Weekly Legislative Update

North Carolina

By Betsy Bailey & Victor Barbour
May 11, 2022

State Revenue Forecast Exceeds Expectation, Legislature Back Next Week

It’s another sunny day for North Carolina’s state budget, but some leaders are already cautioning against spending given the potential for storms ahead. A forecast of state revenue released Monday shows multiple reasons for the promising outlook for the state’s finances, including higher-than-expected job growth and higher-than-expected revenue from sales tax and corporate income tax.

But while state collections may be exceeding expectations, the outlook “faces significant headwinds,” according to the report. The consensus forecast is a joint effort of the nonpartisan Fiscal Research Division in the state legislature and the Office of State Budget and Management, which is part of Gov. Roy Cooper’s administration. The forecast reports “an elevated risk of recession during the forecast period given geopolitical uncertainty and evolving monetary policy by the Federal Reserve to address high inflation.” It adds that despite the risk, the legislative and executive branch economic experts do not foresee a “near-term” recession. The Consumer Price Index was up 8.5% at the end of March.

Here’s what else the forecast shows:

  • Inflation is expected to remain elevated but decelerate during the upcoming fiscal year that starts July 1.
  • Consumer spending direction is unclear given the impact of inflation’s potential to slow consumer demand for higher prices.
  • Revenue for the upcoming fiscal year is estimated to increase by 6.8%, or $1.9 billion, of the budgeted amount.
  • The revenue forecast shows an increase of $4.2 billion in revenue for this current fiscal year.

The state budget passed in November 2021 is a two-year budget, but there may be new legislative spending passed in the upcoming session that starts May 18. Republicans, who hold majorities in both the House and Senate, don’t appear to take the windfall as a plan to spend more. “Today’s forecast highlights the General Assembly’s winning formula of low taxes, reasonable regulations, and responsible spending. Our state continues to experience growth and record-breaking economic development coupled with regular revenue surpluses,” House Speaker Tim Moore and Senate leader Phil Berger said in a joint statement.

They also criticized President Joe Biden, a Democrat. “While this is promising news, we must be cognizant of the national economy and the precarious position the Biden administration has put the American people in thanks to rising costs and runaway inflation.”

Cooper, a Democrat, did not mention numbers in his statement about the forecast, but listed his spending priorities. “Our state is strong in many ways and it’s more important than ever to build on our success by investing in good schools, quality healthcare, resilient infrastructure and clean air and water. Tough times have made North Carolina stronger and we can build a foundation for the future,” Cooper said.

Democratic leaders in the legislature mentioned similar priorities. They called the forecast “great news” and credited Cooper. “It is great news that North Carolina is experiencing record job growth as we rebound from the pandemic thanks to Governor Cooper’s leadership,” House Democratic Leader Robert Reives and Senate Democratic Leader Dan Blue said in a joint statement.

Cooper and Republican lawmakers had a stalemate over the budget in 2019 and finally came to an agreement for the 2021 budget, with the governor saying he signed it into law because the “good outweighed the bad.”

Blue and Reives also brought up pay for state employees, who are receiving at least a 2.5% raise this year as part of the 2021 budget legislation, and teachers, who are getting an average 2.5% raise. “It is also encouraging that workers’ wage growth is exceeding expectations. We need to make sure that teachers, public safety officers, education workers, and all state employees receive pay raises that will help us recruit and retain the best people,” they said.

While the legislature is back next week the day after the May 17 primary election, no voting sessions are expected before the week of May 25.

Building Component Manufacturer Moving to NC

Atlantic Building Components & Services announced Thursday that it would bring more than 100 jobs to the Fairmont area. The company, headquartered in Moncks Corner, South Carolina, is a manufacturer of trusses. Renovations to the building on East White Pond Road, which formerly housed N7, Munsing Wear, and South Robeson Knitting Mills in its history, will begin as soon as next week, company president Jimmy Broach said. Fairmont Mayor Charles Kemp called the expansion a “blessing and a very positive step in the growth of Fairmont.” The company plans to be fully functional by August and will work next week to coordinate hiring efforts, he said. Wages begin at $15 an hour and can exceed $18 an hour.

Among agencies that partnered to make the project possible were Robeson Community College, the N.C. Rural Infrastructure Authority, the Economic Development Partnership of North Carolina, Robeson County Committee of 100, NC’s Southeast and the North Carolina Department of Commerce, according to the press release. “With the collaborative effort of this team, Atlantic Building Components will receive $ 1,045,000 million in a Job Development Investment Grant (JDIG) funds to renovate the property to their needs, as well as $136,500 in training dollars through the NC Community College System’s Customized Training Program, and $500,000 is pending for RIA building reuse,” the release states. 

