NC Weekly Legislative Update

Overview

Last week at the General Assembly the State Budget moved to a conference committee and legislators turned their attention to legislation unrelated to the budget. The State Budget legislation (Senate Bill 897) is formally in the final step in the legislative process as the focus of the debate moves to differences between the House and Senate spending plans. Last week was a busy week at the Legislative Building as committees actively met to advance legislation of all stripes and colors. The heavy work load for committees meeting last week sets up a busy two weeks of work as legislative leaders continue to strive to complete the budget by June 30 and adjourn the session shortly thereafter.

The State Budget is formally in a conference committee after the Senate rejected the House version of the legislation on Monday. Both chambers have appointed conferees to participate in negotiations between the House and Senate. On Thursday legislative leaders from both chambers agreed to and distributed spending targets for each subcommittee overseeing the individual spending areas. The subcommittees or their conferees are meeting this week to make the final decisions on spending. The biggest unknown for budget writers is whether the U.S. Congress will pass legislation that would aid North Carolina by providing $450 million in Medicaid funding. If the Congress fails to pass this legislation, the State Budget could be thrown out of balance and lawmakers will be faced with making deeper cuts or starting the budget process over. Baring this occurrence or another unpleasant surprise, legislative leaders seem to feel that they are on schedule with present plans to have the House and Senate vote on the conference report on June 29.

In the Senate last week, Senators gave final approval to legislation (Senate Bill 1209) related to municipal authority to provide communications services. A handful of cities or towns in North Carolina own and/or operate broadband internet service or other communications systems for residents and businesses. Senate Bill 1209 would prevent any additional municipalities from doing so for about a year and would initiate a study on the effectiveness of municipal broadband service. Supporters of the bill argued that cities and towns were unfairly competing with private companies when they offer broadband service. Senate Bill 1209 drew opposition and a failed attempt to amend the bill. Senators who said that private companies are too slow to bring broadband service to their communities, leaving their constituents at an economic disadvantage in the information age, led these efforts. The bill passed on a vote of 41-7 and now awaits action by the House Committee on Ways and Means/Broadband Connectivity.

Also in the Senate last week, Senators approved legislation (Senate Bill 1216) that will expand the life and the scope of a foreclosure prevention program run by the North Carolina Commissioner of Banks. By a vote of 44-2, senators agreed to keep the Emergency Program to Reduce Home Foreclosures running after its October sunset date to May 2013. The program has to date focused on home loans at risk of foreclosure for loans that are within 45 days and are high yield interest loans. Senate Bill 1216 would expand this effort to all borrowers at risk of losing their homes. The expanded program would be paid for in part by a $75 fee on mortgage services, a portion of which the Commissioner of Banks could use to support counseling and nonprofit legal services. The measure now goes to the House for further consideration.

On Wednesday June 9, the House gave final approval to legislation (House Bill 1829) that enacts or modifies a number of tax laws. Among the changes contained in the bill are a 3 year extension of the mill rehabilitation tax credit, a modification to the credit for renewable energy property, establishment of a 25% tax credit for the construction of a renewable energy property facility and other provisions that affect small businesses. Several of these provisions are likely to be incorporated into the state budget during the conference committee process. The bill won near unanimous support from the House and now goes to the Senate.

In other action last week, the House prepared to give final approval to legislation (House Bill 766) that would clarify the protection provided by the Life and Health Insurance Guaranty Association as related to contractual obligations under annuity contracts. A House Committee considered the largely technical change included in the legislation last week and issued a recommendation that the House adopt the Senate version of the legislation. House approval is likely and that move would send the bill to Governor Bev Perdue (D-Craven) for executive action.

Also in the House last week, legislation (House Bill 636) affecting the school calendar advanced on a unanimous vote. School calendar legislation has often divided the General Assembly as mountain lawmakers sought more flexibility for their school districts to schedule around inclement weather and coastal lawmakers sought to protect the summer tourist season. House Bill 636 makes minor changes in the minimum hours and days of school so that western school districts can meet the requirements if inclement weather cancels school days during the winter. With final approval in the House last week, the bill is heading to Governor Perdue’s desk.

Finally, the Senate advanced legislation (Senate Bill 1323) that is annually regarded a precursor to adjournment of the legislative session. Senate Bill 1323 contains the provisions that authorize university campuses to spend funds collected by campus offices on campus improvement projects. The so-called non-appropriated projects bill is a perennial must pass for lawmakers and the early advancement of Senate Bill 1323 may foretells of a coming adjournment.

