Weekly Legislative Update

Overview

This week the House approved legislation to reform the State Health Plan and a conference committee has been formed to work out the differences between the House and Senate versions. The House of Representatives received the Senate version of the State Budget this week and began a process of review of the $20 billion spending package. The Senate has begun work on a tax reform package as the Department of Revenue works to compile total tax collections through April 15^th. Meanwhile, work continued on various other legislative proposals and committees met on a regular schedule this week. The deadline for introduction of most substantive legislation has expired and lawmakers are turning their attention to an important crossover deadline currently scheduled for May 17^th.

This week the House approved Legislation (Senate Bill 287) to reform and shore up the financial state of the health plan that covers over 600,000 state employees and their dependants. House Majority Leader Hugh Holliman (D-Davidson) coordinated passage of the legislation and brokered amendments that ultimately won 64 votes for passage of the legislation. In order to ensure solvency of the State Health Plan, the legislation calls for a $250 million appropriation of state funds this year. In the next two fiscal years the state would spend even more. A key amendment authored by Representative and former House Speaker Dan Blue (D-Wake) calls for an audit of the Plan, brought the support of lawmakers that represent Wake County, the home of a large percentage of the State's employees. That amendment is in part an answer to critics of the Plan who say the contract with Plan administrator Blue Cross Blue Shield has not been transparent enough. After passage, the bill returned to the Senate where bill sponsor Senator Tony Rand (D-Cumberland) asked that a conference committee be formed. In the coming weeks, that conference committee will be called upon to reconcile differences between the House and Senate versions of the legislation.

After Senate passage of the State Budget last week, the House has begun to review the Senate proposal. Individual subcommittees of the House Appropriations Committee held meetings this week to pour over the Senate spending plan in detail. House members' criticism of the Senate budget has ranged from complaints over individual line items, to more broad concerns. Senior House Appropriations Committee Chair "Mickey" Michaux (D-Durham) was quoted this week as saying the Senate rushed the process and then passed a bill that was too similar to the Governor's budget. Other House members have criticized the Senate for passing a bill with no detailed plan to raise $500 million in taxes. The Senate tax reform plan that would likely raise those funds was the subject of media coverage and a Senate Finance meeting this week (see Committee Meetings below).

The House and Senate were actively moving legislation this week. In the House, the most time was spent on the "Healthy Youth Act" (House Bill 88), a bill that would require local school boards to establish sexuality education that would be alternative to "abstinence only until marriage." The broader education program that would include teaching on contraception, sexual diseases and alcohol and drug use sparked a heated debate on the House floor prior to the bill passing by a vote of 64-53. In other action, the House passed legislation that would ban texting on cell phones while driving (House Bill 9), stay requirements that ABC permit holders recycle empty bottles if the permit holder cannot find a recycling service (House Bill 759), and encourage the use of traffic calming devices in residential subdivisions (House Bill 182). This week, the Senate passed legislation to increase disclosure requirements of North Carolina's mental health system (Senate Bill 799), require an arts education for graduation from high school (Senate Bill 66), waive the Commercial Drivers License test requirement for certain members of the Armed Forces, and to ban the sale of novelty lighters that look like toys (Senate Bill 652).

Committee Meetings

The Senate Finance Committee met on Wednesday this week to review the work of several appointed study commissions that have convened in recent years to examine options to modernize the State tax laws. The modernization effort generally proposes that the State move away from the income and sales tax based system established in the 1920s toward a system that taxes services, captures internet commerce and alters corporate tax burden calculation. The meeting Wednesday was the first in what is expected to be a series of meetings that will lead up to the publication of a tax reform package. Senator Dan Clodfelter (D-Mecklenburg) told committee members that the process would be both open and methodical. A key piece of the process will likely be published next week when the Department of Revenue reports on tax collections through April 15, the day when most income tax filings are due. The report from Revenue will give lawmakers a better idea of how big the budget deficit in the current year will be and how much revenue must be raised during the coming year.

Also on Wednesday the House Finance Committee met to approve legislation (House Bill 148) that will help local governments to fund transportation projects. House Bill 148 would allow counties and municipalities to individually or by regional organizations levy a ½ cent sales tax to fund projects that relieve traffic congestion, promote public transportation, invest intermodal transportation facilities and promote both passenger and freight rail. The Committee was divided on the vote, but approved the bill to be considered by the full House of Representatives as early as next week.

The House Transportation Committee approved separate but related legislation (House Bill 116) that will aid North Carolina's effort to protect rail road corridors and promote rail travel and rail commerce in the State. House Bill 116 would provide stronger protection of rail road easement rights if a rail road company files notices with the local Register of Deeds and corridor maps with the State Rail Division housed at the Department of Transportation. The bill represents a multi-year project that was undertaken by the House Select Committee on a Comprehensive Rail Service plan for North Carolina last year. The bill now goes to the House Judiciary II Committee.

The Senate Judiciary II Committee met on Thursday to consider legislation that would amend the Private Protective Services Act (Senate Bill 584). In many ways, Senate Bill 584 simply updates the Act to include modern practices such as "digital forensics examiners." Other changes would add new reasons for disciplining a licensee under the act. One change not addressed at the Thursday meeting was provisions to require licensure of security personnel that work at an establishment that serves alcohol. Bill sponsor Senator John Snow (D-Cherokee) pledged to remove that section at a later committee meeting or on the floor of the Senate. Senate Bill 584 now goes to the Senate Finance Committee for further review.

The House Insurance Committee also held a meeting on Thursday and approved three bills championed by the Department of Insurance. House Bill 1159 makes changes to the law of insurance licensure, including allowing for a staggering of renewal dates and electronic filing of documents. House Bill 1161 would make changes in the law related to the financial conditions of insurance companies related to reinsurance intermediaries, receivership, third-party administrators, audits of workers compensation self-insurers, and foreign insurers. Lastly, House Bill 1314, would require insurers to provide annual audits of financial statements to the Commissioner of Insurance, to communicate internal control matters, and a management report on control over financial reporting. House Bill 1159 will now go to the House Finance Committee and House Bills 1161 and 1314 will go the House Judiciary II Committee. In related action the House Health Committee approved an omnibus collection of insurance law changes at a Thursday meeting. Like the bills discussed above, House Bill 1183 is an "agency bill" that enacts detailed revisions to the State Insurance Laws requested by the Department of Insurance. House Bill 1183 now goes to the House Insurance Committee.

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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Weekly Legislative Update

Overview

Committee Meetings

Upcoming Meetings

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