June 19, 2015

Legislative Update:
Senate passes its version of state budget


The North Carolina Senate created its own version of the state's budget this week.

House Bill 97, the proposed state budget for the next two fiscal years beginning July 1, 2015 and ending June 30, 2017, passed the House on May 22. When presented to the Senate, the bill included 329 pages and proposed spending $22.1 billion for the next fiscal year.

On June 18, when the Senate gave the bill its final approval and sent it back to the House for concurrence, the document included 508 pages, but spending was cut back to $21.5 billion.

House members are already expressing dismay because the Senate version of the budget is chock-full of policy issues commonly taken up in separate bills, including a privatization of ferries study, Medicaid reform, the bulk of Senate Bill 160 that creates a local-state matching funds program to dredge inlets, and what was SB 369 – redistribution of sales taxes.

The Senate also added the language in SB 369 to HB 117, "The NC Competes Act," which is still in the Senate. When it was received from the House, HB 117's focus was a proposed economic incentives package, but when the Senate Finance Committee added in the sale tax redistribution, it also pared back the proposed economic incentives appropriation amount. The incentives don't appear in the budget.

There seems little doubt among legislators that the House members will refuse to sign off on the expanded legislation, so the bill seems destined to be assigned to a conference committee that will be made up of members of both chambers. Many are predicting that it could be August before a deal is struck that will be approved by the majority in each chamber and get the governor's signature.


Sales tax redistribution

Redistribution of sales taxes, if made into law as presented, would shift the sales tax distribution over a period of four years to 80 percent based on population and 20 percent on point-of-sale over a period of four years. Bill supporters say that the reallocation will help poor counties by redistributing the wealth brought in by the more prosperous counties.

Because of the high summer population, Dare's sales tax revenues based on the current 75 percent on point-of-sale are among the highest in the state, but its permanent population is estimated to be only about 35,000 so it stands to lose more revenues than any county in the state.

Dare County Finance Director Dave Clawson says that the redistribution would cause a loss that would in turn cause Dare County to increase property taxes by at least 7 cents by the end of the four-year implementation because of a loss of $9.3 million in revenue used to support the county's budget. Local towns would have to raise property taxes from 3 to 5.5 cents to make up for the loss.

Senate projections are much lower, based on passage of an optional half-cent sales tax that could be collected locally if approved by a local referendum and increased sales tax revenues due to expanding the sales tax base by adding maintenance and repair on tangible personal property, such as vehicles, and to veterinary and pet services.

Privatization of ferry system

The Senate budget version also includes provisions to “ascertain market interest for the private operations of the North Carolina Ferry system or its component parts.”

The Board of Transportation is to issue a request for information and to report back to the Joint Legislative Transportation Oversight Committee (JLTOC) and the Fiscal Research Division no later than Feb. 1, 2016 on the results of the request for information and whether it is more cost effective.

The JLTOC “shall study the feasibility and desirability of privatizing the North Carolina Ferry System. The study shall include ownership, governance, and regulatory issues related to (I) potential privatization of the North Carolina Ferry System and (ii) privately owned ferries currently operating in North Carolina.” The study findings and any legislative proposals are to be reported to the 2016 Regular Session of  the 2015 General Assembly.

Consolidation of school districts

A provision in the Senate version of the budget, if made into law, would provide the State Board of Education with authority to consolidate local school administrative units in contiguous counties as necessary to ensure that all school systems have the size, expertise, and other resources necessary to provide their students with the opportunity to receive a sound basic education.

Hyde and Tyrrell counties, two of the poorest counties in the state are contiguous with Dare County, as is Currituck County.

Voting requirements

In other action this week, HB 836 delivered a Christmas present of sorts to those fearing that requiring photo identification to vote would reduce the number of voters. The bill's primary focus is allowing electronic means to file absentee ballots and other elections technology issues. But in a surprise move, a provision was inserted in the bill which, if signed by the governor, will allow voters with no photo identification to provide a utility bill or other piece of mail to confirm their address, the last four numbers of their social security number and birth date to obtain an absentee ballot. The bill is now awaiting the governor's signature needed to become law.

The requirement for a photo identification and the elimination of same-day registration, pre-registration for teens, and out-of-precinct provisional ballots is currently being challenged in court.

(Sandy Semans is a retired newspaper editor and reporter who now works as a free-lance writer.  She lives in Stumpy Point. Her update on the goings-on in this session of the General Assembly will appear weekly in The Island Free Press, usually on Friday.)


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