United States: North Carolina General Assembly Week In Review - September 18, 2015

Governor signs NC Budget

The Governor signed the budget bill, HB 97, earlier today. Thursday night, just after midnight, the House gave its final approval to HB 97, the 2015 Appropriations Act.

The House went into session at 5 pm on Thursday, to start debate on the budget bill. The House debated the bill for 5 hours. In the end, 9 Democrats voted with 71 Republicans in favor of the budget, Rep. Gale Adcock (D-Wake), Rep. William Brisson (D-Bladen), Rep. Ken Goodman (D-Richmond), Rep. Charles Graham (D-Robeson), Rep. Susi Hamilton (R-New Hanover), Rep. Rodney Moore (D-Mecklenburg), Rep. William Richardson (D-Cumberland), Rep. Ken Waddell (D-Columbus), and Rep. Michael Wray (D-Northampton).

The Senate gave its approval on Wednesday. The Senate debate began on Tuesday at 2 pm, just over 14 hours after the conference report was published online. The vote was mostly along party lines, with the exception of three Democrats, Sen. Ben Clark (D-Hoke), Sen. Jane Smith (D-Robeson), and Sen. Erica Smith-Ingram (D-Northampton) voting in favor of the budget on its final reading.

The State has been operating under a continuing resolution (CR) since July 1, 2015. The current CR was set to expire tonight at 11:59 pm.

Read HB 97 here.

Medicaid reform bill to be heard next week

On Thursday, September 17, the conference committee report for HB 372, Medicaid Transformation and Reorganization, was reported into the House and Senate chambers. Under the new plan, Prepaid Health Plans (PHPs) will be responsible for the delivery of Medicaid services. The bill defines PHPs as "an entity, which may be a commercial plan (CP) or provider-led entity (PLE) that operates or will operate a capitated contract." Additionally, the bill defines a CP as "any person, entity, or organization, profit or nonprofit," and defines a PLE as an entity in which "a majority of the entity's ownership is held by an individual or entity that has as its primary business purpose the ownership or operation of one or more Medicaid and Health Chose providers" and a majority of the entity's governing body must be composed of physicians, physician assistants, nurse practitioners, or psychologists.

As originally proposed in the Senate's reform plan, three PHPs will contract with the Division of Health Benefits and will serve recipients statewide. Additionally, the Division of Health Benefits could contract with up to 10 PLEs for regional contracts. Medicaid recipients will be able to choose their preferred plan, whether it is a CP or PLE, or a statewide or regional plan.

Under the new compromise plan DHHS will continue to have full authority to manage the Medicaid and NC Health Choice programs. A new division, however, will be created. The newly-created Division of Health Benefits will be responsible for implementing Medicaid reform, and will eventually take over the duties currently vested in the Division of Medical Assistance (DMA). Twelve months after capitated contracts begin, DMA will be eliminated.

The state's current LME/MCOs will continue to manage all of the behavioral health services that they currently provide, for at least four years. After that time period, it is possible that behavioral health care could be turned over to the PHPs, if the legislature chose to do so.

Once HB 372 becomes law, the Division of Health Benefits and a legislative oversight committee, the Joint Legislative Oversight Committee on Medicaid and NC Health Choice will both be created. Additionally, the new division will be responsible for submitting all necessary waivers and State Plan amendments (SPAs) to the Centers for Medicare and Medicaid Services. It is expected that the process to get all of the proper approval for necessary waivers and SPAs could take from 12 to 24 months. Eighteen months after the state receives approval, capitated contracts under PHPs will begin, and initial recipient enrollment must be complete.

It is expected that the House and Senate will both vote on the measure on Tuesday, September 22. Governor McCrory has stated that he plans to sign the legislation.

Read the conference report to HB 372 here.

Agreement reached on economic development bill

Late Thursday night, the conference report to HB 117, NC Competes Act, was posted on the NC General Assembly website. The conference report contains changes to the Job Development and Investment Grant (JDIG) and OneNC programs, several changes to the tax code, and a section dealing with tax compliance and fraud prevention.


The JDIG program underwent the most modifications. Under the conference report, the program was given a three year extension, changing the expiration from January 1, 2016 to January 1, 2019.

The conference report creates a new category of qualifying project called a high-yield (HY) project. A qualifying HY project is a project that has an investment of at least $500 million in private funds and provides 1,750 jobs. The conference report allows the grant to be disbursed for 20 years, unless the project becomes disqualified, where the grant will terminate in the year the project becomes disqualified.

