Last week was a chaotic and exhausting, but extremely productive, final week of short session.  The legislature did adjourn Friday afternoon, although not sine die.  While a number of important items moved forward, there are others that will have to be championed during next year’s long session.

Below, please find an overview of the key legislative items addressed (or not) by the N.C. House and Senate from the final week of session.  While the focus for members will now shift to campaigning, there’s always potential for interim activity.

BUDGET PASSAGE

N.C. lawmakers have sent their $27.9 billion spending plan to Gov. Roy Cooper.  The GOP-controlled Senate and House gave their final approval of the annual budget proposal in a procedural vote early Friday after securing bipartisan support for it on Thursday.  The $27.9 billion spending plan is the largest in state history.  Budget-writers started the process with a historic surplus of more than $6 billion.  Key provisions of HB103/2022 Appropriations Act include:

• $1 billion State Inflationary Reserve was also created in anticipation of a recession
• Additional $14.8 million allocated for mental health resources statewide
• Additional $883 million for water and wastewater infrastructure projects
• Additional $5 million for the GREAT Grants to expand broadband access in underserved areas
• Transfer 2% of sales tax revenue — approximately $193.1 million — to the Highway Fund to support a variety of transportation purposes
• Salary increases for teachers and state employees
   
  • New starting salary for teachers is increased to $37,000 with additional supplements
  • Teachers will receive an average raise of 4.2%
  • Over the biennium, including bonuses, teachers will receive an average 14.2% additional compensation
  • Most state employees will see a 3.5% pay raise
  • State retirees will also receive an additional 1% COLA bonus, bringing it up to 4% over the biennium
     
• Additional $56 million in recurring funds to the Opportunity Scholarship Grant reserve
• Additional recurring $16.3 million to the Personal Education Student Accounts for Children with Disabilities Program
• Additional recurring $15 million for the School Resource Officer Grant program
• Additional $32 million for School Safety Grants to support students in crisis, school safety training, and safety equipment in schools
• $26 million more to the at-risk allotment to provide one school resource officer for each high school
• Increases the N.C. Pre-K provider reimbursement rates by 5%
• $1.8 million from the federal Help America Vote Act (HAVA) grant to update and maintain voter lists and to continue enhancing election technology and security improvements

Critics of the proposal are saying the spending plan doesn’t reserve enough for raises at a time when schools are struggling to hire and retain employees. They argue the budget’s 4.2% average pay raise for teachers and 3.5% increase for most state workers falls well short of the 8.6% inflation rate over the past 12 months.  The budget doesn’t achieve several major policy goals for the short session, including Medicaid expansion, medical marijuana legalization and online sports betting.

 Gov. Cooper hasn’t publicly weighed in on the budget that passed Friday, but he could find his hands tied after Republicans secured support from more than enough Democrats to override a potential veto.  This is one we’ll all be watching in the days ahead.

Budget Bill Text

Budget Bill/Committee Report

MEDICAID EXPANSION

The North Carolina General Assembly adjourned Friday [*to a date certain] without a deal to expand Medicaid.  Both the House and Senate passed expansion plans this short session, but neither chamber has been willing to support the other’s proposal.  GOP leaders shared Thursday that a compromise has not been discussed.  Speaker of the House Tim Moore told reporters Wednesday, “We passed our bill.  We haven’t heard anything back.”  Senate President Pro Tem Phil Berger said his chamber wouldn't take up the House bill. "I don’t know that there’s a pathway for us to reach an agreement," he said. 

• The Senate Plan would pair expansion with a number of regulatory rollbacks in the healthcare industry, including an easing of the state's certificate-of-need laws, which limit hospital expansions. The hospital industry has fought this change for years and is backing the House's Medicaid plan, which deals only with expansion.  HB149/Expanding Access to Healthcare
   
• The House Plan wouldn’t actually expand Medicaid, however.  It would create a joint House-Senate committee to review details of an expansion plan, which Gov. Roy Cooper's administration would hash out with the federal government.  That plan would then go before the joint legislative committee in December, which could forward it to the full legislature for final passage.  SB408/Rural Healthcare Access & Savings Plan Act

 Earlier this week, Gov. Cooper urged the legislature to find a resolution.  Medicaid expansion has been a priority of his for years.  Republicans agreed not to include Medicaid expansion in the budget, which passed on Friday, saying it needs to be handled as a separate issue.  North Carolina is one of a dozen states that has not expanded Medicaid.  Doing so would unlock billions of dollars in federal funding, with the U.S. government paying 90% of expansion costs and sending another $1.5 billion down to the state as an incentive that Congress passed last year to appeal to holdout states.  [see full article]  https://www.wral.com/as-session-ticks-away-dim-prospects-for-medicaid-expansion/20354015/

 N.C. SPORTS WAGERING

Legislators adjourned short session Friday [to a date certain] without legalizing mobile sports betting.  Despite optimistic predictions from bill sponsors when session first convened in May, SB688/Sports Wagering failed to pass the N.C. House last week, 49-52.  While retail sports wagering is currently permitted at tribal-owned casinos, the potential legalization of online sports betting will most likely have to wait until the 2023 long session.  Professional sports teams in the state continue to show overwhelming support for mobile sports betting.  More than 30 other states and jurisdictions have legalized sports wagering to date. 

