BLOGS: Keeping Up With Jones Street

Friday, March 6, 2015, 3:58 PM

In Like a Lion Legislative Update 2/6/15

 This week was exhausting for your normally energetic government relations team; we had to be in so many different hearings at once that we had to wear comfortable shoes.  Angel and I are excited to take it easy this weekend and enjoy the calming Battle of the Blues  - the last real stop before March Madness is officially underway. 

Though Angel is a Blue Devil and I’m a Tar Heel, we’ll be back on Jones Street early Monday – even losing an hour’s sleep -  working for you.
In Like a Lion and Out Like a Lamb.
That’s what we’ve always heard about the month of March in North Carolina.
1.      In like a lion.
2.      Madness.
3.      Out like a lamb.

Not many generations ago our lives were ruled by the weather. And so it has been on Jones Street. With winter storms behind us we officially entered “Madness” this week with bill introductions, committee meetings, floor debates, and unhappy people. And there is plenty of basketball still to come.

State of the Judiciary Address
For the first time since 2001, the Chief Justice of the North Carolina Supreme Court delivered a State of the Judiciary address to a joint session of the General Assembly and the Governor.  It had been 14 years since the State of the Judiciary Address had been delivered and the first time the Governor attended.  

Chief Justice Mark Martin’s address highlighted the fiscal needs of our underfunded court system which handles 3 million cases each year in a state with 9 million people.  In 2012 NC ranked 45th nationally in state per capita spending.  He highlighted the need to direct more resources to court reporting and expert witnesses as examples of what the courts need to better serve North Carolina citizens and businesses.  A compelling takeaway was that the Judicial Branch, co-equal to the other two branches of government, is funded at just $500 million in a state budget of $22 billion.  To put that in perspective, the Wake County Public Schools’ budget is funded at $1.5 billion.

On a positive note, he highlighted the success of the Veterans Treatment Courts which help those who have served make the transition and thrive as civilians while offering particular support for the issues veterans have in our society.  He also noted that there is work being done to develop a master plan for instituting e-filing statewide.

Governor McCrory’s newly-released budget recommendation increases court spending by $6 million next year, with $10 million additional in 2016-2017.  The final budget for the Judicial Branch will be agreed to by the House and Senate in the budget bill that then requires the Governor’s signature.

Governor’s Budget
Governor McCrory released his budget recommendations this week.  Remember that although the governor proposes a budget, his sole constitutional participation in the formation of the budget is to sign or veto a ratified budget bill; it is then his administration’s responsibility to implement the enacted budget. Historically, legislators use the governor’s recommendations as guidance and sometimes political cover for making tough choices. The budget process now underway is for the 2015-2016 and 2016-2017 budget years and would need to be implemented by July 1, 2015 to keep government on track.

In addition to the recommendation to bolster the Judicial branch, some of Governor McCrory’s $21.5 billion budget highlights for 2015-16 are:
·         Raising the state’s minimum starting salary for teachers to $35,000 per year
·         $99 million over the next year for NC Competes, a plan with incentives for economic development
·         Creation of a Department of Military and Veterans Affairs
·         Call for a $1.2 to $1.4 billion transportation bond, as well as a $1.2 to $1.4 billion general obligation bond for repairs and renovation of state buildings
·         Limiting the amount of state money the University of North Carolina system schools can spend on fundraising to $1 million
·         5% pay raise for 700 state troopers
·         $8 million to rescue the ECU School of Medicine
·         $4.1 million reduction to the Department of Public Instruction (10%)
·         $10 million for a new film and TV production grant program
·         Restore the state’s Historic Preservation Tax Credit program

Governor’s Economic Development Quiver Passes the House
HB 117NC Competes – overwhelmingly passed the House this week with bipartisan support and heads to the Senate. This is Governor McCrory’s quiver of incentives to lure business to NC (in particular, an auto manufacturing facility). The debate over incentives was similar to every other year’s business recruiting efforts bill so no one even batted an eye at the Stam-Luebke alliance which is strange political bedfellows in every other instance. Opponents of the bill continue to argue that state incentives pit urban areas against rural ones. Of note, we heard little opposition to the adoption of single sales factor apportionment.

