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Friday Fax – Legislative Update
Two and a half weeks ago when the Senate distributed their timeline for passing out their version of the Budget with Memorial Day as a goal, many long-time observers rolled their eyes. Yesterday, the Senate proved many nay sayers wrong by sticking to their timeline and passing the budget baton to the House. The full Senate Appropriations committee met to hear the spending plan on Tuesday - exactly two weeks from the opening day of the short session. Find more details on the Senate budget below. In other news, House and Senate members had to have any bills containing budget items filed by Thursday. We have been flooded in a sea of bills this session, even more so than in the past, due to the increased emphasis on an open-legislative process. In fact, both chambers filed a total of 4,929 bills during the 2005-06 biennial session, the most since 1913.
Updates on pressing NCRMA issues and highlights of the week follow.
May 26, 2006
1. Senate Passes Budget
2. Minimum Wage Hike Priority for Senate and House
3. Pharmacy Issues
4. Electronics Recycling Tax
5. Methamphetamine Issue
6. Price Gouging
1) Senate Passes Budget -- As we have reported the last two weeks, North Carolina legislators arrived in Raleigh this year with a $2 billion plus surplus - the first surplus since the late 1990's. Unfortunately, spending requests dwarfed the surplus and much of the $2 billion is non-recurring, meaning it is a one-time infusion of cash that cannot be relied upon in future years. The Senate rolled out their spending plan on Monday evening in a slim and trim package of 157 pages as compared to the normal 400 page plus budget documents of years past. On Wednesday and Thursday, the Senate approved the $18.8 billion spending plan for 2006-2007 by a 35-15 vote with all of the Senate Democrats and six Republicans voting in favor of the spending plan. The story surrounding the Budget had as much to do with what was not in the Budget as what was in the Budget. Much of the "surplus" funded education, mental health reforms and pay raises for teachers and state employees. Reserve funds for building repairs and natural disasters were replenished. The ½% "temporary" increase in the Sales Tax and Personal Income tax are being phased out in two increments and the gasoline tax was capped at its current rate. The Senate also included, as NCRMA suspected, an increase in the minimum wage. The provision increases the wage by $1 to $6.15 per hour and would become effective July 1, 2006 . (More to follow on the minimum wage). Community pharmacists maintained their current Medicaid reimbursement under the Senate's spending plan. Additionally, the Senate has left $78 million in a separate pot to allow for some additional tax cuts. What was noticeably absent from the Senate Budget was pork - which is often in the eye of the beholder. Generally, the Senate Budget was devoid of special provisions and projects for the districts of individual legislators. The House will now take the reins and adopt their version of the Budget by June 15th in order to leave two weeks for the Senate and House to iron out their differences between their two spending plans. Many are looking to the House to pull out two or three items included in the Senate Budget which could be seen as not related to the Budget and include some Medicaid relief for counties.
2) Minimum Wage Hike Continues Gaining Momentum -- Riding the wave of last week's press rally for increasing the minimum wage attended by former United States Senator and Vice-Presidential nominee John Edwards and State Treasurer Richard Moore (D) and the overwhelming polling numbers, both chambers took action on a minimum wage hike this week. The Senate acted on the minimum wage first when they rolled out their budget plan which included a $1 increase in the minimum wage (from $5.15 to $6.15) effective July 1, 2006. The House followed in hot pursuit to appease those 92% of likely Democratic voters that said they support an increase. The House gave initial approval yesterday by a vote of 68-39 to House Bill 2174, sponsored by Representatives Alma Adams (D-Guilford), Jim Harrell (D-Surry) and Earl Jones (D-Guilford). NCRMA was successful in defeating legislation last year (on three different occasions). However, House and Senate leaders have made it clear that this issue is a top priority for the short session and that the train is on its way down the tracks. NCRMA has been working with a coalition on the minimum wage increase called the Coalition to Preserve North Carolina Jobs. This coalition is made up of a number of business associations that are concerned with the detrimental effect a minimum wage increase would have on North Carolina businesses. For news stories on the Coalition's work see the links below and the attached press release.
http://triangle.bizjournals.com/triangle/stories/2006/05/22/daily26.html
http://www.newsobserver.com/706/story/443158.html
NCRMA has made legislators aware that retailers have already planned their annual budget for 2006 and any new mandated payroll increases would not be factored into those budgets. While most NCRMA members do not pay minimum wage, many NCRMA members are concerned about the ratcheting effect of those employees that make in the $6 to $8 range. NCRMA also met again this week with House Leadership to express concern about the minimum wage and the need for the General Assembly to find some mechanism to help offset this increase in the cost of doing business that ranges from $95 million to $200 million depending on the source.
