Jul 27, 2015

North Carolina General Assembly Week in Review

Press Conference and Possible Veto

On Tuesday, July 21, 2015, Senate Majority Leader Harry Brown (R-Onslow) held a bipartisan press conference touting his plan to change the distribution method of local sales taxes in North Carolina. Sen. Brown stated in his press conference that he was joined by 40 rural counties and that there may have been more to join him had he had more time.

Under Sen. Brown’s tax redistribution plan, sales tax money would be distributed based mostly on population rather than where the sales occur. Under the current distribution model, 75 percent of the sales tax goes to the county and city where the purchase is made, while 25 percent is distributed across the state based on population. Sen. Brown’s proposal would shift the distribution gradually over the next 5 years, so that effective July 1, 2019, 20 percent would be distributed to the county or city where the purchase is made, while 80 percent would be distributed across the state based on population. Currently Sen. Brown’s tax plan is included in Senate Bill 369, Sales Tax Fairness Act, and at the end of the Senate’s proposed budget.

Also on Tuesday, Governor McCrory issued a press release stating he would veto Senator Brown’s tax redistribution proposal. In the press release Governor McCrory stated, “[SB 369] will result in a tax increase for millions of hard working middle-class families and small business owners throughout North Carolina.” He further stated, “This legislation will decimate our travel and tourism sector, particularly in our mountain and beach communities, shop owners and their employees who depend on tourism for their livelihood. Instead of pursuing left-wing ideas that continually fail, it’s time for the General Assembly to get to work on job creation for all North Carolina.”

The plan has not passed the House chamber. Because Senator Brown’s redistribution tax proposal was included in Senate’s budget proposal, House Bill 97, the Senate chamber passed the plan when it passed its budget proposal.

See Senate tax proposal documents here. Read Senate Bill 369 here.

Senate Committees

On July 14, Sen. Tom Apodaca (R-Henderson) announced on the floor of the Senate leadership planned to wrap up committee meetings by last Thursday, July 23. The Senate held 14 committee meetings last week and have not scheduled any further committees to meet this week. Although Senate committees be held on an “as needed” basis, there will no longer be regularly scheduled Senate committee meetings.

It is not unusual at this point in the session for the chambers to stop holding regularly scheduled committee meetings in order to focus work on the budget negotiations. However, there has not yet been an announcement made by the House that House committees intend to wrap up soon.

House Appropriations hear public comment on HB 97

On Wednesday, July 22, 2015 the House Appropriations committee heard public comment on the Senate’s proposed budget. Mayors from across the state expressed support regarding funding for transportation, historic tax credits, and JDIG. While several school superintendents expressed the need for additional principal and assistant principal pay, restoration of the Master’s degree program, TA funding, and driver education funding.

The committee will again hear public comment this Wednesday, July 29, 2015.

See Fiscal Research’s presentation given in committee here.

Regulatory Reform Bill goes to Conference

The House failed to concur in the Senate’s regulatory reform bill, HB 765, Regulatory Reform Act of 2015, on Wednesday, July 22, 2015 after hearing public comment the day before in committee on the bill. The House wasted no time, appointing conferees the same day. The Senate appointed conferees on Monday, July 27, 2015. Rep. Pat McElraft (R-Carteret) and Sen. Trudy Wade (R-Guildford) will chair the committee.

Read HB 765 here. See the list of conferees here.

Transportation Network Company Bill

On Thursday the Senate passed SB 541, Regulate Transportation Network Companies, 41-5. The bill would establish regulations on a transportation network company (“TNC”). A brokering transportation network company is defined as “a transportation network company … that exclusively dispatches TNC drivers that operate either … for‑hire passenger vehicles regulated under G.S. 160A‑304” or “for‑hire passenger vehicles regulated under G.S. 62‑260(f) and subject to the requirements for security for protection of the public and safety of operation established for regulated motor common carriers.” This definition would include companies such as Uber, Lyft, and Sidecar.

The bill requires TNCs to obtain permits and pay an annual renewal fee, both at a cost of $5,000 each. TNCs must also conduct local and national criminal background checks on TNC drivers. The bill is sponsored by Sen. Floyd McKissick (D-Durham) and Sen. Bill Rabon (R-Brunswick). SB 541 is supported by Uber and Lyft.

Read Senate Bill 541 here.

Charter School Authority Bill

On Thursday, the Senate passed, 32-14, HB 334, Transfer Office of Charter Schools. The bill makes several changes in the state’s oversight of charters schools. It establishes the Office of Charter Schools under the State Board of Education (SBOE), instead of under the Department of Public Instruction (DPI), modifies the charter school advisory board, and enhances the charter school application process.

