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Friday Fax – Legislative Update
With legislators not returning to Raleigh until Tuesday, it was a short week on Jones Street. The brevity of the week did not mean that there was little activity - although much of this activity was behind the scenes as Senate and House Appropriations Chairs attempted to cobble together a budget.
On the NCRMA front, there were some victories in the reinstatement of wine tastings in retail establishments and closing a loophole on flashing. There was also some disappointment with some committee hearings being cancelled until the Budget is complete leaving some NCRMA initiatives in limbo for the time being. The methamphetamine issue heated up this week with two subcommittee hearings and a three-hour negotiation.
The new government deadline of July 19, 2005 is quickly approaching and the question everyone is asking is "will we need a new continuing resolution?"
July 8, 2005
1) Methamphetamine Issue Heats Up
2) Budget Talks Continue
3) Senate Approves Wine Tasting Reinstatement
4) Split Case Fee Reversal Held Up Due to Committee Cancellation
5) Flashing Bill Heads to Conference Committee
6) Minimum Wage Fight Around the Corner?
7) Tobacco Tax Update
8) Sales Tax Holiday Just Around the Corner
1) Methamphetamine Issue Heats Up -- The House Judiciary V Methamphetamine Subcommittee held two separate meetings this week to discuss the differences between Senate Bill 686 and House Bill 1345. The Subcommittee has been charged with crafting a bill that balances consumer access to cold medicine with reasonable restrictions to prevent meth cooks from abusing these products. Senate Bill 686, sponsored by Senators Walter Dalton (D-Rutherford) and John Snow (D-Cherokee) would reclassify cold medicine as a Schedule V Controlled Substance thereby allowing only a pharmacy to sell these products from behind a pharmacy counter by a pharmacist. Senate Bill 686 is essentially the Attorney General's bill. House Bill 1345, sponsored by Representatives Phil Haire (D-Jackson) and Lorene Coates (D-Rowan) is less stringent and would require certain products to be placed behind a counter or in a locked case and would place sales limits on products containing pseudoephedrine in combination with other active ingredients.
NCRMA has continuously made counterproposal after counterproposal to the Attorney General in an effort to reach a reasonable compromise early in the legislative session so that North Carolina could get a meaningful law on the books and begin fighting this terrible problem.
NCRMA prepared a complete notebook for Subcommittee members on Tuesday full of concrete statistics and reasons why cold medicine should be available in outlets other than just a pharmacy. Towards the end of the meeting, NCRMA proposed a new compromise for the Subcommittee to consider. Following the Subcommittee hearing, the Subcommittee Chair Representative Rick Glazier (D-Cumberland) instructed the Attorney General's Office, NCRMA and representatives of the pharmaceutical manufacturers to meet at his office at 9:00 a.m. the next morning to begin negotiations. On Tuesday, after some negotiations the Attorney General's Office came back with a counterproposal to not reclassify cold medicine as a Schedule V Controlled Substance but requiring that these products only be sold from behind a pharmacy counter by a pharmacist. The Attorney General's Office indicated that this was as far as they would move on this issue. Both NCRMA and pharmaceutical manufacturers were disappointed with the Attorney General's proposal considering how much these two parties had offered to compromise.
At Wednesday's Subcommittee hearing, NCRMA and the pharmaceutical manufacturers presented an additional compromise to the Committee. The Attorney General dug in his heels and has labeled NCRMA's position as being about profits rather than public safety. (see transcript from last week's Legislative Week in Review below). NCRMA has consistently maintained that many counties have a limited number of pharmacies and that additional outlets to sell these products is in the public interest especially in light of the fact that 67 of North Carolina's 100 counties have not reported a meth. lab in 2005 as of June 5, 2005. We have told both the Attorney General and legislators that we would like to support the Attorney General in his efforts to stomp out methamphetamines in North Carolina but only if we can do so in a manner that does not hurt law-abiding consumer access to these important products.
While it appears that much of the Subcommittee believes that the Attorney General's position goes too far and that they may be willing to support more reasonable legislation, anything could happen when the Subcommittee reconvenes on Monday evening to begin looking at this issue again.
What follows is an excerpt from an interview that North Carolina Attorney General Roy Cooper gave to a statewide weekly television show called: "Legislative Week in Review," a show that airs on Public Television each weekend. In this segment of the interview Mr. Cooper speaks to the Meth Issue:
Host Tim Crowley: How do you respond though to the argument from consumers and some of these groups you've talked about that say it is an inconvenience for the person who is using it in the right way.
