Jan 15, 2016

NCGA Week in Review

Joint Legislative Oversight Committee on Health and Human Services

The Joint Legislative Oversight Committee on Health and Human services came together on Tuesday, January 12th, 2016 to be updated on the progress of the Department of Health & Human Services (DHHS).

DHHS testified that of the approximately 90 items in the HHS budget, about 70% has been implemented. Featured budget items included community mental health initiatives, successful transition of youths in foster care, improved birth outcomes, and reduced funding for contracts in central management. Read more about the budget initiatives here.

The committee was updated by the Division of Mental Health, Developmental Disabilities and Substance Abuse Services (DMH/DD/SAS) on Local Management Entity/ Managed Care Organization (LME/ MCO) Reduction, as directed by HB 97: 2015 Appropriations Act. The purpose of this legislation is to mitigate cash flow problems that LME/MCOs experience at the beginning of each fiscal year. DMH/DD/SAS was directed to reduce its allocation for single stream funding by $110,808,752 in nonrecurring funds this fiscal year. Read the relevant legislation here and the report here.

The NC Health Information Exchange Authority (NC HIEA) provided an update on their organizations timeline and funding. By February, 2018, all Medicaid providers are to be connected to the NC HIEA. Read more about the NC HIEA here.

Updates on two Medicaid waivers that the legislature mandated DHHS to submit were presented by DMH/DD/SAS.

The first waiver, established by HB 97, targets adults who have experienced Traumatic Brain Injuries (TBI). The program has an average cost of $60,000 per participant and will reach 49 people in the first year of implementation. Read more here.

The second waiver, established by SB 423:Foster Care Family Act, targets children with serious emotional disturbances, including children in foster care programs. This pilot program was implemented in 9 states from 2007-2012, where it served 5,300 children; outcomes included reduced suicide attempts, improved school attendance, decreased contact with law enforcement and savings of up to 68% over cost of psychiatric residential treatment facilities. Read more about the waiver here.

In 2012, North Carolina signed a settlement agreement with the US Department of Justice to settle claims that the state had violated the American with Disabilities Act. DHHS provided an update on the settlement agreement which required the state to make sure that persons with mental illnesses are able to live in the least restrictive setting of their choice. The department is currently in the implementation phase of this initiative. Learn more about the Transition to Community Living Initiative here. Read the update from DHHS here.

Joint Legislative Oversight Committee on Medicaid & NC Health Choice

The Joint Legislative Oversight Committee on Medicaid and Health Choice was established as a part of the Medicaid reform bill, H372: Medicaid Transformation & Reorganization, to examine budgeting, financing, administrative, and operational issues related to the Medicaid and NC Health Choice programs administered by DHHS. The committee held their first meeting on Tuesday, January 12th, 2016.

A representative of DHHS testified that there has been a dip in enrollment, and that enrollment is significantly below projections for the year. See the full report here. DHHS also provided a financial update, where they projected coming in under budget this fiscal year. In November, the Medicaid program was $139 million under budget. This has been driven by three main factors: lower service consumption, flat enrollment growth, and lower costs driven by a changing population profile. Read the full financial update here.

The newly created Division of Health Benefits (DHB), created by HB372, updated the committee on their vision and formation. The vision of the division is to improve the quality of health care for Medicaid beneficiaries. Read more about the new division here.

Revenue Laws Study Committee

The Revenue Laws Study Committee had their inaugural meeting of 2016 on Tuesday, January 12th to discuss the tax law changes made by the HB 97: 2015 Appropriations Act,HB 117: NC Competes Act, HB 943: Connect Bond Act of 2015, and other legislation.

Cindy Averett of the NCGA Research Division and Scott Drenkard, Director of State Projects at the Tax Foundation, provided overviews of the tax law changes and illustrated how they will affect the state. The 2015 Appropriations Act notably reduced the corporate income tax rate from 6.9% in 2013 to 4% in 2016, making it the lowest income tax rate in the country among the states that levy one. Many other improvements were made to the tax climate in North Carolina through these sweeping reforms. The Connect NC Bond Act, proposed to citizens on the March, 2016 primary ballot, would use a $2 billion bond to "connect North Carolina to the 21st century" through major investments in infrastructure. View the presentations here and here. Click here for a full list of projects in the Connect NC Bond Act.

Additionally, Jonathan Tart of the NCGA Fiscal Research addressed the Single Sales Factor Apportionment introduced in the 2015 Appropriations Act. A fiscal impact estimate will be done following reports filed in April, but the change is expected to draw industry to the state. View the full presentation here.

The committee will continue to review a host of tax law changes in the interim. Their next meeting is scheduled for February 9th, 2016.

Joint Legislative Committee on General Government

This new committee, created to examine the agencies that provide state services and make ongoing recommendations for improvement to the General Assembly, met for the first time on Monday, January 11th, 2016.

Secretary Cornell Wilson, Jr. of the NC Department of Military and Veterans' Affairs, updated the committee on the strides the department has made since their inception. With a goal to be a fully functioning self-dependent agency by April 1, 2016, Secretary Wilson highlighted agency milestones, such as the Department Unveiling on November 9th, 2015. Their vision is to make NC the most military and veteran friendly state in the US. Read more about the department's initiatives here.

NC Government Efficiency Reform (NC GEAR), created by S.L. 2013-360 to identify efficiency and effectiveness reforms, provided an overview of recommendations made in 2014 and 2015, that are currently underway. These recommendations are summarized here, and range from merging the departments of Natural and Cultural Resources, directing the department of Health and Human Services to prioritize child support payments to the most vulnerable families.

