Vol

Budget negotiations continue between the House and Senate. Primary sticking points between the two versions of the budget are reported to be:

· whether or not to continue the two temporary taxes which have been on the books since 2001: an additional one-quarter cent sales tax and an additional one-quarter percent income tax on the state’s wealthiest individuals (incomes over $200,000 for those married and filing jointly). The House wants to extend the two taxes, which together raise about $300 million; the Senate does not.

· the size of a state Earned Income Tax Credit and whether it is refundable or not. The House wants a 5% refundable EITC. The Senate budget did not include an EITC at all, though negotiations have included everything from a 3.5% refundable credit to a 12% nonrefundable credit. Note that a refundable credit provides help to the lowest-paid workers.

· whether and how to give relief to counties for their share of Medicaid. Both houses want the state to pick up the 5% county share (which currently amounts to about $520 million, and, like all other medical costs, is rising), but both houses also want the counties to give up to the state some of their revenue and let the counties increase local taxes, if needed, to make up the difference. The Senate wants to let the counties raise the sales tax; the House wants to let counties implement a land transfer tax.

· how much money to borrow and how to do it. The Senate wants to borrow about $1.2 billion, using “certificates of participation,” financial instruments that do not require approval of the voters. The House proposed about $450 million in COPs. The Governor had proposed that most of the borrowing be general obligation bonds, which would require voter approval.

· how much raise for state employees. The House budget gives a 4.25% raise; the Senate gives 4%.

When it became apparent that a budget would not be adopted in time for yesterday’s start of the fiscal year, the General Assembly adopted a continuing resolution (CR). It allows the state to continue to operate normally, with most of the provisions of the just-ended fiscal year continuing for another month. Additional funds to cover anticipated enrolment increases in schools were included in the CR. And the two taxes mentioned above were allowed to continue for another month.

It’s not all about the budget, as other bills have continued to move while budget negotiations were going on. Here’s a rundown on recent action:

S 3, Promote Renewable Energy/Baseload Generation, has passed second reading in the Senate. It has been amended in the following significant ways:

· The state’s electric public utilities would have to increase the percentage of power produced by renewables and/or energy efficiency to 12.5% by 2021, with specified increases every three years between now and then.

· Electric co-ops and municipalities selling electricity must reach 10% by 2018.

· Renewables must include solar energy and electricity generated from hog and poultry wastes, and the bill sets minimum required amounts of each.

· Customers could be charged for additional costs incurred by the electric companies in complying with these new requirements. The costs could be up to $10 per residential customer in 2008, rising to $34 by 2015. (Comparable figures for commercial accounts would be $50 and $150, and for industrial accounts $500 and $1,000.)

· Costs of new plant construction could be passed along to customers before the plant is completed.

· Taxes on electricity, natural gas and fuel purchases for manufacturing industries and plants and for farmers for farm use would be phased out over the next three years.

· A tax credit for building energy-efficient homes would be created for individuals and corporations.

The NC Council of Churches supports the renewable energy and energy efficiency portfolio provisions. However, we oppose making customers pay for construction before a plant is operational.

S 30, DV Victims/Add Protections, has been signed into law.

S 164, Study Housing/Training Mentally Ill in Adult Care Homes, awaits the Governor’s signature.

S 197, Remove Sunset/Debt Management for Consumers, has been signed into law.

S 670, Use of Solar Collectors, has been re-referred to the House Commerce Committee (and nobody seems to be planning to add back the clothesline provision).

S 676, Establish State Government Pay Equity Study Commission, is really a new bill, a committee having taken an unrelated bill and replaced its provisions with these. The study commission it creates would look into disparities in state salaries between men and women and between racial groups. The bill is currently in Senate Appropriations.

S 1086, Tobacco Free Schools, has been passed by the House and is now back in the Senate for concurrence in House changes.

S 1202, Establish Commission to Study Littering, has been re-referred to Senate Rules.

S 1466, Migrant Housing Health/Safety, has been re-referred to the House Health Comm.

H 24, Smoking in State Government Buildings/Prohibition, is on its way to adoption. The Senate amended it to allow university dorm rooms designated for smoking to remain so until the 2008-09 academic year. The House has concurred in the Senate changes.

H 36, Hazardous Materials Task Force Recommendations, has been signed into law.

H 47, Violate Order/Possess Deadly Weapon Felony, has been amended by the Senate to increase the penalty from a Class I (the lowest) to a Class H felony, and the House has agreed to the changes. (It was first introduced in the House as a Class G felony, but was lowered to Class I by the House.) The bill now goes to the Governor.

H 91, Registration and Voting at One-Stop Sites, has been passed by the Senate, but with an amendment which requires all registration forms and ballots to be printed only in English unless otherwise required by federal law. Other Senate changes affect the bill’s effective date. The House has voted not to concur in Senate changes, and a conference committee is being named.

H 150, Every Child Ready to Learn, awaits the Governor’s signature.

H 248, Adult Care Homes Rated Certificate Authorization, has been gutted of its provisions for establishing a star rating system. Instead, these homes will be issued certificates with ratings based on inspections and substantiated complaint investigations. As amended, H 248 has been re-referred to House Appropriations.

H 485, Info on Lawful Abandonment, has been signed into law.

H 554, Assault Disabled Person/Institutional Setting, awaits the Governor’s signature.

H 750, Maintain and Update 1898 Wilmington Report, has been re-referred to House Appropriations.

H 784, Execution/Change Age, has been signed into law.

H 786, LEO Provide Info to DA for Discovery, awaits the Governor’s signature.

H 824, Improve Gender Equity Reporting Statute, awaits the Governor’s signature.

H 898, Expunge Nonviolent Felony/Youthful Offender, has been re-referred to the House Finance Committee.

H 915, Offer Sign Language in Schools and Colleges, awaits the Governor’s signature.

H 973, Mental Health Equitable Coverage, has received a favorable report from a Senate committee and is on its way to the Senate floor for action. It has been amended to remove the small business exemption added by the House. It has also been amended so that it provides full parity on nine specified mental illnesses: bipolar disorder, major depressive disorder, obsessive compulsive disorder, paranoid and other psychotic disorder, schizoaffective disorder, schizophrenia, PTSD, anorexia nervosa and bulimia. Other forms of mental illness would have financial parity, meaning that co-payments, deductibles, coinsurance factors, maximum out-of-pocket expenses, and annual and lifetime limits must be the same as for physical illnesses. But there could be “durational limits” not imposed on physical illnesses. These durational limits would have to allow a minimum of thirty combined inpatient and outpatient days per year and thirty office visits per year.

H 1499, Increase Homestead Income Limit to 25K, has been passed by the House and is in Senate Finance. H 1499 was an unrelated bill which was amended to remove its original contents and add this provision, which would increase the upper income limit to qualify for homestead exemption from $18,000 to $25,000.

H 1517, Voter-Owned Elections Pilot, has been re-referred to House Appropriations. It has been amended to require the publication of a Voter Guide describing candidates for the pilot offices. The appropriations have also been altered so that more of the money would come from the second year of the biennium instead of equal amounts in each year.

H 1785, Fire-Safe Cigarette Act, has been re-referred to House Finance.

H 1860, Honor Rev. W.W. Finlator, has been ratified.

H 1917, Senior Homestead Tax Relief, has been re-referred to House Finance.