Short legislative session, but a busy agenda for General Assembly

May 10, 2014 

The budget dilemma:

How to raise salaries

It’s a rare year when raises are guaranteed. Most times, especially since the recession started, teachers and state employees are held in suspense until legislators have finished their negotiations and the budget is all but signed. And almost every year for the past six years, they’ve been told: “There’s no money for raises.”

This time around, early-career teachers know they’ll be making more. Gov. Pat McCrory and legislative leaders have agreed to raise the floor for teacher salaries over the next two years to $35,000 a year. Additionally, McCrory has proposed 2 percent raises for all teachers and $1,000 raises for state employees.

Legislative leaders also have said they want to raise salaries. At a news conference last week, Senate leader Phil Berger stopped short of guaranteeing that the legislature would adopt McCrory’s plan, but he said raises for state workers and teachers are a priority in the short session. “I expect we’ll be able to do something,” Berger said.

The big question remaining is what will be cut from next year’s $21 billion budget to pay for those raises.

State revenues are lower than expected because of the tax cuts adopted last year.

The state must cover a $445 million revenue shortfall in the budget year that ends June 30, and state fiscal analysts expect tax revenues for the budget year that begins July 1 will fall $191 million short of what was expected.

Medicaid – the health insurance program for poor children, their parents, the elderly and disabled – is going to cost more than expected, but no one is sure how much.

Legislative budget writers received a memo from the legislative fiscal office last week that estimated a $62 million to $94 million Medicaid shortfall this year.

There’s no actual forecast because accurate data are not available from the new Medicaid claims system. Legislative fiscal staff, the state Department of Health and Human Services and the state budget office haven’t been able to agree on an estimate of how big the overrun will be this year or how much more Medicaid will cost next year, the memo states.

At the news conference, Berger said Medicaid “continues to be a real issue for us,” and not knowing how much the program will cost is the biggest challenge in balancing the budget.

But there will be no backtracking on the tax cuts, Berger said.

“People are seeing more money in their pockets not only because they’re employed, but because they’ve seen a reduction in their taxes,” Berger said. “I think that’s a good thing.”

Lynn Bonner

Coal ash:

Three solutions

When Duke Energy spilled a massive amount of coal ash and wastewater into the Dan River this winter, there was an immediate cry for tougher regulation of how the material is stored.

That is going to happen.

Lawmakers are not deaf to the concerns of neighbors of the 14 coal-fired plants across the state – especially those of key legislators such as Senate leader Phil Berger who live near the Dan River or have a Duke Energy plant in their own districts. It will be one of the first bills filed.

There are three competing plans. The most far-reaching is the first one out of the gate, but it doesn’t have a chance of passing because it came from Rep. Pricey Harrison and the Democratic caucus. It would force Duke Energy to close and move all 33 ponds into safe, lined and dry storage away from rivers, and prevent the utility from passing cleanup costs to ratepayers, among other things.

Then there’s Gov. Pat McCrory’s detailed, 16-page proposal that would give the state broader authority over coal ash disposal, closing some ponds but not others based on individual conditions. The governor’s ambitious plan didn’t sit well with Republican legislators who had been working on their own plan because they didn’t know it was coming.

So the bill most likely to succeed is the one being written in the Senate right now. Sen. Tom Apodaca, a Republican representing Buncombe, Henderson and Transylvania counties, says it’s similar to McCrory’s plan “but goes quite a bit further.”

Apodaca said it will define deadlines for the five most critical coal ash ponds to be moved and safely stored. He said he wasn’t ready to go into additional details yet.

Craig Jarvis

Fracking:

Clearing the way

Lawmakers eager to clear the way for shale gas exploration in North Carolina are planning to complete state laws governing the drilling technique known as hydraulic fracturing, or fracking.

Advocates of energy exploration would like for the state to be in a position to start issuing drilling permits next spring. A bill has already been drafted. The legislation:

• Reduces the scope of baseline water testing from 5,000 feet to a half-mile from the gas drilling site. All drinking water wells within the specified radius would be tested to resolve legal disputes about water contamination. The provision is designed to protect energy companies from false claims as much as protecting property owners from bad actors.

• Allows state officials to review corporate trade secret claims to make sure such claims are justified before energy companies can shield fracking chemicals from public review.

The N.C. Mining and Energy Commission expects to submit about 120 safety standards to regulate fracking in October, but the draft bill extends the deadline to January to give commissioners more time to complete their work.

John Murawski

Trees, wetlands:

Protections reduced

Several controversial environmental bills are coming.