Attorney General Roy Cooper: There are, will still be many ways available to treat a bad cold. There are very few ways to treat a child with brain damage from meth fumes. People will still be able to get these; if they insist on the tablet, they get the gel caps and liquids anywhere, but if they insist on the tablet just go ask the pharmacist and the pharmacist will give it to you. It is a very small sacrifice to pay. Unfortunately I think a lot of this argument is profit-driven and I don't believe that most of the retail merchants in this state want to put profit over public safety. I do not believe that. We've seen WalMart, Walgreens, CVS; they've done already voluntarily what we are asking them to do, putting these tablets with the pharmacist in their store because they know it is a good public safety benefit. When I talk to pharmacists and retail merchants about the problem, they agree with our legislation because they know it is a very small sacrifice to make. And I tell retail merchants, "You are still going to be able to make money off of these gel caps and liquids. Do you really want to make a profit off of pseudoephedrine that is going to make this horrible drug, methamphetamine?" I don't think they do, and I think in the end that is the argument that is going to win.
2) Budget Talks Continue.. -- House and Senate Appropriations Chairs continued to meet behind closed doors to try and enact a State Budget and avoid a potential government shutdown on July 19, 2005. Much of the discussion is determining the availability of funds to spend which is dependent on 1) the expiration of a higher income tax on those taxpayers making over $200,000 per year; 2) a $0.25 v. $0.35 cigarette tax; 3) whether the sales tax is lowered from 7% to 6.9%; and 4) whether the State enacts a Lottery.
On Wednesday, Governor Easley entered the fray and called Speaker Jim Black (D-Mecklenburg) and Senate President Pro Tem Marc Basnight (D-Dare) to the Governor's Mansion to try and move the Budget process along. According to media reports, Governor Easley sided with the House against lowering the personal income tax to prevent cuts to education and pushed hard for a state lottery. Easley and the Senate seem to be more in-line with their stances on the lottery with the House looking to restrict advertising and spend the money on college scholarships while Governor Easley and the Senate would like to see a more expansive lottery and possibly spending lottery funds on early childhood education. Governor Easley also proposed placing 5% of the lottery's proceeds in a reserve account in case there are fluctuations in lottery revenues.
Meanwhile, according to media reports, Speaker Black has made it known that the House only has approximately 10 votes to increase the cigarette tax more than the $0.25 approved by the House last month and that he cannot get enough votes to support the Senate-backed $0.35 increase.
One of NCRMA's major legislative efforts is to maintain the current Medicaid reimbursement to North Carolina pharmacies. The House approved maintaining the current reimbursement of AWP-10% for brand name drugs while the Senate position is to reduce reimbursement by 1% to AWP-11%. The Senate position would cost North Carolina pharmacies $4.5 million in 2005-2006 and $11.5 million in 2006-2007. NCRMA has been providing cost-saving options for Budget conferees to consider rather than reducing pharmacy reimbursement.
On Wednesday, Senate President Marc Basnight served notice that he wants to see Budget negotiations wrapped up quickly when he cancelled all Senate Committee meetings until Budget negotiations are completed. Senator Basnight cancelled these committees because Senators felt they were caught between attending important committee meetings and negotiating on the Budget. While we are certainly in support of seeing Budget negotiations finalized, we also saw our attempt to rectify the Split Case Fees on Wine temporarily halted when the Senate Commerce Committee meeting for Thursday was cancelled.
3) Senate Approves Wine Tasting Reinstatement -- On Thursday, the Senate approved House Bill 1500 - Wine Tasting/Wineries Wholesale License Changes - by a vote of 44-5. House Bill 1500, as introduced by Representatives Pryor Gibson (D-Anson) and Jim Harrell (D-Surry), would allow retailers to again conduct wine tastings in their stores. In October, 2004 the ABC Commission issued a ruling that the industry standard that had been in place since 2001 was in violation of North Carolina law effectively leaving wine tasting stands in most grocery stores empty. NCRMA brought the wineries and wine wholesalers together with the retail community to craft a set of guidelines to govern this activity. These guidelines were then reviewed by the ABC Commission and eventually became House Bill 1500.
Many thanks also go out to Senators Tony Rand (D-Cumberland) and Senator R.C. Soles (D-Columbus) for their help with this legislation in the Senate. The bill now goes back to the House for concurrence and will become effective upon Governor Easley signing the bill.
4) Split Case Fee Reversal Held Up Due to Committee Cancellation -- House Bill 1429 fell victim to Senate President Pro Tem Marc Basnight's decision to cancel all Senate committees until Budget negotiations are resolved. Although the bill had just cleared the House late last week, we were successful in getting the bill calendared for a hearing in the Senate Commerce Committee almost immediately. Late Wednesday, we learned of the cancellation policy and will work to make sure this bill is heard as soon as the Commerce Committee resumes its work.