Gas Tax Debate
SB 20 Update the Reference to the Internal Revenue Code, Decouple from Certain Provisions of the Federal Tax Increase Prevention Act of 2014, Modify the Motor Fuels Tax Rate, and Make Certain Reductions Within the Department of Transportation for the 2014-2015 Fiscal Year passed the House this week and will go back to the Senate for a concurrence vote. We are hearing the Senate will not concur and a conference committee will be appointed to settle the differences between the House and Senate-passed versions of the bill.  Both bills create a new gas tax floor:
·         House floor of $0.36 per gallon and eliminates 40 vacant positions at the Department of Transportation.
·         Senate floor of $0.35 per gallon and eliminates  500 vacant and filled Department of Transportation positions.

Gay Marriage
SB 2 Magistrates Recusal for Civil Ceremonies - A House Judiciary Committee began debating the Senate-passed bill and invited public comment this week. Religious leaders on both sides of the issue commented further obfuscating the issue of religious freedom in a judicial setting. An interesting point made by the NC Association of Registers of Deeds is that 42 of NC’s 100 Register of Deeds offices have three or fewer employees making the refusal to grant a marriage license by one employee a potential hardship for those seeking to tie the knot. That said, the Association did not take a position supporting or opposing the bill. The bill is still in committee for further discussion with a committee vote expected March 11.

Redistricting Local Bills
SB 181 Wake County Commissioner Districts - was heard in a raucous Senate Redistricting Committee this week with very little public notice. Senator Barefoot introduced a bill that will add two additional members to the Wake County Commission. It would also align county commission districts with the Wake County School Board Districts which were the subject of bitter partisan bickering on Jones Street a year ago. Some of you may not be aware that the Wake County Commission was swept by Democrats in November, and they did not request this change. No vote was taken on the bill this week. The Wake Legislative Delegation will hold a hearing Monday.

SB 36 Greensboro City Council Districts - was heard in the same committee meeting. This bill would eliminate at-large seats thereby reducing the size of the Board and take the vote away from the mayor. The sitting council opposed the bill and passed a resolution to that effect. We expect a committee vote this Tuesday.

The Sky Was Falling Legislative Update 2/27/15

This week in Raleigh the sky was falling! – well it was snowing!
The news in Raleigh was dominated by snow and ice and skeleton sessions and empty calendars.  However there were a few items of interest:
Fee Increases at the Secretary of State’s Office
Secretary of State Elaine Marshall proposed several fee increases to generate funds for additional investigator positions in her office in advance of anticipated enactment of crowdfunding legislation.  She proposes increasing the fee to incorporate and LLC from $125 to $150, and increasing the fee to register as a securities salesman from $125 to $135.  Increasing these fees is expected to generate $2.68 million per year with $1 million funding twelve investigator positions in her office and $1.68 million in new revenues for the state’s general fund.  Legislators from both parties asked her to come back with fee increases that only generate $1 million.
Waiting for the Governor’s Budget
The Governor expects to deliver his budget to the General Assembly next week.  The Governor’s Budget is typically received by the General Assembly as mere “recommendations” and bears whatever relevance to the enacted state budget as the legislators give it.  The House and Senate budget committees will likely refer to it but not defer to it; they work from their own budget templates.
Gay Marriage
in reaction to the federal court rulings that struck down North Carolina’s ban on same-sex marriage, between winter storms in Raleigh the Senate debated and passed SB 2 – An Act to Allow Magistrates, Assistant Registers of Deeds, and Deputy Registers of Deeds to recuse themselves from performing duties related to marriage ceremonies due to sincerely held religious objection.  The bill allows magistrates to refuse to perform marriages without fear of being fired.  Current law defines a refusal to discharge a duty such as this as a Class 1 misdemeanor that requires an employee be “removed from office.”  While the bill avoids mention of gay marriage specifically, it would allow magistrates to recuse themselves from performing marriages by citing a “sincerely held religious objection.”  Once they submit their objection in writing, they would be barred from performing any marriage for six months or until they removed their objection.  The bill would also apply to registers of deeds who issue marriage certificates.  Bill sponsors insist that this bill is necessary to protect freedom of religion of public servants; opponents warn that passing the bill could result in other public servants refusing to perform their duties – such as performing interracial marriages.  A Senator in the Minority warned that if the bill were taken to its extremes, clerks of the Department of Revenue could refuse to process tax returns of same-sex couples or ticket takers at the state-owned zoo could refuse to process family tickets for same-sex couples.  Interestingly, two Republicans voted against the bill and two Democrats voted for it.  In listening to the legal merits of the debate we pondered as to whether they should appropriated funds to defend legal action against this bill should it become law now or wait for the budget bill.  No word on what the House plans to do with the bill.   #WWJD 

