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House | June 10, 2014 | Committee Room | General Government

Full MP3 Audio File

Happy to have you here. So happy to see another representative come in. Representative Ross? [SPEAKER CHANGES] ?? [SPEAKER CHANGES] I'd like to announce our pages. If you guys would stand up or raise your hand or just to let us know who you are. We welcome you here, and we hope you have the best experience this week. You're here at a prime week. Elizabeth ?? from Mecklenburg, Representative Tillis is sponsoring Elizabeth. Alexa Bumgardner from Wilkes. Representative Jeter, is she here? Down there. Good enough. Lauren Chamblee, Gilbert County, Pricey Harrison and Julia Crane of Transylvania, Representative Whitmire, right there. Good enough. Welcome to you all. And then I'd like to introduce you to our Sargent of arms, We don't know what we would do without them -- we appreciate them more than they know. Bob Rossi, right here. Doug Harris, right there. Thank you so much. So does everyone have copies of everything they need? We hope. You are ready to go. And I think we're gonna structure this the way we did at the last meeting. We'll let staff, and I want to introduce staff too, I forgot to do that. We'll let staff start, and at the end of each staff presentation, if you'll save your questions and comments committee to when they finish, and we'll go on like that. Our staff, Lisa Halliwell, Mark Bondo, Daniel Sader, and our committee clerk is Pamela Ling, we appreciate them. And we'll get started. Miss Halliwell. [SPEAKER CHANGES] Madam Chair and members of the committee, we are going to begin with the money report. So this is the report of the continuation of the expansion budgets. If you would please turn to J1 of the document. Overall spending for the general government agencies is 417.8 million and that's a slight decrease over the 14-15 certified budget. We will walk you through the changes that is being proposed in the house budget. Items one and two are standard throughout all of the agencies and this is the compensation increase of a $1000 annually recurring. As well as the benefits totaling approximately $1,236 per employee. So for the department of cultural resources, that is a total of 778,215 on a recurring basis. Item number two is the state retirement system contributions. That's 155,620 on a recurring basis. And item number 3 is historic publications. You heard a little bit about this before when we discussed the senate's budget. So it's a reduction to staff within the historical locations unit. It's 247,449 on a recurring basis, and an elimination of four staff. There remains about 3 positions within that unit and 173,484 that continue what's required in the law for them to do. Item number 4 is a position elimination, it's an education coordinator. This was the same that was in the senate's budget, 63,870. 1 position eliminated. Item number 5 is an item proposed in the house budget, it's funding for strategic marketing, so this continues an item that was funded on a non-recurring basis in the current year. It's for the online calendar, the social media, contract for its attractions and so forth. So it's 43,000 recurring, slightly less than what was put into the budget on a non-recurring basis this year. The next item, number 6, is reduction to the museum of History. The history museums, 114,961 on a recurring basis. There is a special-- this is a 2% reduction -- and there's a special provision that goes along with this, that directs that-- the department of cultural resources may not close the gateway, the mountain gateway museum. Item number 7 is a library grant. This is a 2% reduction, it was in both the governor's budget and the senate's budget. There is a special provision going along with this to cap the single county or municipal grants to 400,000. So there are only two counties that will be impacted by this reduction and that's Wake and Maklemburg countys. Item number 8 is a house proposed item. It was also in the governor's budget at a little bit higher level. 400,000 recurring for ?? Palace and that's in addition to the 100,000 you gave them, non-recurring for next year.

[0:00:00.0] The Governor’s budget had requested about 550,000 so it’s a little bit less than what was in the Governor’s budget but this brings their total operating state appropriations to three million. J3 is the ___[00:14] Commission this is a 2% reduction so it’s 9,000 on recurring basis at least 441,000. J4 begins the Department of Insurance, and items 10 and 11 are the salary and retirement contributions and adjustments. Item number 12 is an operations reduction within the division of administration it’s 20,000 on a recurring basis. Item 13 is position eliminations a slight modification of what was in the Governor’s budget but the same is what was in the Senate’s budget so it eliminates 7.8 fulltime equivalent position some filled some vacant for the savings of 433,955. J5 item 14 is over realize reseats, this is reseats collected from collection agencies but also it takes out some other reseats that have still been budgeted but are no longer being collected, the Governor’s budget had a million dollars in here but here you say this amount is 200,000 as same what was in the Senate’s budget. So, it looks that there is reseats that they are not really collecting within the budget there is that are off the books and that’s out for the 200,000. Item number 15 is a reduction to these line items communications printing and some other 200,000 reduction within the office of the state fire Marshall, the remains about 800,000 in those accounts. And item J6, this is an item opposed here by the house and this is an increase to the interims regulatory surcharge it would go from 6% to 6.5% and the additional amount to be generated would be approximately 2.4 million on a regular basis. There is a special provision that we will talk about that goes with along with this as well. Now, I’m turning to J8 the State Board of Elections, item 16 and 17 are the retirement salary contributions, item 18 is a contract elimination of 117,415 this was in the Governor’s budget as well as the Senate’s budget and this is where the State Board of Elections is bringing some of their previously contracted data services in-house. Item 19, these are investigated positions this is a new item for these budgets, it was not in the Governor’s or the Senate’s so this would be an additional three positions that 201,657 to investigate fraud in elections, discrepancies in voter registration inflammation and so forth. Turning to J9 the General Assembly 20 and 21 are the reserves for salaries and benefits, item 22 is the General Government Oversight