in particular changes to the definition of “willful misconduct, gross negligence, or gross incompetence” in Section 3 of the bill. H255 returns to the House for concurrence with the Senate’s amendments.

Continuing to track a bill we mentioned last week, the House did not concur with Senate amendments to H44 (Local Government Regulatory Reform 2015) and appointed conferees to negotiate differences. The Senate has yet to appoint their members to the conference committee, and rolled a provision from this bill into their changes to H255 (Building Code Regulatory Reform).