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Friday Fax – Legislative Update
It has been a long, long week of negotiations in Raleigh with the Senate and House Conferees meeting until late in the evening - until 10:00 p.m. the last two evenings - to reconcile their differences in North Carolina's nearly $19 billion Budget. Negotiations began this week between the Senate and House after conferees were named Monday night. Many of the differences in their respective budget bills seem to be settled after negotiations this week but there are still some large issues in question. Relief for counties with high Medicaid expenses, salary increases, education funding, tax cuts and whether non-budget policy provisions should stay in the final budget bill all remain on the table. House and Senate finance leaders still must work out the scope of the reductions in two "temporary" tax increases passed in 2001 during the recession that are set to expire next year. And, the House wants to provide a tax credit to small businesses that offer health insurance to employees but the Senate did not include this credit in their budget. The Senate has been attached to Senator John Kerr's " Healthy NC " initiative.
Most legislators suffered a break in focus on Wednesday when the Stanley Cup champion Carolina Hurricanes were honored at the General Assembly during a special joint session. After bringing the first big-league professional sports championship to North Carolina, close to 30 Hurricanes players and Coach Peter Laviolette with Cup in tow entered the House chamber to raucous applause. Legislators managed to refocus their attention on the budget after the excitement - enough that we still feel confident that conferees will finish up budget negotiations by Sunday and vote on the Conference Report by mid-week. This will allow the budget to be sent to Governor Easley for his signature by June 30, when the current fiscal year ends. We anticipate an exodus for this year's session within two to three weeks with a reconvening date of late January.
In addition to more news on budget progress, the following will update you on some additional hot NCRMA issues from the week at the General Assembly. NCRMA worked with members as legislation passed to provide Veteran's relief from the VA's security breech and several alcohol bills were subjected to committee debate.
June 23, 2006
1) Budget Conferees Hard at Work
2) Veteran Security Breech Legislation
3) Pharmacy Issues
4) Alcohol Coupons and Keg Regs
5) Price Gouging Still in Negotiations
6) Work Opportunity Tax Credit
1) Conference Committee Hard at Work -- With no session limits, the North Carolina legislature often doesn't know the meaning of a "short" session. In year past, we've seen jack-o-lanterns before the General Assembly adjourns the short session. With the pace they have been working this year, it seems as though they will leave in time to enjoy the latter half of the summer. While fall elections are always an incentive for lawmakers to get out of town early, this year has been particularly fast-paced, possibly due to the media's attention on ethics reform. The lack of special provisions and pork leaves much less for House and Senate leaders to haggle over as they work toward a compromise plan. Black and Basnight have said that budget negotiations should be wrapped up in about a week which will allowing lawmakers to finish up the session by mid-July. Negotiators from the House and Senate settled scores of differences in their respective budget bills Wednesday, but county Medicaid expenses, salary increases, education funding and taxes all remain up for discussion. The House budget set aside $53 million for counties to pay their Medicaid expenses, but the Senate had none, preferring to talk more about a plan to take over the counties' share, currently at $470 million annually. The Senate offered a compromise Wednesday in which it would agree to pay $20 million, according to a copy of the document. Negotiators of the roughly $19 billion budget also haven't finalized how to spend money toward a special fund for at-risk students, poor school districts and middle-school literacy coaches sought by Gov. Mike Easley. A draft agreement would provide $26.7 million to the Disadvantaged Student Supplemental Fund and nearly $29 million to poor school districts, but legislative leaders said Wednesday they wanted to examine the funding further. The draft also would give $4 million to hire 85 literacy coaches, instead of $4.8 million Easley wants for 100 coaches. House and Senate finance leaders still must work out the scope of the reductions in two "temporary" tax increases passed in 2001 that have yet to expire. The two chambers agreed in their budgets to reduce the state sales tax by a quarter cent, but they differ on how far the individual income tax should decrease for the top wage earners. The two sides also differ on whether most state employees should receive a $300 bonus to go with a permanent 5 percent raise. As we stated earlier, legislative leaders want to reach a final agreement before next Tuesday so that it can be voted on and sent to Easley's desk for his signature by June 30, when the current fiscal year ends.