Snowmageddon Legislative Update 2/20/15

Welcome to the Snowmageddon version of the Legislative Update. What a strange week in Raleigh with cancelled schools, legislative hearings and events. Going by twitter, the only event
at which a legislative quorum was reached this week was the Duke-UNC game; it certainly wasn’t Tuesday’s Senate Session.
We should have just stayed home this week, all of us. #snowday #snOMG

True Story:

Bitter cold winter weather kept legislative activity to a minimum this week: committees were canceled and sessions had no recorded votes, with the following two exceptions:

SB 14
dealing with the Academic Standards Review Commission, Coal Ash Management Commission, the Health Information Exchange and more, passed the House Appropriations Committee and included four friendly amendments.

SB 15
Unemployment Insurance Law Changes passed the Senate with just a handful of Democrats dissenting. The bill increases required job-related contacts to potential employers from 2 per week to 5 per week as a determination of whether an individual is actively seeking work, which one legislator said is too high a threshold.

Not a True Story:

Despite what you may have heard, freshman Senator Jeff Jackson did not singlehandedly introduce, debate, filibuster, break filibuster, vote, ratify and enact his legislative agenda, which would expand Medicaid, restore funding to the universities, fund the film tax credits, end puppy mills (his shout out to the Governor), increase teacher pay, and more. He did, on the other hand, create an active Twitter feed that delighted his constituents and North Carolina Democrats, and garnered national attention, including
BuzzFeed , Rachel Maddow and Fox News. Senate Rules Chair Tom Apodaca jokingly called Sen. Jackson “North Carolina’s hardest working senator” during the Senate session he was also in.

Next Week:
 We are so looking forward to a regular week next week with committee hearings, full calendars, and less time to ponder frivolous and bizarre questions your spam filter won’t allow us to discuss here. We expect to see the Governor’s budget delivered to the General Assembly as well as the House version of an economic development/incentives plan. Stay tuned…

Valentine's Day Legislative Update 2/13/15

Welcome to the Valentine’s Day edition of Legislative Update
(not to be confused with the Friday the 13th edition).

So far in 2015 one member abandoned the Democratic caucus, several high
ranking Republican committee chairs have been demoted, red
velvet ropes keep your Government Relations Team at arm’s length
from anyone we may hug or hit, and Moral Monday demonstrations
now happen every day of the week. In short, there is no love!

But we love love.

So we scoured the NC statutes and are pleased to report that
we do, indeed, have “love” in North Carolina – in fact “love” appears
seven times – in license plates that proclaim our love for animals,
the state song, salute to the state flag, adoptions, and the statute
differentiating types of bail bonds.

We also looked up “hate”. 

The result:  Love = 7.  Hate = 0.  Not bad.