Committee Meetings

The House Environment Committee met twice last week. On Tuesday, the Committee advanced legislation (House Bill 1765) that requires that an applicant for an Interbasin Transfer (IBT) certificate pay all costs associated with public hearings required for the approval process. This version of the bill is scaled back considerably from earlier drafts that would have granted the Department of Environment and Natural Resources injunctive relief to enforce IBT law requirements. The Environmental Review Commission recommended that bill prior to the legislative session. Also on Tuesday, the Committee began work on legislation (Senate Bill 887) that requires recycling of consumer electronics such as computers and televisions. After major manufacturers Dell and Apple aired their disagreement over the provisions of the bill, the legislation was held for further work. Senate Bill 887 only minimally affects the recycling of televisions that was put into law last year. At a Thursday meeting, the Environment Committee approved legislation (House Bill 836) that would remove the cap on damages recoverable against oil companies that are responsible for large oil spills. The legislation is a response to researchers’ warnings that the oil spill in the Gulf of Mexico could reach North Carolina’s coast by way of the gulf stream current.

On Wednesday, the Senate Finance Committee removed from its agenda legislation (Senate Bill 1172) that provides fairness in tax appeals for large multi state companies that are forced to file a combined tax return. The Department of Revenue opposes the bill because it views the penalty and interest charges as necessary tools to resolve tax disputes. Resolution of these disputes netted the state hundreds of millions of dollars during the current fiscal year and the pending budget legislation calls for roughly $100 million in similar collections next year. Secretary of Revenue Kenneth Lay says that the Department will be unable to collect the $100 million if Senate Bill 1172 becomes law this year. The bill is supported by large businesses that view the Department’s current authority to retroactively apply penalties because a taxpayer failed to file a combined return as fundamentally unfair because only the Department can grant a taxpayer the ability to file a combined return. The legislation will likely be reconsidered in coming weeks.

On Wednesday last week, the House Energy and Energy Efficiency Committee met to consider legislation that affects the membership and mission of the Energy Policy Council. The Energy Policy Council was originally established last year to research and develop a comprehensive energy plan for North Carolina. Last week, the House Committee approved legislation (House Bill 1804) that authorizes the Energy Policy Council to under take a "green energy study," but removed from its agenda legislation (House Bill 2006) that would add a representative of the Utilities Commission Public Staff to the Energy Policy Council membership. Later in the week, bill sponsors announced that reconsideration of House Bill 2006 during the current session is unlikely to occur.

At a Thursday meeting, the House Judiciary II Committee approved legislation (House Bill 1659) that would place a constitutional amendment restricting eminent domain authority on the ballot in 2012. The legislation would stop local governments from condemning privately owned property for economic development purposes, a practice that was found constitutional by the US Supreme Court in the landmark case of Kelo v. City of New London. At the same meeting, the Committee formed a study committee to consider legislation (House Bill 1852) that seeks to increase oversight of state grants to nonprofits, in part by authorizing a 2% fee to pay for auditors.

The House Committee on Alcoholic Beverage Control approved legislation (House Bill 1717) that would enact sweeping new oversight authority for the State ABC Commission. Under the legislation, the Commission would be empowered to adopt new ethics rules for local ABC boards, local board compensation would be limited, and there would be new auditing and accounting requirements. The legislation now goes to the House Committee on State Government.

The House Commerce Committee approved legislation (Senate Bill 1171) this week that seeks to attract to North Carolina two new data centers, an engine turbine manufacturer and a wood pulp to paper factory. Under the bill, these industries would become eligible for credits or refunds against sales and use tax and/or the privilege tax. The data centers are expected to be similar to the facility recently built by Google in Caldwell County-a facility that was the beneficiary of comparable tax benefits. Department of Commerce officials are keeping the identity of all of these companies secret citing economic development protocol.

In other news, the House Water Resources Committee approved a package of bills (House Bills 1746, 1747, 1748, 1749) related to water resource planning, monitoring and conservation. An interim study committee recommended these bills earlier this year.

Printable Version

The articles published in this newsletter are intended only to provide general information on the subjects covered. The contents should not be construed as legal advice or a legal opinion. Readers should consult with legal counsel to obtain specific legal advice based on particular situations.

Nelson Mullins Riley & Scarborough

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Nelson Mullins Riley & Scarborough

NC Weekly Legislative Update

Overview

Committee Meetings

Looking Ahead

Upcoming Meetings

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