Committee and this is funding for several meetings throughout the interim, this was an item also when the Senate’s budget and there is a special provision it goes along with this. Item 23 is a modification of what was in the Senate’s budget it’s a reduction to operations within the Information Systems Division of the General Assembly, this is a non-recurring cut, the Senate’s budget headed in 750,000 but looking more at that budget it looks like there will be less potential carry forward for this year so that’s been reduced to 600,000. J10 is a health insurance mandate study this is a new item for the house so it provides funding for the General Assembly to wish your request for information from consulting firms to look at the potential impacts of the insurance mandate requirements on providers, individuals, and the states economy in general and there is 500,000 on a non-recurring basis for that. Item 25 is the youth of General Assembly so this transfers the program from the Department of Administrations that Youth Involvement Division that provides one position to the General Assembly for you to operate the Youth General Assembly program so that’s a transfer of 56,833 recurring. Moving to J11 to the office of the governor, 26 and 27 are the reserves for the salaries and benefits, item 28 is another transfer from the Department of Administration which is the Youth Internship Program this has been transferred to the office of the Governor one position and some operating funds of 254,974 and all of that would be transfer to continue to manage the internship program. Item 29 is a management flexibility reduction of 103,442 this item was also in the Governor’s budget, the Senate ___[04:52] but this is the same cut in the same level as it was in the Governor’s budget. Moving on to… [0:04:59.2] [End of file…]

12 state budget of management, again, items 30 and 31 are the reserves for the salaries and benefits. 32 is a position elimination of a grant's assistant that you have heard about before that was in the senate’s budget and also the govern’s budget, so one position being eliminated ?? of 50,584 savings. Item 33 is a contract reduction within technology and data services of $100,000 on a recurring basis which would still leave them about $587,000 in that account for 14/15. Item J13, this is an item that was in the govern’s budget, it was not in the senate’s budget and this is a grant in aid to the North Carolina humanities council, so their grant in aid level is $20,000 and this would eliminate that grant in aid on an recurring basis. J14, moving on to the auditor, 35 and 36 are the salaries and benefit reserves. Item 37 is an operations reduction to be taken agency wide $37,000 on a recurring basis from travel, lodging telephone, services, those types of line items. And Mr. Chairman I’m happy to, Madam Chair, I'm happy to take questions if you want to now or we can. (SPEAKER CHANGES) I do, put your hand?? (SPEAKER CHANGES) Yes (SPEAKER CHANGES) Questions, comments from the committee (SPEAKER CHANGES) Representative Harrision (SPEAKER CHANGES) Thank you Madam Chair. Would you mind telling me on item number 34, does that leave any appropriation to ?? council (SPEAKER CHANGES)No, Representative Harrison it does not. It’s J13, item 34. So currently what’s in the budget on a recurring basis is $20,000 and this totally eliminates it. It was reduced last year, the year before, somewhat and that was the remaining amount. (SPEAKER CHANGES) I thank you (SPEAKER CHANGES) Questions comments? Any further ones? Ok. Representative Pittman (SPEAKER CHANGES) Hi. On J2 ?? The $4,000. I was there in February and they were showing us very bad needs of repair. Are they going be able to approach getting them done within the ?? same appropriation they had? (SPEAKER CHANGES) Representative Pittman this would not include any types of repairs or renovations, they are using these funds for operating and paying for positions, and I’m not familiar with any potential projects (SPEAKER CHANGES) That would probably be a concern with me. ? I have to say I’d love to see all kind of types of things eventually be self-supported, but they got to keep standing there if we are going to get there. Thank you. (SPEAKER CHANGES)Further questions from the committee? Representative Ross (SPEAKER CHANGES) J item 2. The start of the ?? If I understood it correctly, ?? there will be 4 position eliminated leaving 3. Is that correct? (SPEAKER CHANGES) That’s correct (SPEAKER CHANGES) Whether they were ?? balance, as long as they are reoccurring, is that correct? (SPEAKER CHANGES) That’s correct (SPEAKER CHANGES) Representative Queen (SPEAKER CHANGES) I just want to follow up on that ?? This isn’t a big division, but they’ve done terrific work over the years for the state. ?? I’m just ?? (SPEAKER CHANGES) This was in the original?? (SPEAKER CHANGES) Is there any analysis of why this was done? (SPEAKER CHANGES) Let us get some information for you (SPEAKER CHANGES) My general comment would be that there’s a lot of work to be done on the district pay for North Carolina and they are the ones that are doing the publications, communicating and educating the public (SPEAKER CHANGES) I will tell you that this was in the senate’s budget. This identical provision that went in last week (SPEAKER CHANGES) Representative Queen there are very specific requirements that are laid out in General statue 21.4 on what the department of Cultural Resources aught be doing regarding publications, one item includes the Governs papers for example

That is something that’s specifically laid out. The department has had reductions in the past and they have taken some reductions in this area, so for instance, that’s one thing that’s put on hold. Right now when you go to their website, it shows that that one’s on hold. Some other requirements. And so producing the papers of the Governor, they do a part of that, but then the funds for the editorial assistants, printing, bonding, distribution, that kind of thing, comes from a different fund not within the Department of Cultural Resources, and again, that’s an item not being completed right now. Another requirement is to edit and publish a second or new series of the most significant records of colonial North Carolina. So there are just a few things that are explicit. There are lots of broad categories, publications of suitable histories of all the counties and other appropriate materials. They provide a historical review that you can subscribe to and those are produced quarterly. So there are lots of things going on that they’re doing, few specific requirements in the law. [SPEAKER CHANGES] Representative Fisher. [SPEAKER CHANGES] Thank you, Madam Chair. On page