INDUSTRIAL HEMP LEGISLATION

N.C. Governor Roy Cooper signed legislation on Thursday that will keep the state’s hemp industry legally in operation.  Cooper made the following statement on SB455/Conform Hemp with Federal Law: “Agriculture is North Carolina’s largest industry and giving North Carolina farmers certainty that they can continue to participate in this growing market is the right thing to do for rural communities and our economy." The General Assembly gave its final approval Wednesday to legislation that keeps lawful the production and sale of industrial hemp and products derived from hemp like CBD.  North Carolina’s industrial hemp program began as a pilot several years ago and is now operated through a federal production program. Without the legislation, the products would have become illegal later this week.  There are more than 1,500 licensed hemp producers in the state, according to the state Department of Agriculture.  The legislation differentiates marijuana, which would still remain unlawful, from hemp and hemp products, which contain a very low amount of the chemical that gives the high to marijuana users.

N.C. COMPASSIONATE CARE ACT

While the state’s hemp industry avoided a shutdown this week, efforts to pass medical marijuana legislation stalled again in the N.C. House.  SB711/N.C. Compassionate Care Act was approved by the state Senate in June.  The bill is currently stuck in House Rules.  An internal vote within the House Republican caucus last week resulted in a decision not to advance the bill during this short session.  SB711 would set up a restrictive medical marijuana program in North Carolina, granting 10 medical cannabis supplier licenses for companies to apply for in the state. The Medical Cannabis Production Commission, which is established in the bill, would decide on 10 companies out of 20 recommended applicants chosen by the North Carolina Department of Health and Human Services.  Each license would cost $50,000.  The bill would mandate proof that each applicant be able to operate as a supplier for two years in the form of liquid and non-liquid assets, which may prove difficult for local start-ups and small business owners. The bill would also require that each company have someone on board with prior operation experience of cultivation, production, and management of cannabis products in a state-licensed medical or adult-use cannabis operation—neither of which have ever been legal in North Carolina.  North Carolina is one of 12 states with no medical marijuana program.

STATE INFLATIONARY RESERVE

Senate leader Phil Berger and House Speaker Tim Moore promoted the GOP budget proposal that passed this week and has been sent to the Governor as “a bulwark against [what they consider] a coming recession and inflation that has ratcheted up prices for government projects and eroded buying power.”  The 2022 Appropriations Act (HB103 CCS) sets aside an additional $1 billion for the new “Stabilization and Inflation Reserve” and builds the state’s rainy-day reserve to a record $4.75 billion.  During a press conference to unveil the 2022 budget proposal, GOP legislative leaders said the Reserve would “allow the state to be better prepared for a coming downturn and would prepare a cushion to avoid tax hikes.” 

N.C. ELECTION MAPS

The Supreme Court has agreed to hear a case that could change the way elections for Congress and the presidency are conducted by giving more power to state legislatures and blocking state courts from reviewing challenges to the procedures and results.  The nation’s highest court will consider whether state courts, when finding violations of their state constitutions, can order changes to federal elections and the once-a-decade redrawing of congressional districts. The case, an appeal from North Carolina Republicans, challenges a state court ruling throwing out the congressional districts drawn by the General Assembly that seemingly would have made GOP candidates likely victors in 10 of the state’s 14 congressional districts.  The case is expected to be argued this fall.

ADJOURNMENT RESOLUTION

Senate Joint Resolution (SJR) 917 passed both chambers on Friday, adjourning the 2021 regular session of the General Assembly to a date certain and limiting the matters that may be considered upon reconvening. 

Upon adjourning on July 1, 2022, the House and Senate stand adjourned to reconvene as follows:

• Tuesday, July 26, 2022, at 12:00 noon; to adjourn on Thursday, July 28, 2022 
• Tuesday, Aug. 23, 2022, at 12:00 noon; to adjourn on Thursday, August 25, 2022
• Tuesday, Sept. 20, 2022, at 12:00 noon; to adjourn on Thursday, September 22, 2022
• Tuesday, Oct. 18, 2022, at 12:00 noon; to adjourn on Thursday, October 20, 2022
• Tuesday, Nov. 15, 2022, at 12:00 noon; to adjourn on Thursday, November 17, 2022
• Tuesday, Dec. 13, 2022, at 12:00 noon

 Matters that may be considered upon reconvening:

1. Bills returned by the Governor with his objections under Section of Article II of the North Carolina Constitution, but solely for the purpose of considering overriding of the veto upon reconsideration of the bill
    
2. Bills providing for the selection, appointment, or confirmation as required by law, including the filling of vacancies of positions for which the appointees were elected by the General Assembly upon recommendation of the Speaker of the House of Representatives, President of the Senate, or President Pro Tempore of the Senate
    
3. Bills providing for action on gubernatorial nominations or appointments
    
4. Bills responding to actions related to litigation challenging the legality of legislative enactments
    
5. Any bills relating to election laws
    
6. Bills providing for impeachment pursuant to Article IV of the North Carolina Constitution or Chapter 123 of the General Statutes
    
7. Simple resolutions addressing organizational matters of each respective house
    
8. Adoption of conference reports for bills for which conferees had been appointed by both houses on or before Friday, July 1, 2022
    
9. A joint resolution further adjourning the 2021 Regular Session, amending a joint resolution adjourning the 2021 Regular Session, or adjourning the 2021 Regular Session, sine die