PNC Arena Upgrades

Three days after NHL commissioner Gary Bettman underlined the importance of upgrades in and around PNC Arena to both the Carolina Hurricanes and the league, the Centennial Authority voted unanimously in a special board meeting Thursday to extend and expand existing relationships with consultants on both fronts, restarting a long-stalled process.

“We have an opportunity to take this facility in a completely different direction,” chairman Philip Isley told Centennial Authority members Thursday. The authority, the government-appointed board that oversees the arena on behalf of Raleigh, Wake County and the state, will ask HOK and Ratio to update the arena enhancement plan prepared in 2019 for current arena trends and construction costs and prepare a menu of possible upgrades at various cost levels for the city and county to approve at some point next year.

Three years ago, the authority was looking at a $200 million package of upgrades; that price will certainly be higher now. Meanwhile, CAA Icon, which advised the authority on negotiations over last year’s arena lease extension with Hurricanes owner Tom Dundon, will be further employed to develop a master plan for development inside and outside the arena, a project Dundon has declared his intention to pursue. “Either would have been fine,” Isley told The News & Observer afterward. “Having both is great because we now can say we’re moving forward on both the enhancements and whatever the vision will be out there. I’m pleased we’re moving forward. We’ve certainly been given marching orders from the city and county and these enhancements need to happen. They need to see something sooner rather than later.”

South Carolina

By Leslie B. Clark
May 11, 2022

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Last week, the Senate debated legislation to Save Women’s Sports and the House worked through their calendar, with the expectation of taking up the medical marijuana bill before a procedural vote shut down that debate. Both bodies completed their final committee meetings of the session since they, technically, adjourn tomorrow. Highlights of the week are included below:

SCDOT Presents to Senate Oversight Committee

Last week, a special subcommittee of the Senate Legislative Oversight Committee began their review of SCDOT this week. The subcommittee is chaired by Sen. Tom Young (R-Aiken) and includes Sens. Darrell Jackson (D-Richland), Brad Hutto (D-Orangeburg), Gerald Malloy (D-Darlington), Chip Campsen (R-Charleston), and Wes Climer (R-York). SCDOT Secretary Christy Hall and her leadership team provided an overview of the SCDOT operations, federal and state funding sources, and progress on the ten-year plan. Secretary Hall noted four primary areas that the Department will be focusing on in the immediate future:

  1. Implementation of Federal Funds: Working with federal partners to ensure that dollars are spent on projects and initiatives that will benefit South Carolina and are not subject to federal overreach.
  2. Continuing to Ramp up Programs: The Department will use ARPA and IIJA dollars to boost the state’s ten-year plan, including MPO/COGs, bridges, pavements, safety, and interstate programs.
  3. Work Zone Safety: Hall shared that the Department would like to explore adding blue lights to work zones, not necessarily law enforcement, but simply blue lights on vehicles to prompt drivers to slow down. This has been done is other states and has been successful.
  4. Workforce Development, Recruitment & Retention: Secretary Hall recently increased wages to $14, noting that it was still not enough to be competitive. She reminded Senators that the state’s pay bands limit flexibility, especially for entry-level positions. She also mentioned that the state needed to be more proactive in simplifying the employment application process.

This was the first of several meetings that will be held during the legislative interim.

Ways & Means Committee Fails to Pass out CON Bill

A special House Certificate of Need (CON) Ad Hoc Committee met to consider S.290, which passed the Senate earlier this year.  As proposed and passed by the Senate, this legislation would repeal the CON law and eliminate all references to it. The House Ad Hoc Subcommittee, which met early last week, offered a strike and insert amendment that changed the bill from repealing the CON law to reforming it. It was expected that additional amendments would be considered in the full Ways and Means Committee later in the week, but the full committee adjourned debate on the bill, all but killing it this session. There are several maneuvers that could be offered to reconsider S. 290, but not sure there is enough support to make it happen. If the bill fails to pass, there will be no change in the current CON law.

House Ways and Means Approves Bill to Split DHEC

The full House Ways and Means Committee amended the bill to split the Department of Health and Environmental Control (DHEC), S.2, and reported it out of committee last week. This legislation would split DHEC into two separate agencies. The reorganization of the Department would allow for the agency to become more modernized and, hopefully, more efficient. The legislation creates the Department of Behavioral and Public Health and the Department of Environmental Services. Both would be cabinet agencies and the reorganization would become effective June 30, 2023. The year-long transition would require monthly progress reports to be sent to the state and would maintain the one-stop shopping those contractors have become used to when obtaining permits from the Department. The bill was amended to not included the Department of Mental Health as one of the agencies that would fall under the new Department of Behavioral and Public Health. The bill still allows for one-stop shopping for permits that our members are required to have. The bill was reported to the full House, and this is the last week it can debated since the General Assembly adjourns tomorrow.