J8, under Investigator Positions, is this a new position, the 201 thousand C57? [SPEAKER CHANGES] Yes, ma’am. Representative Fisher, this would be new positions added to the Board of Elections. [SPEAKER CHANGES] And then a follow-up? On the Information Systems Division, can you tell me more about what was eliminated with that item? [SPEAKER CHANGES] Within the General Assembly? [SPEAKER CHANGES] Within Board of Elections. [SPEAKER CHANGES] Board of Elections. [SPEAKER CHANGES] Sorry, same page. [SPEAKER CHANGES] Same page. This one… they had been contracting with a third party entity to provide their data information, the election returns and so forth. They brought all of that in house, so this is the savings from the elimination of that contract. So this is following a practice that’s already in place. It’s just taking the cut. [SPEAKER CHANGES] And one last follow-up on that same couple of items there. Where will the new positions come from for that investigative position, or for the investigative positions? Are they going to be from outside or within the department or…? [SPEAKER CHANGES] They will just go through the regular recruitment process, whether or not they go about in or how they go about hiring, but it will be just through the state’s regular recruitment process. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] Anyone else? Representative Cunningham. [SPEAKER CHANGES] I want to go back to that investigators on page J8. On those investigators ??, I heard what Representative Fisher was saying, were they going to be hired in or without the state, and I’m not sure where are they going to be coming from and if there’s a background qualifications for these positions, since they’re going to be paying about 60 thousand dollars per person per piece, and if they’re going to be travelling investigators. Can we find that information out? [SPEAKER CHANGES] What I can tell you is this of course is at the request of the head of the state Board of Elections because she feels as though she needs these positions, and then you can answer… [SPEAKER CHANGES] Madam Chair, if I may. [SPEAKER CHANGES] Sure. You are recognized. [SPEAKER CHANGES] These three positions were… actually, they requested five positions, the state board of elections did. They have investigations languishing over there that are several years old that they’re been trying to get finished and they haven’t got them finished. This isn’t just for quote-on-quote “voter fraud”; it is to give them the ability to do their campaign finance work in addition to other things, is what these three investigators are for. They’re going to be hired through the normal process; they will be vetted in any same way as any other investigators hired for the Board of Elections. [SPEAKER CHANGES] Do you want…? Did you have anything to add to that? [SPEAKER CHANGES] No, ma’am. [SPEAKER CHANGES] Any follow-up? Representative ??. [SPEAKER CHANGES] I was just sort of concerned about the continued cut in positions for the Department of Insurance on J4, pages 5 and 13 ?? positions. I remember last year’s budget, we had a dozen I think eliminated. We’re in an environment where insurance is a more and more contiguous service. Customer service is a bigger and bigger concern. There’s a lot of changes, not only…

Affordable Care Act within the property insurance. We haven’t had a hurricane lately, but let us have one and we’re going to be struggling. What do we really save here? I understand that these are fee supported positions, how does that help the general fund? [SPEAKER CHANGES] Representative Queen this is actually a reduction to their overall budget. These positions were in the Governor’s budget. The list was provided by DOI. Last year there were the 9 positions eliminated and there were some issues around that. And the department of insurance has asked for some flexibility and so forth then. I don’t know if they’re asking for that now but this list was provided. And the way that the department of insurance is funded is that it’s funded through the regulatory surcharge. So the regulatory surcharge comes in within the department of revenue. It’s deposited in a special account within the department of insurance, and then they’re up-fronted in appropriation. DOI’s up-fronted the appropriation from the General Assembly, and then DOI repays the general fund, plus interest. And I think that’s what you’re talking about with the fee piece. But ideally, the whole operations of DOI would impact what that surcharge is set at. And as the costs go down to DOI, that rate is looked at every year. [SPEAKER CHANGES] Is your question answered? [SPEAKER CHANGES] It’s answered to a point. I’m just, my concern is the need is great, and we’re cutting their staff off, right and left. And I just wonder why we’re doing that. I have some thoughts but I just want to take government out of our government committee. [SPEAKER CHANGES] Other comments, questions from the committee. ?? We thank you very much. ?? [SPEAKER CHANGES] Good morning, I’m Daniel Sater with the fiscal research division. I’ll begin on page J16 with department of revenue. Items 38 and 39 are the salary and retirement increases. Item 40 is an actual office space increase. This was in the Governor and the Senate budget. There were new IRS regulations about physical building security so the department had to upgrade their lease. Item 41 was in both Senate and Governor’s budget, is transferring operating expenses over to receipt support. The receipts are going on to the collection assistance fee. That’s the 20% surcharge leveed on overdue taxes. Item 42, this is a slight modification of a Senate item. It eliminates 9 vacant positions. 7 of these have been vacant for over 300 days. Item 43, local government division positions. This adds 5 positions to the local government division, to help local government auditing non profits and governmental units in auditing their refund requests. It’s $400,000 recurring and $600,000 non-recurring spent. The money for this will come from receipts collected on apartment, on the local sales and use tax receipts. This is in both the Senate and the Governor’s budget. Item 44 is a transfer over from the department of transportation. OSBM, transportation and revenue have all agreed that this program should be housed within revenue. The ?? tax project and it allows revenue to pay for expenditures related to the project. And that’s just under $800,000 recurring and this money comes from property tax collections collected by the division of motor vehicles. On J17, the special fund for the project to collect tax. This is the account for the collection assistance fee. The first item you see is the locator services, this was a modification of the Governor and the Senate item. This sets the cap at $250,000 for locator services. The next item, the taxpayer assistance call center. This is a modification of the Governor’s proposal. It was not in the Senate’s budget. It appropriates just under $4 million recurring for 50 positions to open a second taxpayer assistance call center in Guilford County. It’s about half of what the department had requested. The next item, criminal investigation division special agent. This is a modification of the Governor and Senate item, authorizes the department of revenue to hire 2 new special agents to pursue individuals and businesses with overdue tax debts. And again, all this money is coming out of the collection assistance fee so none of these items will have a general fund impact.