The General Assembly has still not hit its stride. Several weeks into the 2015 session and we have very little bill movement and very few committee hearings. March contains bill introduction deadlines so we expect the pace to pick up.
This week we learned from economists at the Legislature that currently revenues continue to lag behind projections. Chief Economist Barry Boardman expects a $271 million shortfall in the current year budget. Republicans suggest April tax filings may help while Democrats complain that the recent tax cuts are deeper than originally thought.
Are Senate Republicans Raising Taxes?
Senate Bill 20, filed in the Senate as an Internal Revenue Code update bill, rolled out with a surprise new “Part II” that deals with motor fuel tax changes. We pay the motor fuels tax at the pump with every fuel purchase. The rate of that tax is adjusted every 6 months, according to the price of fuel – if fuel is up, the rate goes up; if fuel is down, the rate goes down. This new section proposes a 2.5 cent cut in the state’s gas tax and adds a new minimum rate floor that would keep it from falling even lower. In June, however, the gas tax is expected to go lower than the proposed minimum rate floor, so the tax reduction included in the bill would ultimately have the effect of being a tax increase later this year. Supporters of the bill argue a minimum rate is necessary to ensure the Department of Transportation’s primary revenue source is less volatile and more reliable, in order to keep up with both the need to repair roads and the growing economy. Under current law, the formula sets the tax as the sum of 17.5 cents plus either 3.5 cents or 7% of the average wholesale price, whichever is greater. The new legislation would change the formula, setting the tax at 17.5 cents plus either an additional 17.5 cents or 9.9% of the average wholesale fuel price, whichever is greater. The bill passed the Senate on Thursday, but we’re hearing House Leadership doesn’t agree with the tax reduction talking points. Stay tuned.

Post-Super Bowl Legislative Update 2/6/15

Welcome to your Post-Super Bowl Legislative Update --

Your Womble Carlyle Government Affairs Team Member, Angel, is just happy that the Carolina Panthers are back in the running!  Now that the Super Bowl is over, professional football is starting anew.  So it is in Raleigh with the 2015 Legislative Session officially underway!  This week new committee chairs got trained to run committees, members started drafting and filing bills, and each chamber dipped its toe in the water and acted on legislation; the Governor delivered his biennial State of the State Address to a Joint Session of the General Assembly in all its finery; and there are new velvet ropes and rules restricting access to the House and Senate chambers….

Give us a call if you or your client has a question.  Although time is marching on it’s never too late for a legislative game-changer --  even at first and goal on the 1 yard line a pass can be intercepted.

Wishing you a weekend of big horses, cute puppies, ____ cowboys and cold beverages. 

PS This new larger font is sponsored by Womble Partner Chris Geis.

PPS  Laura was for the Patriots all along.

Typically the legislative session starts off slowly with the members, staff and public getting their sea legs. For example Angel and Laura have been showing new members how to navigate the legislative complex. This year is no exception with little official legislative action and lots of activity around the margins. Things will start hopping soon enough!
State of the State Address
Each biennium, the Governor addresses a joint session of the General Assembly along with the Supreme Court, the Council of State and his Cabinet. The purpose is to discuss the current state of our state as well as highlight his plans for budget initiatives and more for the coming legislative session. In the State of the State address on Wednesday night, Governor McCrory highlighted the falling unemployment rate and new jobs, vowed to raise teacher base pay to $35,000, asked the legislature to provide funding for economic incentives including the historic tax credit, and pledged to work with lawmakers to find new funding sources for road construction and maintenance. He also asked the legislature to consider two bonds costing around $2.4 million for roads and state buildings. He managed to rub a little bit of salt into the wounds of Seattle Seahawks fans while encouraging legislators to pass Medicaid reform this year saying, “Let’s not take another pass this year. Let’s run it up the middle and win a victory for families across North Carolina.” He had to stop for applause. We were interested to then see the Governor depart slightly from a normal gubernatorial agenda to continue to press for reforms for “puppy mills” – an issue near and dear to Mrs. McCrory. Stay out of the dog house, Governor.
Constitutional Amendment
Civics Note: **A constitutional amendment must pass with three-fifths of the House and three-fifths of the Senate approving. In the House that’s 72 votes (regardless of attendance) and 30 votes in the Senate. This differs from a vote to override the Governor’s veto, which requires only three-fifths of the members present and voting, which can be a very different number.
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