Legislators returned to Raleigh this week with renewed optimism that a deal between the House and Senate on the State budget would be near.  By mid-week, it appeared that a deal had been struck and that a compromise bill would be put to votes in the House and Senate next week.  However, by the end of the week, intervention by Governor Bev Perdue (D-Craven) wrecked a compromise deal and budget negotiators were back to the drawing board.  Outside of the budget, legislation of all types was on the move this week as the prospect of a budget deal seemed likely to spur the adjournment of the legislative session. 

On Tuesday this week, House Speaker Joe Hackney (D-Chatham) declared that the two chambers were closer than they ever had been to striking a compromise on the State budget.  On Thursday, the compromise plan was beginning to take shape, although no formal announcement or publication of the terms of the agreement between the House and Senate had been published.  The plan would reportedly raise taxes by $982 million next year by raising sales taxes by 1-cent, implementing a temporary 2% surcharge on personal and corporate income taxes plus a tax on digital downloads and increases in excise taxes on cigarettes, beer, wine and liquor.  The agreement on taxation seemed to pave the way for chief budget writers to complete work on the spending portion of the State budget expected to total roughly $19 billion.  Legislative leaders had planned to complete details of the budget and to have votes on the budget legislation ahead of the expiration of the temporary spending authority on Friday next week. 

Despite these encouraging signs from the Legislative Building, on Thursday Governor Perdue rejected the compromise budget.  Governor Perdue told members of the press corps Thursday that she had told Speaker Hackney and the President Pro Tempore of the Senate Marc Basnight (D-Dare) would not support the income tax surcharge provisions of the budget.  Governor Perdue's objections are twofold:  she wants to shift the tax burden to wealthy individuals and she wants lawmakers to raise an additional $200 million above the current tax increase.  The Governor's statements on Thursday set up a surprising high stakes showdown over tax policy within the Democratic party's elected officials, who control both chambers of the General Assembly and the Governor's office.  Governor Perdue, now in her first year as Governor, stopped short of saying she would veto the budget proposal, but Senate tax writers made an announcement of their own on Thursday, saying they are "back to square one." 

Numerous insurance law changes were advanced through the legislative process this week.  House Bill 1159, a bill that makes changes to the insurance licensing law, was approved by the Senate on Monday and now awaits executive action on Governor Perdue's desk.  With House approval of Senate changes to similar legislation to that makes technical changes to the health insurance laws (House Bill 1183) and to the annual financial reporting requirements for insurers (House Bill 1314), these bills also await action by the Governor.  Later in the week, still other insurance law changes (House Bill 1166) were approved by the House and sent to the Senate for consideration there.

The Senate approved legislation (House Bill 1228) on Monday that would repeal the rule-making authority of the Alcoholic Beverage Control (ABC) Commission pertaining to requiring a waiting period to join a private club.  Businesses that are licensed to sell alcohol in North Carolina, but do not qualify as restaurants must licensed as "private clubs" under the ABC laws and regulation.  Since the early days of liquor by the drink service in North Carolina, ABC Commission rules have required a three day waiting period to become a member of a private club.  That requirement would be repealed under House Bill 1228.  The Senate rejected an effort to amend the bill and approved the legislation by a vote of 30-13.  The bill now awaits Executive action and a spokeswoman has said that Governor Perdue plans to sign the bill into law. 

The General Assembly has given final approval to legislation (House Bill 1523) that would enact a version of the "SAFE" mortgage licensing act for North Carolina.  In response to national legislation requiring States to conform with new licensing laws, the SAFE mortgage licensing act would replace the current Mortgage Lending Act.  The new act would require licensure of mortgage loan originators as well as brokers, lenders and servicers, and impose new educational requirements and duties on brokers.  House bill 1523 now awaits action by Governor Perdue. 

The House spent hours debating annexation law changes (House Bill 524) this week.  After a review by the House Appropriations Committee on Tuesday, House Bill 524 was debated and approved by the full House in separate votes on Wednesday and Thursday.  Annexation reform has brought crowds of angry citizens to the Legislative Building for over two years.  The most controversial aspect of the current law is the practice of allowing "involuntary annexation," that is, annexation of residents without requiring a vote or approval of those being annexed.  Under House Bill 524 that practice would still be allowed, but the bill sets up a new procedure by which citizens can petition and force a vote on the annexation.  A large group of mostly urban lawmakers opposed the bill which they say will weaken cities ability to confront the problem of large numbers of residents who live just outside of the city limits, consume city services, but pay no city taxes.  Proponents of the bill, point to abuses by cities who annex residents and then fail to provide city services to those new taxpayers.  The bill passed the House on a vote of 83-31 and now goes to the Senate.

A compromise version of revisions to the statute of repose for product liabilities (Senate Bill 882) was approved by the House this week.  Key to striking a deal between plaintiffs' lawyers and business interests was the exclusion of the "disease provision" that would have allowed for law suits based upon a product causing illness to consumers and the extension of the time to file product liability suits to twelve (12) years.  With those changes the bill easily passed the House 113-4, and now returns to the Senate for consideration of the House changes. 

Revisions to the electricity generation laws (Senate Bill 1004) continued to advance through the Legislature this week and is heading to Governor Perdue's desk.  Senate Bill 1004 followed an unorthodox path to enactment by arriving in the House Public Utilities Committee as an unrelated measure.  There the bill was rewritten to allow investor owned utilities an additional year to comply with an emissions deadline under the Clean Smokestacks Act.  The bill then went to the House Environment Committee where additional provisions that allow for retention of fuel related costs savings for carbon offset facilities and for regulation of coal ash ponds by the Department of Environment and Natural Resources were added to the bill.  On the floor of the House the emissions deadline delay was replaced with new requirements for applying for a certificate of construction of a new electric generation facility.  The amendment and the bill were unanimously approved by the House and the Senate gave its final approval to the bill Thursday, sending it to Governor Perdue for executive action. 

The Environmental Management Commission (EMC) would be temporarily stripped of its rule making authority under House Bill 1335 approved by the Senate this week.  House Bill 1335 would enact a temporary moratorium on EMC's authority to make permanent rules through July 1, 2011.  The hiatus in rule making is being championed by Senator Charlie Albertson (D-Duplin) who is upset over regulations passed by EMC that affect hog farmers in Eastern North Carolina.  Other lawmakers have protested EMC's recent inability to enact rules that aren't objected to and ultimately end up in the General Assembly for amendment.  For several years, the most controversial environmental measures debated in the General Assembly have dealt with disapproving rules or amending rules passed by the EMC.  House Bill 1335 faces stiff opposition in the House and its future is uncertain.  Under legislation (House Bill 1481) that was given final approval by the General Assembly this week, the State Energy Office would be moved to the Department of Commerce and take in the Office of Economic Opportunity.

In further action this week the General Assembly advanced various measures of importance.  North Carolina Local Governments would be required to adopt a code of ethics under other legislation (House Bill 1452) approved by the Senate this week.  The House has given tentative approval to legislation (Senate Bill 405) that would require that deeds include certain information about real property sales when the associated documents are recorded.  Disabled veterans would pay less property tax under legislation (House Bill 594) that would increase the tax exclusion for a veteran's primary residence.  In further action, legislation (House Bill 512) approved by the House this week would allow for an extension of the tax credit for investing in renewable energy property.