Old North State Report - February 10, 2017
Six weeks into North Carolina Gov. Roy Cooper's term, the Democrat and Republican-controlled legislature are locked in a partisan power struggle, leaving a cloud of uncertainty over state government. Cooper won the latest battle Wednesday as a three-judge panel temporarily blocked a new law that required Senate confirmation for the governor's Cabinet members, using a process similar to what the U.S. Senate does for the president's Cabinet choices. The state law was passed in the waning days of GOP Gov. Pat McCrory's administration and seen by Democrats as a way to undermine the new governor's authority. Cooper sued over this and other laws that reduced his powers after he was sworn in Jan. 1. The decision by the judges was released an hour before senators were scheduled to question Cooper's pick to lead the department of military and veterans' affairs, but he was absent. Committee co-chairman Sen. Wesley Meredith read a brief statement in which he said senators would still get answers about the qualifications of secretaries and the meeting abruptly ended.
Cooper appointed eight of his 10 Cabinet members before the legislature came into session in January and they were sworn in. Some legislators call them acting heads. Under the law passed in December, they can be dismissed if the Senate does not confirm them. While the agency leaders wonder about their jobs, the standoff hasn't halted state government operations. But this much remains certain: the court battle has kept the rancor between Cooper and the General Assembly front and center. The three Superior Court judges have scheduled another hearing in the case today and will decide whether to postpone enforcement of the law until they can reach an ultimate decision. We will keep you updated on this dispute.
House Democrats introduced two bills that would effectively repeal last year’s House Bill 2 (Public Facilities Privacy and Security Act). No compromise of the House Bill 2 controversy was reached this week amid rumors of continued negotiations between the Governor and the General Assembly.
The General Assembly’s Fiscal Research Division and the Office of State Budget and Management released their consensus revenue forecast this week, predicting North Carolina’s 2016-17 tax collections would be $552.5 million above budget projections for the fiscal year. The anticipated surplus is “the result of stronger-than-expected wage growth increasing both Personal Income tax and Sales tax collections.” At this current rate of growth, the revenue forecast predicts the 2018-19 fiscal year surplus is estimated to approach $1 billion.
Appropriations Committee chairs in both the House and Senate have introduced legislation to require that 15 percent of each year's revenue growth from the prior year go into the rainy-day savings account. Spending from the savings wouldn't be able to exceed 7.5 percent of the previous fiscal year's operating budget, unless lawmakers agreed to a higher amount with two-thirds majority votes in the House and Senate. The fund could only be used to make up for revenue losses, pay the costs of a court order or provide emergency disaster relief:
Meanwhile the House Finance Committee met this week and staff provided the members with a review of General Fund sources and highlights of tax reforms from recent years:
In limited floor action this week, the House voted to shrink the size of the UNC Board of Governors from 32 members to 28 this year and to 24 in 2019. The Senate is expected to support the move:
Inevitably during a legislative session, there are spirited battles between interests competing in the same business sector. These fights don’t necessarily attract a lot of attention outside the state’s political arena but can consume the legislative building. A few potential wars are stirring as craft breweries square off against beer distributors, optometrists argue with ophthalmologists over the scope of practice laws on eye surgeries, and auto insurers debate “insurance regulatory modernization.” We’ll keep you updated on the hottest clashes as they unfold.
The articles published in this newsletter are intended only to provide general information on the subjects covered. The contents should not be construed as legal advice or a legal opinion. Readers should consult with legal counsel to obtain specific legal advice based on particular situations.