3) Pharmacy Issues -- Two different measures were filed as companion bills this week in an attempt to assist community retail pharmacy. The first measure was filed in the Senate by Senator Bill Purcell (D-Scotland) as Senate Bill 1956 and Representative Bobby England (D-Rutherford) as House Bill 2853 and requires the Department of Health and Human Services to look at the new federally-created Average Manufacturers' Price figures prior to January 1, 2007 and adjust the dispensing fee accordingly to keep reimbursement for generic drugs dispensed under Medicaid revenue neutral. The second provision of these bills requires a study to be conducted on the cost to dispense a prescription, with $25,000 appropriated to pay for the study. The second measure was filed in the Senate by Senator Bill Purcell as Senate Bill 2044 and would reimburse pharmacies the Medicaid dispensing fee for each prescription dispensed to a Medicare Part D enrollee that is a Medicaid recipient ($4.00 for brands and $5.60 for generics). Representative Edd Nye (D-Bladen) introduced as similar version in the House as House Bill 2370 to instruct the Department to establish and implement a program that pays pharmacies for servicing Medicaid recipients enrolled in Medicare Part D. Senator John Snow (D-Cherokee) has introduced Senate Bill 1611 which allows Sheriffs to have access to prescription drug records. Currently only state law enforcement such as the State Bureau of Investigation and the Department of Health and Human Services have this access. NCRMA has been working with Senator Snow to address his concerns.
4) Electronics Recycling Tax -- Senate Bill 1030, which would impose a $4 tax on computers and televisions at the register, sits in the Senate committee on Agriculture/Environment/Natural Resources. NCRMA has been walking the halls of the legislative building this week and explaining the negative impact this bill will have on brick and mortar retailers to committee members. While many understand that this bill gives remote retailers an advantage over our North Carolina retailers, there are also many committee members that feel this is a viable solution to removing electronic waste from basements and storage rooms around the state. NCRMA is working diligently to keep this piece of legislation at bay. As we mentioned last week, several manufacturers in the "Electronics Manufacturers Coalition" have hired contract lobbyists to advocate their support of this bill. This puts the manufacturing community at odds as HP and Dell understand that this is an issue that needs to be addressed at the Federal level rather than state-by-state. We urge you to contact your Senator and tell them to vote NO on Senate Bill 1030 as many Senators are telling us they have not heard from their retailers back home.
5) Methamphetamine Issue -- NCRMA has been working with bill sponsors in the House and Senate, as well as the Attorney General's office, to develop a resolution to the differences between the recently enacted state and federal Meth legislation. There are discrepancies among the requirements set forth by the two laws and one is not directed to preempt the other. NCRMA's preference is that NC adopt legislation to comply with the Federal.
6) Price Gouging -- In addition to bills filed last week by Senator Clark Jenkins (D-Edgecombe), several House members have filed legislation aimed at capping North Carolina's gas tax and further addressing price-gouging during the time of a disaster. Representatives Lorene Coates (D-Rowan), Pryor Gibson (D-Anson), Bruce Goforth (D-Buncombe), Alice Graham Underhill (D-Craven) and other House members held a press conference on Tuesday to announce the introduction of HB 2384, to address both the gas tax and price gouging. We expect HB 2384 to be debated in the House Finance committee in the coming weeks. In addition to capping the gas tax, the bill would expand the times in which the Attorney General could examine whether a gas station was intentionally charging high prices. NCRMA has been working closely with the bill sponsors as well as the Attorney General's office to ensure that this legislation will not adversely impact retailers. House Bill 2384 more closely mirrors changes to the price-gouging legislation that NCRMA could probably live with going forward and would actually provide some improvement to this well-intended law. Senate Bill 1576 and Senate Bill 1581 contain the Attorney General's proposals which NCRMA has some serious concerns with - especially the removal of the requirement that a retailer have knowledge and intent to charge an unreasonably excessive price to be guilty of price gouging.
Link to Senate Bill 1576: http://www.ncga.state.nc.us/Sessions/2005/Bills/Senate/HTML/S1576v1.html
Link to HB 2384: http://www.ncga.state.nc.us/Sessions/2005/Bills/House/HTML/H2384v1.html
As always, we value the working relationship we have with you, our member companies. It is our pleasure to work on your behalf. Thank you for allowing us to continue to represent the retail perspective before the North Carolina General Assembly since 1902.
'Til Next Week
Fran Preston
Andy Ellen
Elizabeth Dalton
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