The last item on this page, collection e-service. This transfers the money over to a different special fund, which I'll talk about in a moment, it's going over to the I-task replacement project. On page J-18 the first item, this was in both the Governor and the Senate. This provides the department the 1.4 million dollars non-recurring to upgrade the technology at the current Rocky Mountain Call Center. The next item, ABC permit tax compliance program, some software purchases to allow commerce and DoR to ensure that all applicants for retail ABC permits have paid all of their taxes. The last item you see, operating expenses, this is the transfer over that you saw on the general fund code, so we're decreasing the general fund appropriation and it increases the money that is spent out of their special fund. Next on page J-20, collections case management, this authorizes the department to spend 5 million dollars nonrecurring out of the I-task replacement code which is a combination of the TIMS benefit stream, some general fund appropriations, and collections assistance fee money. This is what we had, the General Assembly had been paying for, for TIMS, this is what's going to be the next portion of the TIMS replacement so it allows the department to spend 5 million dollars to implement a collections case management program. Collection e-service, this is what I spoke to just a moment ago. This is a transfer over from the collections assistance fee fund. That will allow the department to implement an e-garnishment system, to automate management of the garnishment process to be 7.5 million dollars, nonrecurring. The last item tax impression management system funding. This is maintenance of the portions of TIMS that the department did receive from the TIMS contract, to be 11 million dollars, nonrecurring. This is, all of these three items were in the Senate budget. On page J-21, the two items you see here are technical fixes to the certified budget. When the budget was certified last year, the contract was CGI the former TIMS vendor was still in place so the General Assembly had to fix the certified budget to, yes thank you, to reflect the changes we've made in the current budget. Just can't think of words. On page J-22, the first two items you see, 45 and 46 are the combination retirement increases. Item 47,this is the modification of a send item, the Senate had eliminated three positions in the publications division. The house budget gives this as a management flexibility deduction. Item 48 is identical to the Senate budget, it eliminates two vague additions in the corporations division. On page J-23, first two items are the salary and retirement, the next item is from the Governor and the Senate's, it's operating expense reductions, this is a 2% cut to the Lieutenant Governor's office. On page J-24, first two items are compensation increases. Item number 54 is a slight change from the Senate and the Governor's, there is a technical fix, one of the positions numbers had to be changed, but the amount is the same as in the Senate and the House. Item 55 is the operating budget, just appropriates 173,000 dollars to decrease the transfer that is going from one of the Controller's special funds into their general fund. Currently, their transferring just over ??,000 dollars from a special fund into their general fund operating. This decreases their transfer by 173,000 dollars. Item 56, this is a new item. It extends the hardware on the Beacon, it extends the warranty on the Beacon hardware through July of 2015 to 130,000 dollars, nonrecurring. Item 57 was in both the Senate and the Governor's budget. It provides money for the ongoing maintenance the cash manager program, it's 180,000 dollars, recurring. Item 58 is a contract increase, it provides 21,000 dollars to pay for our contract increase for Oracle software licensing fees. Item 59, this was in both the Governor and Senate budgets, operating budget reductions, it's 520,000 dollars. Item 60 was in the Governor's budget but not in the Senate budget. There was a contractual inflationary lease increase for the Bush street building where the Controller's office is. Item 61, this was in both the Senate and the Governor's

[0:00:00.0] It’s another contract increases the hundred thousands dollars. On page J26 the special funds of state controller the first item is the Federal and Trans contribution act savings, this transfers 5.255 million dollars non-recurring problem that fund to the general fund and the next item operating budget just with the second half of an item you saw just a moment ago this decreases the amount but it’s taken out of this fund by 110,000 dollars every years because the General Assembly is appropriating that through the General Fund Appropriations. [SPEAKER CHANGES] Questions from the committee, Mr. ___[00:45] any questions? [SPEAKER CHANGES] Representative Ford… [Background Conversation] The call centers… [SPEAKER CHANGES] This is on page J17, if you want. [SPEAKER CHANGES] The ___[01:12] is selected due to the ability of the local community college that provide training and they have been providing training and there are numerous other call centers in that area presently and the support for the call center locally with the employees and educational backgrounds and what not was the best choice to understand I think. [SPEAKER CHANGES] It’s the one I think say private funds ___[01:50] if there is not [SPEAKER CHANGES] No. [SPEAKER CHANGES] No. [SPEAKER CHANGES] There is one, there is currently in the Rocky Mount and then the Greens ___[01:57] will be second. [SPEAKER CHANGES] Okay, if there are not probably. [SPEAKER CHANGES] No, Sir. [SPEAKER CHANGES] Further questions from the committee, Representative ___[02:05]. [SPEAKER CHANGES] Alright, just like the little information on the J26, transfer problem with the ___[02:13] and talking about savings I think ___[Inaudible] [SPEAKER