Brooks Pierce Capital Dispatch: Budget Bill to Become Law, Legislators Consider Other Bills

After weeks of negotiations, legislators on Friday passed the budget bill and sent it to Gov. Roy Cooper, who indicated he will let it become law without his signature. In addition, members this week acted on bills on a variety of other topics.

Budget Bill

Both houses on Friday passed the conference report for the budget bill (H 259). The House vote was 70 to 40 and the Senate vote was 26 to 17. After the votes, Gov. Cooper indicated that he will let the bill become law primarily because it expands Medicaid insurance coverage.

A budget agreement had been delayed for a number of weeks as members discussed whether to legalize casinos and video lottery terminals. They ultimately chose not to consider those issues this year. The bill appropriates $29.8 B for FY 2024 and $30.9 B for FY 25.

Detail about the budget is contained in a text bill (similar to other bills) and a Committee report (often known as the Money Report since it contains extensive detail on spending).

Notable items from the budget

Medicaid expansion

• The budget expands Medicaid health care insurance to an estimated 600,000 North Carolinians. A bill (H 76) expanding this coverage was enacted in March but the expansion was contingent on an enacted budget bill.

Education

• Increases K-12 teacher salaries by about 7 percent over the biennium
• Increases salaries for UNC and community college personnel by about 7 percent over the biennium
• Provides a one-time cost-of-living adjustment of 4 percent for state employee and teacher retirees
• Increases funds for “Opportunity Scholarships,” for student tuition at nonpublic schools
• Shifts appointment power to the State Board of Community Colleges from the Governor to the General Assembly, makes the selection of a system President subject to legislative confirmation, and gives the General Assembly power to appoint some members of local community college boards

Economic Development

• Appropriates about $2 B for over 200 water and sewer projects
• Appropriates $500 M over two years to NC Innovation, a private, nonprofit corporation focused on facilitating commercialization of research from North Carolina universities
• Appropriates $5 B over the biennium to the State Capital and infrastructure fund for a variety of projects including at state agencies and UNC

Transportation

• Appropriates $3 B for FY 24 and $3.2 B for FY 25 for the Highway Fund (used primarily for existing infrastructure) and $2.3 B for FY 24 and $2.45 B for FY 25 for the Highway Trust Fund (used primarily for construction)

Taxes and fees

• Moves up scheduled decreases in the personal income tax rate with a reduction from the current 4.75 percent rate to 4.5 percent in 2024 with additional reductions in future years if certain revenue collection (“triggers”) are met
• Caps the franchise tax paid by certain businesses
• Extends sales tax exemptions for motorsports, senior care facilities, aviation, fuel for freight boats and breast pumps
• Raises annual fees paid by electric vehicle owners from $140.25 to $180, creates a new $90 fee for plug-in hybrid vehicle owners, and imposes a new excise tax on rideshare services (e.g., Uber and Lyft) of 1.5 percent for exclusive rides and 1 percent for shared rides

Other

• Provides a raise of 7 percent to most state employees over the biennium
• Prohibits state or regional emission standards for new motor vehicles (this prohibits adoption of an Advanced Clean Truck rule adopted by some other states) and prohibits cap and trade requirements for carbon dioxide (CO2) emissions
• Raises salaries for judges and court administrators
• Makes the State Bureau of Investigation a cabinet-level department and removes it from under the Department of Public Safety
• Authorizes a study on whether the DMV should be privatized

Regulatory Reform Bill

Both houses this week passed a conference report for the regulatory reform bill (H 600). The House approved it by 72 to 38 and the Senate approved it by 25 to 16. The bill includes provisions on a variety of topics including watersheds, stormwater, fish harvests, drinking water, environmental permitting, disposal of lithium-ion batteries and solar panels and nonprofit raffles.

Election Bill

Both houses this week adopted a conference report on a notable election bill (S 749). The House adopted it by 63 to 44 and the Senate adopted it by 26 to 17. Gov. Cooper is expected to veto the bill.      

Among other things, S 749 would remove the Governor’s ability to appoint members of the State Board of Elections — as well as all 100 county election boards — and instead transfers that power to the General Assembly. Under current law, the political party of the Governor has a 3 to 2 majority on both the State and local boards. The bill would instead create evenly tied boards.

Legislators earlier passed a different election bill (S 747) that could make significant changes in state election law and Gov. Cooper vetoed it. A veto override vote on this bill has not yet been scheduled. Among other things, S 747 eliminates the three-day grace period for receiving absentee ballots, bans private money for election administration, and gives poll observers more freedom to watch the voting process.

For more information, contact a member of the Brooks Pierce Government Affairs Team.

Ed Turlington, Partner
Drew Moretz, Government Relations Advisor
Katelyn Kingsbury, Government Relations Advisor