2) Veterans and Identity Theft -- HB 2883, sponsored by Representative Bruce Goforth (D-Buncombe), passed the House on Thursday, which would exempt veterans from the $10 fee charged to place a freeze on a credit report. The bill was introduced in response to the news of a recent theft of a federal government database including the names, social security numbers and birthdates of 26.5 million veterans across the nation (approximately 800,000 living in North Carolina ). The bill was first brought up in committee on Wednesday for discussion. NCRMA General Counsel, Andy Ellen, explained that the credit bureaus have come to the table to offer North Carolina a solution to a problem that they did not cause. Committee members had concerns regarding the scope of the bill and offered several amendments. The amended bill gives North Carolina veterans until the end of the year to initiate the service and could keep it at no charge for up to a year. Surviving spouses of military personnel can also get a credit freeze under the proposal, and family members can act on behalf of active-duty personnel overseas. Existing North Carolina law allows any victim of identity theft can get a free credit freeze if there is evidence of fraud. NCRMA worked with the 2005 General Assembly on this provision when they passed the Identity Theft Protection Act. The bill also gave consumers the right to place a fraud monitor on their account free of charge as well as the ability for any consumer to place a security "freeze" on their credit report for a fee of $10. Placing a security freeze on your report prohibits credit reporting agencies from releasing your information to new creditors without your approval, making it difficult for an identity thief to open an account or obtain credit in your name. Meanwhile, pending legislation in the U.S. House would overrule state laws and only allow consumers to block their credit information if they've become the victim of identity theft. The state's credit freeze laws have come from those who say it cuts off or slows down access to credit. The NC Attorney General's office has been critical of the Federal legislation.
Link to amended version of HB 2883: http://www.ncleg.net/Sessions/2005/Bills/House/HTML/H2883v2.html
3) Pharmacy Issues -- Health and Human Services conferees have been meeting into the wee hours all week and NCRMA has been close by their side tracking their progress. For the first time in quite awhile we were able to keep a cut to pharmacy reimbursement from even being an option. In addition, NCRMA has been hard at work on a couple of measures to protect community pharmacy from potential implications of the Deficit Reduction Act and to try and shift some of the savings from the claw back to pharmacies. You have heard several times of the two provisions we were working on trying to get into the Budget which has been a struggle because of the strict adherence by the Senate and House to not include policy language in the Budget. Unfortunately, our two provisions as originally drafted were deemed "policy changes" forcing us to bob and weave a bit. Representatives Edd Nye (D-Bladen), Bob England (D-Rutherford), Jeff Barnhart (R-Cabarrus) and Verla Insko (D-Orange) along with Speaker Black helped get broadly written language requiring the Department of Health and Human Services to analyze the impact of Medicare Part D and the DRA and develop strategies to ensure access to prescription drugs into the conference committee discussions. Late last evening, the conference committee on HHS met to consider these budget items. Senator Martin Nesbitt (D-Buncombe) raised concerns that he had no problem with the Department looking at the issue and developing strategies to assist pharmacies but he did not want the Department to be required to subsidize pharmacies. NCRMA General Counsel, Andy Ellen, was recognized in committee and explained the drastic impact of Medicare Part D and potentially the DRA was and could have on access to prescription drugs. We kept our provision in the end but it provides some additional flexibility to the Department. After conversations with legislators, we still anticipate the cost of dispensing study will be included in a studies bill before adjournment.