House Bill 1429, as introduced by Representative Pryor Gibson (D-Anson), includes a provision to reverse the opinion letter issued by the ABC Commission to require wine wholesalers to charge retailers a fee to split a case of wine. The ABC Commission's decision would have cost North Carolina retailers millions of dollars each year and would have had a detrimental effect on small wineries. The bill has been referred to the Senate Commerce Committee with a second referral to the Senate Finance Committee.
Without this legislation, North Carolina retailers could be forced to pay millions of dollars for a service that the retailer is prohibited from providing for themselves.
5) Flashing Bill In Conference Committee --Last week we reported to you that the House approved Senate Bill 776 - Amend Indecent Exposure Law - and that we anticipated that the Senate would concur with the minor technical change the House made. Not long after we sent out the Friday Fax did we receive a telephone call from the bill sponsor John Snow (D-Cherokee) and Representative Deborah Ross (D-Wake) called with a concern that was discovered after the House approved the bill. Both asked if we would be "team players" and allow the bill to go to a conference committee so that this concern could be corrected. We agreed to allow this process to occur as these two legislators' concerns were not detrimental to purpose of the bill. A conference committee has been appointed and we expect final action on this legislation on Tuesday. Just goes to show you that you cannot count your legislative chickens before they hatch!
As a review, Senate Bill 776 bill was introduced by Senator John Snow (D-Cherokee) at the request of NCRMA and would clarify North Carolina law to make it a crime to expose one's self in a public place to another regardless of the gender of the victim. Additionally, the bill would create a new Class H felony for someone over the age of 18 years of age to expose themselves to someone younger than 16 years of age in a public place for the purposes of sexual gratification. This bill is meant to address a series of incidents in Charlotte area stores where young boys were being flashed by men and district attorneys had no ability to prosecute due to a loophole in North Carolina law which only made it illegal to flash someone of the opposite sex. Representative Jim Harrell (D-Surry) carried the bill on the House Floor.
6) Minimum Wage Fight Around the Corner? -- Yes, another minimum wage increase fight in the House of Representatives may be just around the corner. As you may remember, the House Commerce Committee defeated this measure in early June only to see the bill revived, passed out of House Commerce Committee and go down in defeat on the House Floor. Proponents of increasing the minimum wage have not stopped pushing the issue especially in the districts of the 10 House Democrats that joined the 66 House Republicans to defeat the bill. We have heard that the plan maybe to couple a minimum tax increase with some additional pro-business items to try and ensure that both business and labor gets something that they want but not everything that they want.
7) Tobacco Tax Update -- It appears highly likely that there will be an increase in the excise tax on tobacco this year. North Carolina currently has the lowest tax in the United States on cigarettes at $0.05 per pack. Both the House and the Senate have approved separate measures to increase the tax on tobacco by different amounts effective July 1, 2005. The House approved an increase of $0.25 per pack of cigarettes from $0.05 to $0.30 per pack while the Senate has approved an increase of $0.35 per pack of cigarettes from $0.05 to $0.40 per pack.
House Version -- Tobacco Tax Rate Changes
- Amends GS 105-113.5 to increase cigarette tax from 5 cents to 30 cents a pack
- Amends GS 105-113.35(a) to increase tax on other tobacco products from 2% to 6%, except retains 2% rate on cigars
- Deletes provisions in the Senate Version that would have capped at $12,500 the discount for cigarette and tobacco products distributors.
Senate Version -- Tobacco Tax Rate Changes
- Amends GS 105-113.5 to increase cigarette tax from 5 cents to 40 cents a pack
- Amends G.S. 105-113.35(a) to increase the tobacco products tax from 2% to 4% of the cost price
- Caps at $12,500 a year the discount for cigarette and tobacco products distributors.
8) Sales Tax Holiday Just Around the Corner -- North Carolina will again hold its Sales Tax Holiday. This year the dates are from August 5 th - 7 th , 2005. NCRMA has worked closely with the North Carolina Department of Revenue to prepare handy materials, including a poster containing a list of taxed and non-taxed items to place at your registers to help employees and customers identify tax-free items. Please call NCRMA at 1.800.662.7211 to obtain copies of these free-to-members posters to help ensure the weekend runs smoothly for your store, your employees and your customers. Visit our Sales Tax Holiday page for more information.
‘TIL NEXT WEEK
Fran Preston
Andy Ellen
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