CHANGES] The savings what J26, first item, this transfer going to general ability the ___[02:26] fund has built up a balance, it’s the money in that account comes from what the state saves when it doesn’t pay to payroll tax if employees select, if employees enter into flex plans to pay for health care and travel expenses. So, if you are employee like he puts in $1000 into this flex plan then I save on the payroll tax of that $1000 but the state saves on their half of the payroll tax as well and that money goes into this fund and it builds up balance overtime. So, just transferring about 5.2 million dollars out of that fund and putting towards your health and other availability and it’s not correct. [SPEAKER CHANGES] Further questions or comments from the community? [SPEAKER CHANGES] [Inaudible] [SPEAKER CHANGES] Thank you very much. [Background Conversation] Good morning, good morning it’s Mark Bonder with this research and we are gonna be starting on page J28 under the Department of Administration. As you have seen item 62, 63 are the compensation increases for employees, item 64 is variation on the Senate budget instead of eliminating 10 specific positions, it gives the department flexibility and what positions it eliminate the dollar amount remains the same. Item 64, the modification of the Governor’s budget that also included in the Senate budget this is reductions to various departments or divisions within the Department of Administration. Item 66, this is a transfer the general government budget is transferring the great crises program, the domestic violence center and domestic violence center fund to the Department of Public Safety also with the Domestic Violence Commission, the Commission of Domestic Violence, there are no cuts to any of the grand programs or any of the administration and this transfer is a total transfer. The account will remain with the Department of Administration. Item 67, this is reduction with general ____[04:37] services contract this was in the Senate budget as well as the Governor’s budget. Item 68, this is same as in the Senate reduction to utilities expenditures within the Department of Administration. Item 69, this is the same as in Senate Budget this was an operation reductions for the offices came in human resources, any questions on… [0:04:59.8] [End of file…]

Office of State Human Resources to Lisa Hallowell. Item 70, this is a reduction of the learning management system. Last year there was appropriated money for a learning management system and this reduces the spending closer to actual. Item 71 is a position elimination within the Office of Human Resources. State Ethics, this is a slight change to the Governor's budget but same as in the senate. It's a reduction of operating expenses to the State Ethics Commission. And Daniel Sader will be the one covering any detailed ethics questions. Item 73, this is the same as in the Senate budget. It's the elimination to the Aid to County Veteran's Services Offices. This is a grant program that goes back to County Administration for various Veteran's services that they provide. Item 74, is a technical fix. It was in the Governor's budget and in the senate budget. This basically allows the Veteran's homes to operate at their current budget with the opening of two new Veteran's homes. Item 75, you heard about when Lisa Hollowell presented the general assembly's budget and the Governor's budget. This is the transfer of the Youth Internship and Youth Legislature program. With this transfer, one position will be going to Governor's office along with the funding for the internships and relevant funding for operations to run the internship program out of the Governor's office. One position will be going to the General Assembly to run the Youth Legislature or Youth General Assembly as it will be called. And three positions are eliminated. Page J31, this is a new item. It's a reduction to the e-Commerce reserve on a non-recurring basis. 2.13 million dollars will be transferred to general availability. Page 33, this was in the senate budget also and the Governor's budget. This is a technical fix for the Veteran's Trust Fund. This just appropriates funds from the Veteran's Trust Funds to the Department of Administration's budget to run the Veteran's Homes and adjust receipts. Page J35, again this is a technical fix. It was in the Governor's budget and also in the senate budget. This appropriates funds for the Motor Fleet Management to get Motor Fleet back on its normal replacements cycle and also add them to expend funds that they collect. Page J37, temporary solutions. This is a technical fix. It allows temporary solutions within the Office of State Human Resources to expend funds that they collect for the provision of temporary services. Page J39, again another technical fix to a special fund page. This was in the Governor's budget also in the senate budget. Allows State Park and system to expend funds that they collect and also adjust receipts accordingly to essentially to true up their budget. Page J41, The Housing Finance Agency. This budget in its entirety is the same as the senate budget. Item 66 reduces the Home match by 2%. The Home Match Program is a program funded from the federal government from the Housing and Urban development department. And it is essentially block grant program for housing that the states receive. And the states have to put up a 25% match. Item 77, reduces the Housing Trust Fund recurring appropriation by 2%. Item 78, is the Workforce Housing Loan program. This creates a low income housing program within the housing finance agency that will connect with and sort of mirror the old, expiring State Low Income Housing tax credit. Next page, page J42, Office of Administrative Hearings. Again this budget, with obvious changes to the compensation, is the same as in the senate budget. Item 81, this is an operations reduction to the department through various line items that you see below. Page J43, this is the treasurer's budget. Item 82 and 83 are compensation adjustments. Item 84 was in the senate budget and a modification of the Governor's budget. This is a reduction in operations to the Financial Operations Division. Item 85 is a modification of what was in the senate budget. This appropriates nine new positions within the Investments Division to reduce the expenditure on 3rd party vendor contracts within that department to internalize investment operations. The hope there is that we will save potentially on contracts that are being used to manage the state's investments. Item J44, is a new item. A couple of years ago with the state, the state created a 403b plan for teachers which allows for, essentially it's a 401k plan that is.