House Returns ARPA Funding Bill Back to Senate with Amendments

Last week, the full House amended and then returned to the Senate H. 4408, the American Rescue Plan Appropriations (ARPA) bill which includes, among other things:

  • $453.5 million for SCDOT to advance projects
  • $900 million to the Rural Infrastructure Authority for water and sewer
  • $400 million to the Office of Regulatory Staff for broadband
  • $100 million to the Office of Resilience
  • $8 million to the Department of Administration
  • $107 million for construction of a new lab at DHEC.

The Senate would need to concur in the House amendments for the bill to be enrolled for ratification. Otherwise, a Conference Committee will be appointed.

Local Government User Fee Legislation Fails to Advance

The full House briefly considered S.984, before the bill was objected to and placed in the contested calendar last week. This bill that codifies the allowance of local user fees. The legislative intent of the bill is to allow local governing bodies to enact service or user fees in return for a government good or service if the revenue generated from the fee is used to benefit payers of the fee. This would be allowed regardless of whether the public benefits as well. Lawsuits have been filed around the state alleging that counties have been improperly assessing user fees to pay for county roads and road maintenance. S. 984 would revert to the 1991 law that allows counties to collect road user fees and would codify, in law, the intent of the General Assembly at that time. If the bill is not passed, counties may be forced to raise property taxes or cut services to pay back years of collected user fees. The counties could also be on the hook for paying damages that are being sought through at least ten class action lawsuits that have already been filed. The House would need to take the bill up this week or include it in the Sine Die resolution for it pass this session.

Voluntary Contributions by GC’s to CSM Programs

S.888 was debated on the House floor last week but was objected to before the bill could receive a second reading. This is legislation that would allow an applicant for a new, reinstatement, or renewal contractor's license the opportunity to voluntarily contribute any amount beyond their license fee to an accredited public institution of higher learning offering courses in building science or civil engineering. The applicant may designate a specific accredited institution (Clemson, University of South Carolina, The Citadel, or SC State University) to receive the contribution. Undesignated contributions will be divided among the four institutions. Funds can be used to provide or enhance programs related to building science or civil engineering, which shall include, but is not limited to, scholarships, fellowships, research, faculty development, and continuing education programs. The bill will be on the contested calendar in the House this week.

BCC Legislation Requires Members to Reside in SC

Last week, the full House approved S. 934. This is legislation that addresses the membership of the South Carolina Building Codes Council. The proposed bill directs the South Carolina Chapter of the American Institute of Architects to provide a list of qualified candidates to the Governor to fill the Licensed Architect spot on the Building Codes Council. Currently, Carolinas AGC, the South Carolina Council of Engineering and Surveying Societies, the Home Builders Association of South Carolina, and the Manufactured Housing Institute of South Carolina are required to provide a list of qualified candidates to the Governor to fill the respective industry positions on the Council. A licensed Architect serves on the Council, but the law was silent on who would assist the Governor in finding a qualified candidate. The bill was amended in the Senate to require that each association must provide candidates for consideration who are residents of South Carolina. The full House passed the bill by a vote of 107-1 and it has been enrolled for ratification.

SCWINS Legislation Approved by Senate

The full Senate approved H.3144 last week by a vote of 40-0. This is legislation to establish the South Carolina Workforce Industry Needs Scholarship (SCWINS) for students attending a two-year technical college. The bill spells out that a student who is attending a two-year public technical college, who is majoring in a critical workforce area program, as defined and recommended by the State Board for Technical and Comprehensive Education (SBTCE) and ratified by the South Carolina Coordinating Council for Workforce Development, and who is receiving a Lottery Tuition Assistance Program Scholarship (LTAP) for the current school year, shall receive an additional South Carolina Workforce Industry Needs Scholarship (SC WINS). The bill was sent back to the House with Senate amendments and the House can either concur in those amendments and the bill will be enrolled for ratification. Or, if the House insists on its amendments, the differences will be worked out in a Conference Committee made up of three members from the House and three members from the Senate.

Workforce Council Legislation Passes Senate

The full Senate passed H. 4766 by a vote of 40-0 last week. The bill amended the makeup of the Coordinating Council for Workforce Development by allowing designees to serve for some of the board members. The bill also deleted the appointment of a representative from the business community appointed by the State Chamber of Commerce and instead calls for two representatives from the business community who are appointed by the Governor and who have professional expertise in economic development and workforce issues. Additionally, the Council must facilitate and coordinate the development of a unified, statewide workforce plan that utilizes data and analysis to identify statewide workforce priorities and create measurable, time-sensitive metrics in which all workforce pipeline stakeholders including, but not limited to, education and workforce boards, councils, and partner representatives, participate. The bill was sent back to the House with Senate amendments and the House can either concur in those amendments and it will be enrolled for ratification. Or the differences will be worked out in a Conference Committee.