4) Alcohol Issues -- Keg Registrations: The Senate Judiciary I committee held three meetings this week in order to complete discussion on HB 1048, Governor's DWI Task Force Recommendations. The bill passed out of committee on Thursday with NCRMA's amended language still in tact to include a more retailer-friendly provision on the sale of kegs. Our incorporated changes will require a purchase-transport permit be issued for the purchase of containers in excess of eight gallons (in other words ½ kegs but not "pony or party kegs" which were included in the original bill). New language does not require background checks to be conducted as did the original and there are no time restrictions on the issuance of permits (it had been 9:30 p.m. ). You may sell multiple kegs with one permit and you only have to keep the paperwork 30 days (as opposed to one year). Finally, a first violation results in a warning rather than an ABC violation. Committee discussion concerned whether or not maintaining the copy of the permit for 30 days was a long enough period of time. Senator Rand defended the 30 days as part of a larger overall compromise that is a step in the right direction. The bill heads to the Senate floor for a vote and then will then likely go back to the House where a conference committee will be appointed and we will have to work hard to maintain the language we proposed. It will be a difficult task to hold the language from the amendment as many legislators would rather have you comply with language that is much more onerous.
Alcohol Coupons -- HB 1025, sponsored by Representative Paul Luebke (D-Durham), was heard in Senate Finance Committee on Wednesday. NCRMA has been working with Senator Kay Hagan (D-Guilford) on an amendment to HB 1025 which would allow retailers to provide alcohol coupons for their customers. Currently, North Carolina does not allow alcohol coupons, meaning that retail stores that provide consumer discount or membership cards must exclusively exempt alcohol as a benefit of that membership. Reverend Mark Creech, representing the Christian Action League of NC, spoke in adamant opposition to our amendment until such time that Senator John Kerr, chairing the committee, called for adjournment and held the bill over for discussion until their next meeting. HB 1025, include several provisions related to alcohol issues, and is expected to be heard again in the Senate Finance committee next week. NCRMA has continued to educate legislators on the coupon issue in preparation for next week's committee hearing.
5) Price Gouging Still in Negotiations -- HB 2384, sponsored by Representative Pryor Gibson, expands the times in which the Attorney General could examine whether a gas station was intentionally charging high prices but more closely mirrors changes to current law that NCRMA could live with going forward and actually provides 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
NCRMA continues to work with bill sponsors, legislative staff and the Attorney General's office to ensure that new legislation will not adversely impact retailers. We are not sure at this time when this issue will be debated again in committee.
6) Work Opportunity Tax Credit -- It is still expected the House and Senate will compromise on a minimum wage increase as both chambers have passed their version of a $1/hour hike. NCRMA continues to express our opposition to such an increase in the minimum wage and have made them particularly aware of the need for any such increase to take effect on January 1, 2007 at the earliest so that businesses have the opportunity to budget for the increase. NCRMA has also made legislators aware of 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). Conversations between NCRMA and legislative leaders led to the introduction of SB 1889, sponsored by Senator David Hoyle (D-Gaston) and HB 2844, sponsored by Representatives Pryor Gibson (D-Anson) and Nelson Cole (D-Rockingham) which make North Carolina employers eligible for a tax credit of up to $2,000 of wages paid to employees meeting certain criteria and who are employed at least nine months. Many of the hires that could create this tax credit for an employer would be hired at or near the minimum wage.
An employer could receive the credit for hiring workers who:
1. Receive Temporary Assistance to Needy Families
2. Are a veteran and a member of a family that has received benefits under the Food Stamp Program
3. Are between the ages of 18 and 24 years old when hired and a member of a family that has received benefits under the Food Stamp Program and
4. Received benefits from the Supplemental Security Income
NCRMA continues to advocate the merits of this legislation with legislators and the NC WOTC concept is well received in both the House and the Senate. However, the legislative staff fiscal analysis shows a cost of $28 million to state coffers which, for the time-being, is a road block for inclusion in a budget that is already tight.
Link to House Bill 2844: http://www.ncleg.net/Sessions/2005/Bills/House/HTML/H2844v1.html
Link to Senate Bill 1889: http://www.ncga.state.nc.us/Sessions/2005/Bills/Senate/HTML/S1889v1.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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