. . . given to educators. There is going to be a need for some start-up funds in order to manage the contract with TIAA-CREF. And so what this will do is it will allow the transfer of funds from the Qualified Access Benefits arrangement, which is a fund within the Treasury and within Retirement System to be used to fund these start-up cost. The funds will be repaid over a longer period of time back into the fund. Page J-45, this is a new item, this is the Blount Street properties. Within the Treasurer's office, there is about 5.4 million dollar fund that's made up of proceeds of the sale of the Blount Street properties. This reduces that amount by 2.4 million non-recurring and transfers it into general availability. I believe, back in 2003, the Blount Street bills passed regarding the sale of Blount Street properties. Up to 5 million dollars of that sale was to be appropriated to this fund for the provision of maintaining the Governor's mansion. Right now, after 5 million dollars was deposited in the fund, it has grown to 5.4 million dollars, and 2.4 was taken out. Page J-47, Fire, Rescue, National Guard and Pensions item, this is a Salaries and Benefits item, but I will report on what is happening here. The Firefighters' Pension Fund is the same as in the Senate. This allows for a reduction based on the annual required contribution, but again it allows for the increase in benefits to the Firefighters Pension. National Guard, this reflects a change. There is a reduction, but it's less than it was in the Senate budget, because it allows for an increase for up 5 dollars per month for retirees benefits. Item 89 is the same as in the Senate. This reduces the Rescue Squad Pension Workers Fund on the same basis, on the annual required contribution, but also allows for a benefit increase, as was in the Senate budget. And that concludes the General Government Budget, and I'm happy to take any questions. [SPEAKER CHANGES] Questions? Representative Fisher. [SPEAKER CHANGES] Thank you, Madame Chair. I have several questions. The first question is how much altogether has Gen Gov contributed to the general availability this time around? [SPEAKER CHANGES] A lot. [SPEAKER CHANGES] A whole lot? [SPEAKER CHANGES] A whole lot. SPEAKER CHANGES] We don't have a whole lot to start with. This is pretty disturbing to me. We're looking at, I don't know, how many millions of dollars we've been able to scrounge up for general availability. Any round figures on that? [SPEAKER CHANGES] We had . . . if I may, Madame Chair? [SPEAKER CHANGES] Sure. You're recognized. [SPEAKER CHANGES] I guess, Representative Cleveland. [SPEAKER CHANGES] We initially were going to take the 5.2 million FICA monies . . . [SPEAKER CHANGES] Right. [SPEAKER CHANGES] . . . and we've had done this in the past to help our budget with non-recurring cost. In our first meeting with the ??, we were told that that was their money, we couldn't use it. So we had to go shopping for some money or do some drastic reductions. And in shopping for the money, we came up with the two sources that you've heard. And hopefully going forward. Those two sources are going to dry up quickly if we have to use them again, and hopefully going forward for non-recurrent cost, we'll be able to dip where we've been dipping in the past. [SPEAKER CHANGES] Representative Fisher has got 9.7 million dollars general bill money. SPEAKER CHANGES] Going back to page J-29 - and you knew I would ask you about this - Item number 66, I know that this was in the works, that this has been a conversation ongoing for awhile, about the transfer of these funds to ?? public safety, but tell me, is this a new House item? Did it originate in the Senate or the Governor, or. . . ? [SPEAKER CHANGES] Yes Ma'am, this is a new House item. This was not in the Senate's budget and it was not in the Governor's budget. [SPEAKER CHANGES] Can you tell me what the thinking was behind it? [SPEAKER CHANGES] If I may? [SPEAKER CHANGES] You may. [SPEAKER CHANGES] Representative Cleveland again. [SPEAKER CHANGES] The JPS part of our government, they have grants and funds to mirror what the domestic violence people do, and the main thought behind it was, to put it all together so everyone understands what funds are available, where they're coming from, and just get a handle on the total program and not have it basically working out of two agencies, two areas.