Sen. Jerry Tillman (R-Randolph) presented the bill in the Senate Education committee on Wednesday. Sen. Tillman stated that charter schools offer alternatives to public schools and he is in favor of removing impediments that interfere with that choice. Sen. Josh Stein (D-Wake) opposed the transfer from the DPI to the SBOE.

The House passed HB 334 on April 21, 2015, 112-2. Because the Senate made changes to the bill, the House will now vote on concurrence to the Senate’s changes.

Read House Bill 334 here.

Revenue Changes

On Thursday, the Senate passed SB 605, Various Changes to the Revenue Laws, that makes numerous changes to the state’s revenue laws. Most of the changes are minor, but one change is being opposed by Lt. Governor Dan Forest. The provision would repeal check-off boxes on tax returns that make contributions to N.C. Education Endowment Fund, an education endowment that rewards good teachers. Further provisions are as follows:

Part I addresses business tax change and includes eliminations of several deductions from the corporate and franchise tax laws that the Senate has deemed “antiquated or obsolete,” such as: deductions for marketing assessments on tobacco grown in NC, interest and gains of a trust resulting from the tobacco settlement, and amounts paid from the Hurricane Floyd Reserve Fund and Disaster Relief Reserve Fund for hurricane relief. Corporate income tax changes would be effective for taxable years on or after January 1, 2016. Franchise tax changes would be effective for taxable years beginning or after January 1, 2017. These changes are also included in the Senate’s proposed budget, the seventh edition to House Bill 97.

Part III addresses changes to sales tax and includes the repeal of the sales tax exemption for items sold by a nonprofit organization when the receipts from the sale of the item will be directly or indirectly contributed to the State or school (i.e. a museum gift shop).

Part IV addresses changes to the excise tax and includes a provision that authorizes wine shippers to file excise tax returns on shipments once a year, rather than monthly.

Read Senate Bill 605 here. Read the summary of the bill here .

Warrantless Cell Phone Search

On Thursday, the Senate Judiciary I committee passed HB 804, Kelsey Smith Act. The bill would permit “warrantless access by law enforcement to telecommunications device location information under certain circumstances.”

Under the bill, a wireless service provider would be required by law to provide call location information of a user to the law enforcement agency or public safety answering point, upon request. The bill also authorizes a law enforcement officer to install and use a pen register or trap and trace device, without first obtaining a warrant, when the officer determines either an emergency situation exists that involves immediate danger of death or serious bodily injury and there are grounds upon which an order could be entered to authorize such an installation and use. The officer must then seek an order approving the installation or use within 48 hours.

The bill passed the house 118-2 on April 29, 2015. The bill is scheduled be heard on the Senate floor this evening, July 27, 2015.

Read House Bill 804 here.

Death Penalty Changes

On Thursday, the Senate Judiciary II committee reported out favorably HB 774, Restoring Proper Justice Act. The bill amends the law requiring the presence of a licensed physician at the execution of a death sentence by also allowing a medical professional other than a physician, including a physician assistant, nurse practitioner, registered nurse, emergency medical technician (EMT), or EMT-paramedic, to monitor the injection of the required lethal substances and certify the fact of the execution. However, if a licensed physician is not present at the execution, a licensed physician is required to examine the body after the execution and pronounce the person dead.

The bill is scheduled to be heard on the Senate floor this evening, July 27, 2015. The bill passed the House 84-33.

Read House Bill 774 here.

Historical Monuments

SB 22, Historic Artifact Mgt. and Patriotism Act, was signed by the Governor on Thursday, July 23, 2015. The bill seeks to ensure respectful treatment of the American flag and the North Carolina flag by establishing a division as the clearing house for the disposal of worn, tattered, and damaged flags.

However, the controversial part of the bill is the provisions that seek to protect monuments and memorials commemorating events, persons, and military service in North Carolina history. Gov. McCrory stated in a press release “Our monuments and memorials reminds us of North Carolina’s complete story.” He further stated, “I remain committed to ensuring that our past, present and future state monuments tell the complete story of North Carolina. While I disagree with the process created in the bill and the overreach into local decision making, the overall goals of the bill merit my signature.”

The bill passed the Senate on April 22, 2015, 48 to 0, and passed the House on July 21, 2015, 70-39.

Read Senate Bill 22 here.


Harry Kaplan
Senior Vice President

Jeff Barnhart
Senior Vice President

Franklin Freeman
Senior Vice President

Bo Heath
Senior Vice President

John Merritt
Senior Vice President

Johnny Tillett
Senior Vice President

Kerri Burke
Vice President

Jillian Totman
Assistant Vice President

Sarah Wolfe
Assistant Vice President