Additionally, HB 117 will increase the State's liability cap from $15 million to $20 million, for a year in which no grant is awarded for a HY project, and $35 million for years that include a grant awarded to a HY project. The grant will be available in semiannual commitment limitations less than or equal to 50%.

The conference report changes the disbursement for projects located in tier 2 counties, to allow only 10% of the grant to be diverted to the Utility Fund. It also modifies the percentage of withholdings to 80% for tier 1 counties and 75% for tiers 2 and 3. The grant will allow businesses that meet the HY requirements for 3 consecutive years to receive 100% of withholdings for each eligible job for the consecutive 3 years.

Also, it adds a new requirement of local government participation in the recruitment and offer of incentives. It requires rejected offers to be published in a list.


The only change to OneNC is the matching formulas. Under the conference report, the state will match $3 to every $1 in local money for tier 1 counties, $2 to $1 for tier 2 counties, and $1 to $1 for tier 3 counties.

Tax changes

The conference report provides a tax credit on electricity for Datacenters with $75 million in private investment funds. Aircrafts weighing between 9,000 pounds and 15,000 receive a tax credit on jet fuel. Modular homes, aircrafts, and jet engines are added under the privilege tax. The conference report exempts motor vehicle service contracts and motorsports parts and fuel from sales tax. The conference report also includes various changes impacting tax compliance and fraud prevention.

What is not included

The conference report does not address the sunset of several tax credits, set to expire in this fiscal year including renewables and the Research and Development tax credits.

The finance portion of the state's budget, HB 97, is contingent on HB 117 becoming law before January 1, 2016. The conference report to HB 117 is set to be heard in the Senate on Monday.

Read the conference report to HB 117 here.

Compromise reached on local government regulation bill

The House and Senate voted to approve a conference report to HB 44, Local Government Regulatory Reform 2015. The conference report:

  • Provides local governments different options for notice to chronic violators of overgrown vegetation ordinances.
  • Authorizes cities to regulate uninhabitable structures that unreasonably restrict the public's right to use the state's ocean beaches.
  • Prohibits local governments from requiring compliance with voluntary state rules and regulations or rules and regulations with a delayed effective date.
  • Repeals the requirement local governments comprising the local health department maintain operating appropriations from local ad valorem taxes.
  • Provides developers of property located partly within the municipality options to 1) apply the county land use planning ordinances to the entire property or 2) apply the municipality's ordinances to the portion within the municipality and the county ordinances to the rest of the property.
  • Allows local governments to permit irrigation and drinking water wells.
  • Limits fence wrapping signage to advertising sponsored by a person directly involved in the construction of the project
  • Removes exception for zoning permits from the Permit Choice statutes, NC Gen. Stat. § 143-755
  • Makes various changes to the Preaudit Certification statutes, effective October 1, 2015.
  • Limits local governments' ability to regulation beehives.
  • Requires notices to adjacent property owners prior to the start of any construction project, but limits the notice period to 15 days.
  • Includes modifications to riparian buffer regulations.
  • Requires zoning density ordinances to provide credits or severable development rights for dedicated rights-of-way.
  • Makes various changes to inspections of buildings certified by licensed architects or licensed engineers.
  • Clarifies local governments' authority to define bedroom.
  • Provides more flexibility to cities regarding development agreements.

The bill will be sent to the Governor.

Read HB 44 here.

Senate sends Employee Misclassification Bill back to House for concurrence

On Thursday, the Senate signed off on its own version of Employee Misclassification Reform, HB 482. The Senate made substantial changes to the bill.

The Senate Committee Substitute for HB 482 (SCS) requires the advisory council to meet at least quarterly. The Senate also modified the House bill by creating a new appeal process for the employer within the Industrial Commission. It removes the following two factors the House included in its version of the bill dealing with how independent contractor status was determined, 1) the level of the individual's investment in equipment or tools required to perform the work and (2) the individual's opportunity for profit or loss. The Senate further removed a requirement that violation of the statute constituted revocation of the violator's license, and disqualification of some violators from contracting with the State. It removes the exception for newspaper, shopping news, and magazine distributors from the employment definition under the Unemployment Insurance statutes. Finally, the SCS removes the appropriations to DOR for administration and enforcement of the statute.

The bill is currently in the House Rules Committee.

Read HB 482 here.

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