Joint Legislative Oversight Committee on Capital Improvements Oversight

The Joint Legislative Oversight Committee on Capital Improvement Oversight Committee was created under the authority of the 2015 Appropriations Act in order to examine the capital improvements requested by, authorized for, and undertaken by or behalf of state agencies.

The committee, meeting for the first time on Wednesday, January 13th, 2016, discussed the broad process of agency requests and use of capital improvement funds. Members expressed concern for the lack of a requirement for a sinking fund in for funded projects. Read more about the Capital Improvement Program here.

The committee heard from Will Johnson, Associate Vice President for Finance and Capital Planning for the University of North Carolina System. Johnson explained the process that the university system uses to review the needs of its 17 campuses across the state. The UNC System has worked to increase their STEM programs and has used the Repair and Renovation reserve to improve older buildings across their campuses. Sen. Tommy Tucker (R- Union), indicated a desire to allow and require state universities to use overhead receipts for necessary repairs. His suggestion, he conveyed, would allow schools to sustain themselves without as much reliance on Capital Improvement funds. Click here to read more about the Capital Planning Process for the UNC System.

The committee will reconvene on February 10th, 2016.

Joint Legislative Oversight Committee on Justice and Public Safety

The Joint Legislative Oversight Committee on Justice and Public Safety met on Thursday, January 14th, 2016. The purpose of the committee is to examine the correctional, law enforcement, and juvenile justice systems in NC and to make ongoing recommendations to the General Assembly to protect the public and to punish and rehabilitate offenders.

Secretary Frank Perry of the Department of Public Safety (DPS) testified to the committee about the reorganization that occurred within his department and recent developments of the department. Several legislators questioned whether a 2013 reorganization of the adult and juvenile correction activities into one agency was constitutional. A memo from NCGA bill drafting division in October 2015, was cited. The committee requested that NCGA staff draft legislation that will make conforming changes to law to ratify the reorganization. Read the Secretary’s memorandum on the reorganization here.

Additionally, Secretary Perry testified to the committee that 42 threats were prevented by a taskforce of approximately 475 state and local law enforcement officers led by DPS during the men’s and women’s US Open Golf Tournaments in 2014 in Pinehurst. When asked whether the state is equipped to handle threats that come along with such major events, Secretary Perry stated that they are not as prepared as they should be but there is no finish line when it comes to these types of threats.

Secretary Perry addressed the gang issue in North Carolina, stating that 1 in every 7 prison inmates have a gang affiliation. The state is currently tracking 314 active gangs.

Susan Sitze of the NCGA Research Division, reported on S.L. 2010-94, which required DNA samples to be taken upon arrest for certain offenses. Legislation in 2015 added all violent felonies to this list; this expansion is projected to quadruple the current $2.5 million annual cost.

Forensic Scientist, Amanda Thompson of the NC State Crime Lab provided testimony on this initiative, reporting that 50,000 arrestee samples have been received since February 2011, with no accumulated inventory, or backlog. The samples have matched to six homicides, 49 sexual assaults, and nine armed robberies. The committee plans to make a recommendation in April for the legislature to consider during this year’s short session. Read the report here, and testimony here.

Agriculture Awareness & Forestry Study Commission

In their first meeting of the interim, the Agriculture and Forestry Study Commission reviewed four presentations on issues currently facing NC's agricultural industry.

17% of the state's workforce work in agriculture, totaling 663,000 jobs, and a $77 billion economy.

Federal tax law, that incentivizes farming, has not been matched by the state, according to Guido van der Hooven, Extension Specialist of Agriculture and Resource Economics at North Carolina State University. This disparity can cause cash flow problems for farmers. Depreciation bonuses, Domestic Production Activities Deductions, and Employee Income Tax deductions, attempt to make up for these concerns, but van der Hooven suggested this may not be enough to encourage young farmers to enter the industry. Read van der Hooven's full report here.

Presenting on the successes and contributions agriculture makes to the state, Joy Hicks, a policy analyst from the NC Department of Agriculture and Consumer Resources, brought three primary concerns of the NC Department of Agriculture and Consumer Services (NCDA&CS) to the commission. Her first concern, echoed by Sen. Bill Cook (R-Beaufort), is the transfer of land use from farmland to solar energy farms. Hicks then formally requested that the commission introduce legislation to ban registered sex offenders from the NC State Fair, which draws over 1 million visitors annually in its two week run. Finally, Hicks requested that the commission focus on drainage issues that have been exacerbated by heavy precipitation across the state this fall and winter.

In 2011, Congress passed the Food Modernization Act with strong bipartisan support. According to Joe Reardon, NCDA&CS, this legislation will have substantial cost on North Carolina's farmers and agriculture industry. The act is being carried out by the FDA to increase food safety, but members of the commission had concerns about over regulating NC's agriculture industry.

In 2015, the NC legislature passed SB Industrial Hemp to allow hemp growth in the state for research purposes. Hemp, the male cannabis plant, must have less than .3% THC, the psychoactive ingredient in marijuana, and can be used as a textile. The Industrial Hemp Commission will be created after $200K in outside funding for the commission is raised. The commission will establish an agricultural program and issue licenses for the cultivation and growth of industrial hemp in North Carolina. They will facilitate the market opportunities for industrial hemp to help the state, and investigate methods of industrial hemp cultivation that are best suited to soil conservation and restoration.

Members of the commission and visitors were invited to the NCDA&CS Agriculture Forum on February 4th. The forum will discuss agribusiness issues such as food insecurity in NC. Learn more about the forum and register 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