The council for women has been administering these programs for quite some time. And I'm wondering now what funds will be available to the council of women for the programs that they've been administrating for years and years.[SPEAKER CHANGES] The council for wom-- go ahead, Jim. [SPEAKER CHANGES] Yes, ma'am, so the council for women will no longer administer -- It will be in the special provisions -- but the council for women will no longer administer any grant programs. They will remain intact to advise the state on activities within that council. But the grant programs for rape prices and domestic violence will be moved underneath the department public safety. The department of public safety will also receive the domestic violence commission under the provision and they will be, they will be allowed to administer and place where those grant programs go, sort of where they see best for them to go.[SPEAKER CHANGES] So, will the council for women now be put in the position of having to apply for grants in the department of public safety, for the programs that they have in place to help women, families, children; as they've been doing for some time now?[SPEAKER CHANGES] Yes, ma'am, potentially if they were to start offering those sorts of programs, should the house budget become law, and they would need to find sources of funds to provide those programs.[SPEAKER CHANGES] And then one last follow-up. This leads me to a question about the displaced homemaker program. There is a program that has been happening all across the state that yes, women or other family members back on their feet after a loss of a spouse or if for some reason someone has to return to school, or do some sort of career prep to get back into the workforce, where are those funds?[SPEAKER CHANGES] Yes, ma'am, last year that program was eliminated in the budget. It was on a phased elimination, so this current fiscal year it received a lesser amount from the divorce filing fee. Next year where you see nothing from the divorce filing fee, so as a result, that program did not transfer in the special provision and the elimination of that would take place. The total divorce filing fee that was collected for the displaced homemakers and the domestic violence center, that total fee will transfer to domestic violence with this transfer. [SPEAKER CHANGES] So, I thought that was my last question. This is just really disturbing to me. And I guess the reason I have so many questions is that I'm wondering now how will these programs be funded that have always been able to go to the council for women, will they now go to the department of safety with these kinds of issues?[SPEAKER CHANGES] Yes, ma'am, that's correct. The statues that followed these programs, so the opp-- what they have been operating now under current statues and administrative rule will transfer a type to the department of public safety. There will be no change, or should be no change, in how they are funded. The requirements for who is eligible for funding will remain exactly the same, and statue once they go to the department safety. Now in terms of the administration of, you know, forms and that sort of thing, that obviously could change depending on how the department of public safety would choose to manage those items. [SPEAKER CHANGES] Thank you.[SPEAKER CHANGES] Representative Harrison[SPEAKER CHANGES] Thank you, Madam Chair. Work on -- page on Item number 68. ?? So, I guess state construction isn't from the administration’s bill?[SPEAKER CHANGES] Yes, that's correct.[SPEAKER CHANGES] Is this utility setting a result of the requirement that our state government buildings be more energy efficient? ?? Do you know?[SPEAKER CHANGES] Ma'am, I don't believe that is probably a requirement -- or a result of this. Essentially the state budgets -- the state budgets what's called a certified budget. So the budget that you’ll pass will be the certified budget for the state. When OSBM then administers the budget, they issue what's called an authorized budget. So normally their authorized budget is done at a level much below the certified budget for utilities. And looking over the past 3-4 years of expenditures, the state has not expended the amount of the certified budget in utilities. So it has been just sitting there and reverting back, so we're cutting that closer to actual -- is it a result of utility savings? I would probably hazard a guess

...say no, the only building that we have that really would have fallen underneath that rubric would have been the Green Square building, the other buildings in the state government complex have not received a whole lot of R&R or refurbishment since that bill passage. So potentially for that one building for Green Square that might be the case, but probably, state complex wise, I say no. [SPEAKER CHANGES] Thanks. [SPEAKER CHANGES] Further questions from the committee? Representative Floyd? [SPEAKER CHANGES] [??] [SPEAKER CHANGES] Oh goodness. [SPEAKER CHANGES] My first question, my first one is [??]... and that's the [??] hundred and thirty-eight dollars for the county. Given the [??] across the nation, as it relates to [??], you know I would really like to see that money somehow remain. There's an article in our paper today saying [??] the state impatient trying to get some kind of assistance from out DA. This program is very important. [SPEAKER CHANGES] Representative Floyd, I can respond to that too and we'll let Mr. Vaughn do as well. That's just- it's a very small amount of money to each county, it's almost negligible, and we've had to look so hard, I understand your point fully. I really do. And it's a shame, but that's what we had to do. You haven't- you want to respond to that? [SPEAKER CHANGES] You know, we talked about- I mean, I know it's like four thousand dollars per county. [SPEAKER CHANGES] No, it's not even that much [SPEAKER CHANGES] It's not that much. It's a little over a thousand, isn't it? A little over a thousand? [SPEAKER CHANGES] Eight hundred, nine hundred dollars. Six hundred dollars [SPEAKER CHANGES] And we talked about this last year. We almost eliminated it last year. [SPEAKER CHANGES] We talked about it. We attempted to keep this military [??] and I think that it would really help that if we- some kind of way looked through this and see if we can't find a hudred thirty-eight thousand dollar investment, that's just something that I expected from [??] The other- [SPEAKER CHANGES] You're recognized. [SPEAKER CHANGES] I expect to request that we look at that in some kind of way and I would totally appreciate it if [??] across this day [??] county that provides this valuable service. The other is, the total of [??]