May 22, 2020
North Carolina General Assembly — Coronavirus (COVID-19) Update
Earlier this week, Governor Roy Cooper signed Executive Order 141, easing restriction on travel, business operations, and mass gatherings. In this next steop of quarantine, called Phase 2, restaurants will be able to operate at 50% dine-in capacity with distancing and cleaning requirements. Pools and personal care businesses, including salons and barbers, can also operate at 50% capacity with distancing and cleaning requirements. Employees of personal care businesses will be required to wear face coverings. Childcare facilities, day camps, and overnight camps will be open with enhanced cleaning and screening requirements. Retail businesses which were allowed to open in Phase 1 at 50% capacity will continue at that level. Businesses such as bars, night clubs, gyms and indoor fitness facilities as well as indoor entertainment venues such as bowling alleys, public playgrounds, and movie theaters will remain closed.
As of Thursday morning, in the state of North Carolina, there were 20,910 confirmed cases of COVID-19, 290,645 completed tests, 716 deaths, 578 current hospitalizations, and all of the state's 100 counties had seen confirmed coronavirus cases. As we all continue to feel the effects of the global pandemic and adjust to a new normal, we want to highlight a few ways our clients across North Carolina have worked to support residents and make this time a little easier for those throughout the state. Read more about what our clients are doing to help by clicking here.
For more information on COVID-19 in North Carolina, click here to visit the Department of Health and Human Services website, and be sure to stay up to date on the latest federal guidelines issued by the Centers for Disease Control and Prevention (CDC) by clicking here.
Senate Commerce and Insurance
The Senate Commerce and Insurance Committee met Monday, May 18 and Wednesday, May 20 to discuss Unemployment Insurance (UI) and tourism regulations. The committee heard an update Monday from Assistant Secretary of the Division of Employment Security (DES), Lockhart Taylor, on North Carolina's unemployment security benefits plan. DES took 125,000 unemployment insurance claims during the first week of North Carolina's state of emergency. Now the division has upped their staff to 2,600 in order to answer 60,000 calls per day. As of Thursday, 922,821 North Carolinians have applied for UI and 565,970 claims have been paid. Committee members raised questions regarding their constituents receiving UI payments in a timely manner. Taylor told members that the DES system has been so overwhelmed by the number of claims that it has lead to dropped calls, unanswered questions, and slow payment times. Members were skeptical about how the process was being handled, but praised Taylor for his steadfast work during the pandemic. The committee also heard from citizens of North Carolina who were invited to speak in front of the committee. The speakers voiced their concerns over prompt payments and urged the committee to look for solutions to put all North Carolinians back to work.
The Senate Committee on Transportation heard an update from State Auditor Beth Wood on the North Carolina Department of Transportation's (NCDOT) most recent audit. The audit found that NCDOT overspent its cash spending plan by $742 million. NCDOT's budget was hit hard by unexpected expenses due to storms, disasters, and Map Act claims. Auditor Wood presented the committee with her departments finding's citing, the lack of oversight of spending plans across NCDOT's 14 divisions. Earlier this week, NCDOT announced it will furlough nearly all of its employees in phases during the next several weeks. The department said the pandemic has cost the department $300 million in revenue.
The audit found that NCDOT continued ongoing projects despite not having the cash on hand. Additionally, Auditor Wood found that the department had continued to approve advanced construction projects for which they were not reimbursed until after the completion of the project. Auditor Wood told the committee that her team found gaps in reporting on $4.8 billion in NCDOT projects. The audit team found $1.3 billion in originated funding for projects from state funds and bonds. However, there were no reports on how the money was spent in addition to the remaining $3.5 billion on advanced construction.
The General Assembly has passed legislation in the last few years to assist NCDOT, but have not yet found a sustainable solution to the department's cash floor problem. Auditor Wood and the committee agreed to look into legislation regarding additional oversight of the department. The committee will meet next week to hear a response from NCDOT officials.
The House Rules Committee met Tuesday, May 19 to discuss House Bill 1079: Various Sales Tax Changes, House Bill 1067: Modernize Debt Settlement Prohibition, and House Joint Resolution 1152: Extend Certain Filing Deadlines. All three bills passed unanimously through committee and through the House during the floor vote.
Highlights from the bills include:
House Bill 1079: Various Sales Tax Changes
House Bill 1079 has three parts consisting of various sales and use tax changes:
Part I – Provides relief to auctioneers and estate sale companies in light of recent law changes.
Part II – Expands the scope of the sales and use tax exemption for equipment purchased by a large fulfillment facility.
Part III – Makes the following changes with respect to the sales tax on digital property:
- Clarifies that the provision of an "educational service" by certain institutions, regardless of whether all or a portion of the instruction is delivered through an online class, whether live or recorded, is not a taxable event.
- Exempts sales of digital audio works and digital audiovisual works that qualify as an educational expense when purchased by the operator of a home-school.
- Exempts sales of digital audio works and digital audiovisual works that consists of nontaxable service content when the transfer occurs contemporaneously with the provision of the nontaxable service in real-time.
House Bill 1067: Modernize Debt Settlement Prohibition
House Bill 1067 would move the prohibition of debt adjusting and debt settlement from the criminal chapter into the civil chapter on consumer protection and would expand the prohibition as follows:
- Include the conduct of affiliates to determine if debt adjusting or debt settlement occurred.
- Treat any fees paid as consideration, regardless of when paid.
- Make debt adjusting and debt settlement unfair trade practices subject to civil remedies by the Attorney General and consumers under Article 75.
- Void any contracts for debt adjusting or debt settlement.
The Senate Committee on Rules passed Senate Bill 733: UNC Capital Projects which approves a request for the UNC System to move forward on three projects and House Bill 1079: Various Sales Tax Changes unanimously.
Upcoming Legislative Meetings
Tuesday, May 26
1: 00 PM: Senate Judiciary
2: 00 PM: Senate Rules and Operations
2: 00 PM: Senate Commerce and Insurance
3:00 PM: House State and Local Government
Wednesday, May 27
10:00 AM: Senate Agriculture/Environment/Natural Resources
11:00 AM: Senate Education/Higher Education
12:00 PM: Senate Transportation
Thursday, May 28
10:00 AM: Senate Transportation