Trees: This one is already running into organized, sustained opposition. It would prohibit cities and counties from having ordinances that protect trees on private property. An agriculture study commission approved the draft bill late last month. Cities and counties are lobbying heavily to kill it.

Isolated wetlands: This bill would reduce protections for isolated wetlands, which are water-saturated ecosystems that are not connected to other aquatic bodies. It would increase the size at which the wetlands are regulated by the state from one-third acre to 1 acre if east of Interstate 95, and from one-tenth to one-third acre if west of I-95. Environmentalists say the bill would exempt from regulation 93 percent of the isolated wetlands east of the interstate, and exempt many more to the west.

Wetlands mitigation: Currently, when projects damage wetlands developers must pay to restore twice the size of another wetland within the same river basin. This bill would reduce that ratio from 2-to-1 to 1-to-1. The purpose of a 2-to-1 ratio is to ensure an adequate exchange, since mitigation projects don’t often succeed 100 percent of the time.

Craig Jarvis

Common Core:

Bring on the debate team

North Carolina was one of the earliest states to adopt Common Core standards for teaching English and math. But if critics get their way, the standards may soon be history.

A legislative commission has recommended the state dump Common Core and come up with state standards to replace them. The proposal is headed for debate this session.

The Council of Chief State School Officers and the National Governors Association developed the standards. Forty-four states and Washington, D.C., adopted them. North Carolina signed on in 2010, and they were in all schools in fall 2012.

Since their introduction, the tea party wing of the Republican Party has branded Common Core a federal takeover of education. But the standards have also been criticized for being inappropriate for younger children.

Lynn Bonner

Privilege tax:

Municipalities worried

Draft legislation that would cap at $100 annually the privilege license taxes that some cities and towns levy on businesses, while expanding the types of businesses that can be taxed, is one of a few tweaks to tax laws possible this session.

The proposal was endorsed recently by the General Assembly’s Revenue Laws Study Committee. Proponents say the aim of the proposed legislation is to have all cities and towns treat businesses the same. Currently, municipalities have latitude in how and how much they can tax businesses, leading to disparities in how the taxes are applied across the state. Critics of the current system, such as Rep. Tim Moffitt, an Asheville Republican, point out that some businesses are charged thousands of dollars a year, while others pay little or nothing.

But opponents of the $100 cap say that some cities and towns would lose much-needed revenue that helps pay for infrastructure and services to support businesses. Sen. Floyd McKissick, a Durham Democrat, said the legislation should include a means to keep cities from losing revenue.

Patrick Gannon

Public-private partnership: Transparency an issue

One of the main issues from the 2013 session – and a top priority for the governor – never made it to the finish line: the partial privatization of the state Department of Commerce.

It returns this session after a makeover to assuage concerns about how the private nonprofit arm would manage taxpayer money to recruit companies to North Carolina.

The transparency issues, which have plagued similar outfits in other states, were a top concern for House and Senate lawmakers who formed a committee between sessions to rework the legislation.

A draft bill limits the state-created nonprofit Economic Development Partnership of North Carolina to a mostly marketing and research function, said Rep. Tom Murry, a Morrisville Republican helping to lead the effort.

The nonprofit will still receive some state money, but it would not administer big-dollar incentive grants to companies, keeping this role within the Commerce Department. “We are altering the mission of the public-private partnership away from a conversation about obligating state funds,” Murry said.

A sticking point in the draft legislation is a provision that requires the nonprofit to raise $10 million from private sources, such as major corporations, for its operations before contracting with the state. It’s a high hurdle that the nonprofit may not meet immediately, so lawmakers will consider giving it more time to find the money, such as a three- to five-year window.

John Frank

Film incentives:

Cue the action

Without action by the General Assembly, legislation that grants spending credits to film and TV production companies in North Carolina will expire at the end of 2014.

The pending sunset means incentives likely will be one of the biggest battles of the session. The issue crosses partisan lines, with Republicans and Democrats supporting and opposing the 25 percent refund production companies can receive on their spending.

Proponents of the incentives say they lure films and TV shows to the state and that without them, the industry would go elsewhere and take thousands of jobs with it. Opponents argue that the tens of millions of dollars spent on incentives each year would be better spent on roads and raises for state employees.

Both sides have released studies bolstering their opinions about the controversial subsidies, studies expected to be used in committee and floor debates on the issue. Will North Carolina remain one of the top states in the country for filming, or will lawmakers abandon the incentives as they have in other states? That question should be answered this summer.

Patrick Gannon

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