On Thursday (6/14), the Senate gave final approval to its version of a $20.1 billion state budget which has significant differences from the House version. Budget writers from both chambers now have to hash out a compromise plan before sending the budget to Governor Bev. Perdue. Perdue has already reviewed both versions of the budget and is anticipated to veto the budget for the second year in a row. In 2011, the legislature overrode her budget veto with the aid of five House Democrats.

As budget conferees negotiate, main items in contention include:

• Teacher Bonuses/Raises: The House wants to give teachers a $250 bonus, while the Senate prefers a 1.2 percent increase for “rank-and-file” department employees and making raises optional for higher education instructors and public school workers.
  
  
• Education Reform: The Senate budget included most of Senate Pro Tem Phil Berger’s Education reform bill and money to fund the provisions. The House did not include any of Berger’s education plan. Additionally, the Senate cut funding for the NC Teaching Fellows Program, while the House retained the funding.
  
  
• Infrastructure Projects: The Senate budget cut funding for several projects including the Garden Parkway, Blue Line Extension and the Mid-Currituck Bridget. The House however kept the funding for all projects at the levels funded in the 2011 budget.
  
  
• Eugenics Compensation: The House set aside $11 million in reserves to pay $500,000 in compensation to living victims under the North Carolina Eugenics Program, while the Senate did not provide any compensation reserve.
  
  
• Medicaid: The Senate spends $100 million more than the House on Medicaid, and also provides a $102 million reserve for the State Health Plan. The House only included a reserve of $1 million.

Annexation Bill to Become Law
Gov. Bev Perdue says that she will not take any action on legislation that allows people who live in unincorporated areas to vote against forced annexations. Perdue has 10 days to either veto or sign a bill before it becomes law without her signature. The annexation reform bill at issue was in response to a court ruling in March that cancelled a petition process approved in 2011 to block such annexations, because only landowners participated. The revised law allows a traditional referendum requiring a simple majority vote. The final floor votes in both the House and Senate appear to provide veto-proof majorities in both chambers.

House Passes 8th Veto Override
This week, the House successfully overrode a veto by Governor Perdue during the 2011 legislative session concerning community colleges. With the override, North Carolina community colleges may now opt out of a federal student loan program. Supporters argued that the measure is about local control, and that community colleges should decide for themselves whether to participate in the low-interest loan program. Opponents countered that the result would be less access to higher education.

Update: Shale Gas Development
With a vote of 66-43, the House gave final approval to legislation creating a regulatory framework that allows hydraulic fracturing. The bill only allows permits after additional action from the General Assembly, creating a sub-commission under the Mining and Energy Commission to oversee the creation of the regulatory framework. Rep. Mitch Gillespie, who called the proposal the “strongest fracking bill in the nation,” emphasized that while the measure legalizes hydraulic fracturing, implementation is still at least two years away and any additional concerns can be addressed during that period.

Senate Bill 820, the Clean Energy & Economic Security Act now goes back to the Senate for concurrence to the changes made in the House. Once the Senate concurs, the bill will be sent to the Governor for her consideration.

Chamber’s Priorities Continue to Move Forward
The Charlotte Chamber adopted its 2011-2012 legislative agenda focused on job creation, advocating pro-business policies that deliver innovative program and services. Several of the Chamber’s priorities have had additional movement in the General Assembly:

• State Air Toxics Program Reforms
  House Bill 952 would exempt some emission control sources from regulation under the state Air Toxics Program if those sources are subject to regulation under the federal Clean Air Act. (Passed House 70-46; Calendared for Senate vote 6/18)
  
  
• Education Reform
  Senate Bill 795 includes a vast array of education reform provisions, including replacing teacher tenure with one-to-four year contracts for teachers; puts additional focus on teaching children to read by third grade; provides merit pay for teachers; and creates a lateral entry program for the teaching profession. (Passed Senate 31-17; Scheduled in House Education Committee 6/18)
  
  
• Corporate Tax Reporting Requirements
  Senate Bill 824 prevents the Department of Revenue (DOR) from interpreting the law on forced combinations by issuing directives. Under the proposal, DOR would be required to develop formal rules that could then be challenges and taken to an administrative law judge to determine. (Ratified)
  
  
• Regulatory Reform
  Senate Bill 810 includes several regulatory efficiency goals, including: changes to the Administrative Procedures Act; requires agencies to provide private businesses advanced notice on audits; clarifies that state air quality regulations cannot be superimposed with state water quality regulations; lengthens the term for a sold waste permit from five years to 10 years. (Passed Senate 41-1; Calendared for House vote 6/18)
  
  
• Tax Credit Extensions
  House Bill 1025 would extend tax credits that are scheduled to expire on January 1, 2013 for one year. (Ratified)

Regulatory Reform

Taxes

Transportation

Education

Job Creation