United States: North Carolina General Assembly Week In Review - May 11, 2015

State Pays Off Unemployment Insurance Debt, Predicts Budget Surplus

This week, in a press conference at the state capitol building with House and Senate leaders, Gov. Pat McCrory (R-NC) announced that North Carolina had paid off the $2.8 billion debt it owed to the federal government for unemployment insurance benefits and noted that the state had done so three years ahead of schedule. Additionally, this week saw a joint report published by the Office of State Budget and Management and the legislature’s non-partisan Fiscal Research Division which predicted that North Carolina will collect $400 million more in revenue this year than the state expected. If this rings true, legislators would then have to decide specifically how to allocate that surplus in the state budget. The House and the Senate return to action on Monday, May 11th.

NC Pays Off $2.8 Billion Unemployment Debt

Top Republican leaders announced this week that North Carolina has paid off a $2.8 billion unemployment insurance debt it owes to the federal government, three years ahead of schedule. The accelerated repayment was accomplished in just two years as a consequence of an overhaul of the state’s unemployment insurance program that reduced the size of payments as well as the number of weeks the jobless could collect unemployment benefits. The final payment to the federal government, made this week, was announced in the old House chamber of the state capitol building by Gov. McCrory (R-NC), Senate leader Phil Berger (R-Rockingham) and House Speaker Tim Moore (R-Cleveland), along with various administration officials.

Several legislators attended as well, including the co-authors of the unemployment overhaul: Rep. Julia Howard (R-Mocksville), and Sen. Bob Rucho (R-Matthews). Rep. Howard and Sen. Rucho ceremoniously wielded a giant pair of scissors to cut an oversized symbolic credit card in half. When Gov. McCrory took office, the state’s debt to the federal government was about $2.5 billion.

Watch the Governor’s announcement here

Projections Show $400 Million NC Surplus

North Carolina will collect around $400 million more in revenue this year than State officials expected – a surplus that House and Senate leaders said is in large measure a result of the fact that taxpayers received lower refunds or are paying more to settle up in this year’s tax season. The State’s last prediction, made in mid- February, had in fact forecast a budget shortfall of about $270 million. Republicans immediately hailed the surplus as excellent news that they said clearly shows tax changes in recent years have left North Carolina in strong financial shape. Democrats, on the other hand, cast the surplus largely as a disappointment, saying much of it was generated by middle-class taxpayers who lost deductions or exemptions and paid more this year.

A joint report, which was developed by the state budget office and the legislature’s nonpartisan Fiscal Research Division, says the projected surplus is “predominately due to higher income tax payments and lower refunds from the 2014 tax year.” Wages, sales tax receipts and withholdings from paychecks were also relatively flat or down, according to the report.

Read the report here

House Approves Renewables Freeze

The House voted this week to freeze North Carolina’s renewable energy standard and remove price supports for future solar farms. The changes were part of House Bill 760, Regulatory Reform Act of 2015, a comprehensive package that addresses protective buffers for rivers, and curtails the investigatory powers of wildlife officers, among other things. The measure had its first vote on the night before crossover, when an amendment to the bill froze the State's renewable energy portfolio standard, and repealed the 80 percent tax exemption for solar farms.

After further amending, the property tax break was restored, but utilities will no longer have to buy renewable energy unless they need it. Beginning in 2017, they will no longer have to offer lucrative contracts to solar farms over 100 kilowatts. The current requirement for a standard qualifying contract is 5 megawatts, the size of most of the small solar farms in North Carolina.

Read H760 here

Senate Approves Keeping 15-Point Scale for School Grades

The Senate gave unanimous approval this week to a two-year extension of a more forgiving 15-point scale used to assign public schools A through F grades. House Bill 358, School Performance Grade Scale, will most likely keep hundreds of schools from dropping below the C grades they received based on last year’s test results and indeed many would have fallen to Ds or Fs this year if North Carolina had stayed with a plan to begin using a 10-point grading scale.

On the way to the final vote, Republicans used a parliamentary maneuver to stop a proposal that would give more weight in the grading formula according to student growth, or how much pupils learn year over year. For elementary and middle schools, scores on standardized tests count for 80 percent of their grade, while growth counts for 20 percent. The State released the first grades in February, with the results showing a high correlation between the wealth of students’ families and the grades their schools received.

Read H358 here

Bill Would Expand DNA Collection from Felony Suspects

Suspects arrested for a violent felony would automatically have their DNA collected, if a bill passed Thursday by the Senate Judiciary II committee becomes law. Senate Bill 351, Collect DNA All Violent Felony Arrests, adds more than 30 crimes to the list for which DNA collection would be mandatory. Currently, North Carolina requires police agencies to collect DNA from suspects arrested for a wide range of crimes in the State. Those include murder, kidnapping, armed robbery, among other things. SB351 would add malicious castration, train robbery and secret peeping to that list.

The bill’s sponsor, Sen. Josh Stein (D-Wake) said of the measure "DNA analysis is an extremely powerful tool for keeping our community safe, unfortunately, only 10 percent of all felonies are currently covered by the DNA sampling law.” The new group of felonies covered by Stein's bill would add roughly 4,000 DNA samples every year.

Read S351 here

Vehicle Insurance Tax Dropped from Road Maintenance Bill

A proposed vehicle insurance tax was removed this week from legislation designed to reduce North Carolina's dependence on gas tax revenue to build and maintain its highways. House Bill 927, Reestablish NC as the “Good Roads State” had previously included language which called for a 6.5 percent tax on automobile insurance premiums, which would have added around $106 to the average auto policy. Bill sponsor Rep. John Torbett, (R-Gaston), said during a House Transportation committee meeting this week that while the bill remains "under construction,” the insurance section "is not going to be in there."

Although Rep. Torbett didn't say why the insurance tax was dropped, it was clear the measure had drummed up intense opposition over the last few weeks. Indeed, even after Rep. Torbett announced the change, State Insurance Commissioner Wayne Goodwin told committee members what a bad idea an auto insurance tax would be.

Read H927 here

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