Senate Budget Discussions

Senate leaders have met at length to thoroughly review the spending plan passed by the House of Representatives on May 5.  The state must balance the budget in the face of a $2.5 billion revenue gap by the beginning of the next fiscal year on July 1.  The House's $19.3 billion budget let the temporary personal and sales tax increases, implemented in 2009 to account for the spending shortfall at that time, expire as planned this summer.  The Senate is expected to do the same.

As they work to draft their own spending proposal, Senate leaders indicated that they aim to spend less than the House.  The Republican-majority House and Senate will then appoint a conference committee to compromise the differences between the two plans and rollout a final budget to send to Democrat Governor Bev Perdue shortly thereafter.  There remains much political speculation as to whether Governor Perdue will veto the budget. 

State Health Plan

After nearly a month of negotiations between the legislative and executive branch, the two have agreed upon a measure that addresses an expected shortfall for the state employee health insurance plan.  Governor Perdue vetoed the original proposal passed by the legislature last month.  The compromise legislation, aimed to close the estimated $515 million shortfall through mid-2013, now includes a premium-free option.  Starting September 1, the 663,000 members covered in the plan will see higher out-of-pocket copayments and deductables, 5.3% annual premium increases for dependant coverage, and eliminates the penalty for members who are overweight or smokers.  Additionally, the bill moves oversight of the plan from the legislature to the State Treasurer's Office.  Governor Perdue is expected to sign the bill into law.

E-Verify

A bill that would require any contractor that does business with the state to prove they have no undocumented employees passed the House Government Committee this week.  Under this measure, businesses wishing to contract with the state would be required to use the federal E-Verify system to obtain eligibility certification of their workers, and would make it a felony to submit a false certification.  The E-Verify system is already widely used across North Carolina to verify the eligibility of state employees, a mandate put in place in 2006. 

E-Verity is a web-based program that allows employers to determine whether a person is eligible to work in the United States by matching him or her against Social Security Administration and Department of Homeland Security databases.

Consumer Finance

This week the House Banking Committee discussed a piece of legislation that would allow consumer finance practices in North Carolina to raise borrowing costs on installment loans used by about half a million people in the state.  The bill would raise the borrowing limit from $10,000 to $15,000 and keep the maximum interest rate at 36 percent, but allow that rate to apply to balances up to $1,500 instead of the current maximum balance, $600. 

Early Voting

A measure passed the House this week that would shorten North Carolina's early voting period by a week from its current 2 ½ week length, while requiring that early voting polls operate for a second Saturday before the election.  The bill was narrowly approved 60-58 largely along party lines.  Legislative staff estimated a savings of approximately $2,000 per site for counties.   However, State Board of Elections head Gary Bartlett wrote in a statement that the perceived savings would be offset by an increased turnout on election days, which would cost counties more for new precincts or equipment. The bill now goes to the Senate for consideration.

Rex & WakeMed

Late last week WakeMed Health & Hospitals sent an offer letter to University of North Carolina President Tom Ross to acquire Rex Healthcare from UNC Health Care for $750 million.  UNC Health Care has operated Rex since merging with the private, non-profit hospital in 2000. 

WakeMed CEO Bill Atkinson said the potential take-over is aimed at consolidating and seeking efficiencies in services. He also mentioned that the tough economy could make it a good time for the state government to sell Rex to WakeMed, a private, not-for-profit hospital.  Some state lawmakers have said that it's worth exploring whether Rex could be sold particularly at a time when the state may benefit financially from selling some of its assets.  Although UNC Health Care's Board of Directors passed a resolution stating that selling Rex is not in the best interests of Wake County, they plan to appoint a special committee to review the unsolicited offer.

For more information, contact:

Allison Waller, Policy Advisor
allison.waller@nelsonmullins.com
 Mobile: 704.957.3728 | Office: 919.329.3883 | Fax: 919.877.3799