The six House budget subcommittees last week approved spending proposals that would restore funds to the public schools while leaving intact many cuts to other agencies that lawmakers approved last year. The Republican-led subcommittees recommended adjustments to the second year of the two-year state budget implemented last year despite Democratic Gov. Beverly Perdue’s veto. All the proposed adjustments for the $19.9 billion plan starting July 1 will be rolled into one bill scheduled to be debated and voted on next week by the full House. The Senate will pass its own version later, and the two chambers will work out differences before a compromise is presented to Perdue.
Rep. Harold Brubaker, R-Randolph, senior chairman of the House Appropriations Committee, said budget-writers benefited from a projected revenue surplus of more than $200 million this year and unused pots of money elsewhere to help relieve public schools. Republicans in charge of the Legislature disagreed with Perdue’s budget proposal last month and won’t raise taxes by three-quarters of a penny as she sought to restore even more cuts approved last year. Perdue said in a statement the proposals didn’t go far enough to protect education. Perdue’s budget would have used the extra revenue from her tax increase to eliminate the $503 million cut entirely a move she said would generate thousands of education positions. She said the plan also falls short on pre-kindergarten, Smart Start and military-related programs.
Other subcommittees approved plans that would spend $664,000 so that the state can tap into $4 million in federal funds for more early voting sites and voting machine maintenance, delay for one year the collection of new or higher tolls on several ferry routes and spend an additional $169 million on Medicaid to reflect higher than projected growth. Portions of the budget weren’t released Thursday. Brubaker said top budget-leaders had yet to decide whether to propose a recurring salary increase or one-time bonus to state employees or teachers. (Gary D. Robertson, THE ASSOCIATED PRESS, 5/24/12).
With the expected drop in gas tax collections, the bulk of reductions the House subcommittee approved would come from the state’s program for paving gravel roads and improving paved secondary roads. The House Transportation Appropriations Subcommittee scaled back a plan to cut funding for rural and urban transit programs, agreeing to cut public transit grants by $2.6 million instead of the $8.6 million originally proposed. The panel shifted the $6 million difference to the secondary road construction fund. If the full House and Senate agree, the Highway Fund secondary road construction program will be cut by $39.4 million, leaving it with an appropriation of just $14 million for the fiscal year that starts July 1. A similar program funded by the Highway Trust Fund will be cut by nearly $1 million, leaving $48.3 million for the upcoming year, according to the recommended budget.
The House transportation budget assumes that legislators will agree to cap the state gas tax at 37.5 cents a gallon, a step that would reduce revenues next year by an expected $63 million. The budget also would add $2.5 million to the state Department of Transportation ferry budget, after legislators agreed to delay a requirement for new and higher ferry tolls that had been expected to increase toll revenues by $2.5 million. The plan also authorizes the hiring of 43 new employees to help the Division of Motor Vehicles implement a new program in July 2013 that will have DMV take over collection of vehicle property taxes, linking the tax collection to vehicle registration renewals. Car owners will write a single check to DMV to pay the tax and the registration fee. (News & Observer 5/24/12)
Natural and Economic Resources
While most of the substantial reductions in this area of the budget occurred during last year’s session, there are still some notable proposals that will be included in the full House budget:
1) While substantial reductions in the DENR regional offices have been avoided, budget provisions call for the department to centralize oversight of the regional offices, develop customer surveys, establish benchmarks and measure performance and identify best practices.
2) Directs DENR to provide the 20% match to draw down federal funds for the Clean Water State Revolving Fund and the Drinking Water State Revolving Fund.
3) Eliminates 4 Erosion and Sedimentation positions in DENR.
4) Transfers the Geodetic Survey Section to the Division of Emergency Management in the Department of Public Safety
5) Appropriates $11.25 million for the Clean Water Management Trust Fund – the same appropriation as the previous year.
6) No changes to the Biotechnology Center – continues appropriation of $17.5 million
7) No changes to the Rural Center – continues appropriation of $25.3 million
8) Appropriates $50 million in Commerce for One NC Fund for economic development projects
Regulatory Reform Act of 2012 – Senate Bill 810, sponsored by Senators David Rouzer, Harry Brown and Jim Davis passed the Senate Commerce Committee last week and is scheduled to be heard on the Senate floor this week. The bill accomplishes several regulatory reform goals including clarifications to the Administrative Procedures Act; requirements for agencies to provide private businesses advanced notice on audits; clarification that state Air Quality regulations cannot be superimposed with state Water Quality regulations and lengthens the term for a solid waste permit from 5 to 10 years.
State Air Toxics Program Reforms – House Bill 952 sponsored by Representatives Mitch Gillespie and Ruth Samuelson was approved by the NC House Environment Committee last week and is expected to be heard on the House floor this week. The bill 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.
Shale Gas Development and Clean Energy – Senate Bill 820 – Clean Energy and Economic Security Act was introduced by Senators Rucho, Black and Walters the first week of session and is scheduled to be heard in Senate Commerce. As reported in a previous update, it was expected that the House version of this bill – which deals primarily with shale gas development – would differ in some key areas. Last week, the House version was introduced by Representative Mitch Gillespie (HB 1064). Unlike the Senate bill which calls for rules and regulations to be developed by a newly created Oil and Gas Board, HB 1064 authorizes the NC Department of Environment and Natural Resources to study and recommend needed regulations for hydraulic fracturing. The bill also differs from the Senate in that it establishes a Joint Legislative Commission on Energy Policy which would provide oversight on all energy related issues within the state including oil and gas exploration.
Mechanics Liens – A legislative study commission charged with studying NC lien and bond laws met over the winter and developed several recommendations to be incorporated into legislation this year. However, the most significant item, the issue of how to determine hidden liens was recommended for further study and no legislation was expected on this issue until 2013.
Title insurers and lenders were not satisfied that no substantive, immediate action was taken to remedy their concerns over hidden liens and that this issue would be delayed until next year. The most recent development came earlier this month when Fidelity Insurance announced they will stop selling lien coverage for NC commercial and residential properties. Other title insurers are expected to follow suit if prompt legislation action is not taken.
Interested stakeholders met with legislators last week to consider a new bill draft that would require persons filing claims of lien give a written notice to a designated lien agent to ensure that their lien rights are protected. Engineers, architects and contractors are opposed to the current draft due to the additional administrative filing requirement that would put on our industry and the cost of compliance. Further negotiations are expected and PENC and AIA are requesting that architects and engineers that do work before a building permit is issued not be required to file a written notice but enjoy the same protections that the current law provides.
Other bills of interest that are scheduled for committee hearings this week include:
HB 261 – Allow DOT to Use Recycled Asphalt
SB 886 – Strengthen Board of Transportation Ethics Policy
SB 890 – Secretary of Transportation Project Approval
SB 891 – Update Chapter 136 with Term “Chief Engineer”
SB 892 – Require DOT Strategic Prioritization Process
SB 893 – Privacy of Turnpike Authority Toll Date
SB 444 – UNC Nonappropriated Capital Projects
Gubernatorial Candidate Pat McCrory Addresses Engineers PAC
GOP Gubernatorial Candidate Pat McCrory addressed the Engineers PAC of NC last week during the group’s luncheon at the Cardinal Club in downtown Raleigh. McCrory joked that although his father was an excellent mechanical engineer, he definitely did not follow in his father’s footsteps.
McCrory’s three major areas of emphasis were Energy, Water and Transportation – stressing that critical investments in infrastructure were needed in all of these areas. He added that as Mayor of Charlotte he has dealt with major issues in all these areas and that this experience has given him keen insight into the needs of our state and how to position ourselves to be competitive yet cooperative with our neighboring states.