iImpact of Budget Proposals
Legislative leaders have named the conferees for House Bill 259 (2023 Appropriations Act), which consists of 26 senators from both parties and 47 members of the House of Representatives. Republican Senators Michael Lee of New Hanover County, Ralph Hise of Mitchell County, and Brent Jackson of Sampson County will serve as the upper chamber's chairs. Republican Representatives Donny Lambeth of Forsyth County, Dean Arp of Union County, and Jason Saine of Lincoln County will be in charge of the lower chamber.
The conferees are tasked with rectifying the various budget plans to produce a final document in the upcoming weeks, work that will have a significant impact on both taxpayers and state operations.
Republicans with supermajorities in both chambers tied the expansion of Medicaid to Governor Roy Cooper's approval of the biennial budget, with competing ideas offered by the House, Senate, and Governor.
With Medicaid expansion comes an infusion of one-time money from the federal government, estimated to total $1.6 billion. The Senate proposes investing much of that money into two new programs: NC Innovation and NC Care. NC Innovation is an economic development program that aims to monetize university research projects by keeping those investments in North Carolina. NC Care is a new initiative for improving access to high-quality health care for citizens and communities located in rural areas. The House budget allocates a much smaller amount to NC Innovation and does not include investment in NC Care, leaving opportunity for negotiation.
Both the Senate and House budgets would lower personal income taxes from the current rate of 9.6% to 3.99% by 2027, though the Senate aims to do so more quickly. Specifically, the Senate proposes to lower the flat rate to 2.49% by 2030, which would be lower than all states except those lacking an income tax.
Another major area that will need to be negotiated is how much money to save in reserves. Governor Cooper’s budget proposes no savings, while Cooper's proposal, while the House proposes saving $1.7 billion and the Senate proposes saving $6.7 billion.
Pay raises for teachers and government workers are another important factor. In addition to a $46,000 starting salary and retention bonuses, Cooper's plan calls for a 10% increase in teacher pay the first year and a 6% increase the following year. In contrast, the House wants to raise teacher pay by 4.25% the first year and 3.25% the second and restore master's pay removed in 2013. The Senate proposal would increase starting teacher pay by 11% to $41,000 by 2024–25 with a 4.5% increase for others over two years.
The proposed pay increases for state employees are 8% from Cooper, 7.5% from the House, and 5% from the Senate.
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Sports Wagering Legislation Passes
On Wednesday, state lawmakers gave their final approval to the legalization of sports betting on mobile devices and at specific in-person sporting events throughout North Carolina, opening the door for betting to start the following year.
House Bill 347, which permits betting from mobile devices on professional, collegiate, electronic, and Olympic sports as well as horse racing, received the House's second approval (68-45) after the Senate made changes to the legislation. The bill permits sports betting in person at eight locations throughout the state. At a cost of $1 million, it enables 12 mobile operators to acquire five-year renewable licenses. On the gross gaming revenue, the operators must pay 18 percent tax.
Mobile betting could begin as soon as January 8. However, the legislation also gives the North Carolina Education Lottery Commission one year from the time Governor Roy Cooper signs the bill into law to begin accepting bets.
Fiscal analysts for the legislature predict that in the fifth year of implementation, tax revenue from sports gambling could reach $100 million for the state. The budget for the state is about $30 billion.
Governor Cooper still must sign the bill into law, but he has expressed support for sports wagering throughout the lengthy legislative process.
Election Law Changes Proposed
This week, Senate Republicans unveiled a bill that would make a number of changes to the state's election laws, including new and stricter rules for same-day registration and absentee voting.
One of Senate Bill 747’s most important amendments is a new requirement that election boards only count absentee ballots received by Election Day. The time limit currently in place is three days following the election.
The bill would also mandate the use of provisional ballots for those who register and vote on the same day.
Additionally, the proposed legislation would:
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require election records to be kept for at least 22 months;
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allow any voter to challenge any absentee ballots cast in their county;
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require witnesses signing absentee ballots to also print their names;
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require the state elections board to implement a to-be-determined two-factor authentication process; and
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require counties and the State Board of Elections to refrain from accepting private donations for the purpose of conducting elections.
The legislation is still in its initial stages. It must pass numerous committees in addition to the House and Senate floors, where it may be modified.
Party-Switching Legislation Introduced
A bill filed on Tuesday by Senate Democrats in response to Representative Tricia Cotham's (R-Mecklenburg) midterm switch to the GOP would force an early election for those state legislators in North Carolina who change parties.
Democrats in Raleigh and Cotham’s Mecklenburg County district, which she won last fall by more than 18 percentage points, were angered by her change. Despite not mentioning Cotham by name, Senate Bill 748’s preamble made reference to information about her election in November by mentioning the precise number of votes cast.
According to the proposal, a seat in the General Assembly would be deemed vacant if an elected or appointed member changed their party affiliation with more than six months left on their term. Within 90 days, a special election would be held to complete the two-year term. Additionally, if a donor so requests, the bill would compel a party-switcher to return recent campaign contributions.
By allowing voters to hold their representatives accountable, the bill's sponsors claim it will help voters regain confidence in government.
The legislation would be prospective and would not apply to Cotham, whose action gave Republicans a veto-proof majority in both chambers of the General Assembly. The likelihood of the bill gaining traction in the GOP-controlled legislature is doubtful.
Bill Banning ESG / ETI Investment Criteria Progresses
Two separate but nearly identical bills that ban ESG investment criteria have passed their respective legislative bodies, indicating a high likelihood that either bill will become law.
The relevant bills are Senate Bill 737and House Bill 750, both of which have the title "Address ESG Factors," and have already been approved by their respective legislative bodies. On May 3, Senate Bill 737 passed the Senate on a party-line vote of 30-20. House Bill 750 passed the House on a vote of 76-41. The bill was also debated in the Senate Commerce and Insurance Committee on Tuesday afternoon and passed out of the Senate Rules Committee on Thursday.
Both bills would effectively forbid state agencies and state pension plans from using "environmental, social, and governance (ESG) criteria" as well as "economically targeted investments (ETI) requirements."
Both Senate Bill 737 and House Bill 750 define ESG criteria as "a set of standards to screen potential investments based upon the perceived impact to the environment and the social relationships between a company's employees and the community."
The definition of economically targeted investments (ETI) requirements in both bills is "a set of standards to screen potential investments based upon the perceived impact to the environment and the social relationships between a company's employees and the community." Both bills also specify criteria for evaluating "how a company's leadership is structured" in order to meet ETI requirements.
The use of these ETI or ESG standards to evaluate, hire, or fire state employees is prohibited. It is also prohibited to use them to manage assets in state pension plans or to screen potential investments.