... the total amount of money that was appropriated day one, and now day two, what is it? [SPEAKER CHANGES] Lisa? Do you have that? [SPEAKER CHANGES] You said Lisa? The total, [??] now. [SPEAKER CHANGES] What's the change in- [SPEAKER CHANGES] [??] - general government. [SPEAKER CHANGES] General government: It was about 900,000 decrease from the start of 5 14 15 budget. So it's less than a 1% increase, [??] 2-3 percent. [SPEAKER CHANGES] Paula? [SPEAKER CHANGES] Paula? [SPEAKER CHANGES] Tell the position to eliminate. [SPEAKER CHANGES] The title position was eliminated... [SPEAKER CHANGES] Thirty [SPEAKER CHANGES] Thirty-five [SPEAKER CHANGES] Thirty-five positions, and that should not include the transfered positions to other departments. [SPEAKER CHANGES] Total positions created? [SPEAKER CHANGES] We will be twelve positions, three for state board of elections and nine for the treasurer. [SPEAKER CHANGES] And there're positions we're creating in [??] [SPEAKER CHANGES] Ah, that's right, and there are positions in revenue that are non-general fund funded. [SPEAKER CHANGES] And my third, my last question is, somebody can help me here, raised the question at the last meeting [??] fifty-six thousand dollars, and I was trying to [??] to see if I can find an attorney in the district. [??]... drop off [SPEAKER CHANGES] [??] [SPEAKER CHANGES] I believe- [SPEAKER CHANGES] [??] [SPEAKER CHANGES] I believe that, Representative Floyd, that it was in the Department of Administration's budget, it was a vacant position. The Department of Administration had filled a number of those positions, or had offers out to them, so that was... [SPEAKER CHANGES] I know I didn't see it, that was just... [SPEAKER CHANGES] That's when they got the flexible... [SPEAKER CHANGES] Further questions? Representative Cunningham [SPEAKER CHANGES] J-29, I [??]... I understand you said that the home the [??] home [??] was told the council of women would actually function on their own now? [SPEAKER CHANGES] Mm-hmm. [SPEAKER CHANGES] Okay, so if this, the transfer of the [??] price [??]... to go into the GPI, or the DPS or whatever, will that staff be going with him because they are specialized in that field? [SPEAKER CHANGES] Yes ma'am, the entire staff- (recording ends)

There’s 14 people. The entire staff is going over. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] Further questions? Representative Queen. [SPEAKER CHANGES] just a general question so I understand what we’re doing. On page J 37, the Temporary Solutions of Budget Adjustment, we’re adding almost 22 million dollars to Temporary Solutions this year? [SPEAKER CHANGES] Representative Queen, this is a result of a Governor’s executive order that requires all agencies to utilize Temporary Solutions. Before not all of them were utilizing it, and now because this is a temporary service agency, so this is fixing the budget where there are so many more agencies utilizing it. That’s the increase. The money’s coming from the rest of state government, these other agencies. [SPEAKER CHANGES] Follow-up? [SPEAKER CHANGES] Follow-up. [SPEAKER CHANGES] Is Temporary Solutions a state agency? [SPEAKER CHANGES] Yes. It’s within the office of state Human Resources. It’s a placement agency. [SPEAKER CHANGES] And so you’re consolidating what each agency was doing on their own under this administrative group? [SPEAKER CHANGES] Yes. The executive order requires almost all of the agencies to utilize this service. [SPEAKER CHANGES] Follow-up. [SPEAKER CHANGES] And what has been the history of this sort of Temporary Solutions-type spending? [SPEAKER CHANGES] Well the budget you see before us at about the 20 million was probably the level it’s been at the last few years. There’s a special provision in here for ya’ll to consider that’s being proposed that would look at Temporary Solutions, the surcharge that it has on agencies, what it actually pays for and how many staff it has, try to compare it with a private outside entity, and for this study though, I have some recommendations for ya’ll to consider next year. So I think the proposal is to try to look at and get into the Temporary Solutions operation, to get a better handle on it. [SPEAKER CHANGES] Any further questions? Seeing none, we’ll go to special provisions. Ms. ?? [SPEAKER CHANGES] Madam Chair and members, if you will turn to the first page of your special provisions document – it’s actually page 192, and these first ones relate to the Department of Cultural Resources, and section 19.2 follows the money, and this further explains the cap on the grants for the library program. So it caps the grants – it’s a municipal or single-county library grant – at 400 thousand; again, only effecting Wake and Mecklenburg Counties. 19.4, this is a new item in the House budget; was not in the Senate’s budget but was in the Governor’s budget. So this is Queen Anne’s Revenge Project special fund, so this is an accounting-type special provision. It allows the Office of State Budget and Management, or requires them, to create a special fund to house any funds that come in – any receipts, donations and so forth – from the Queen Anne’s Revenge Project. So these funds, once they’re deposited in this account, they would become non-reverting. It is a special fund. 19.5, this builds upon a special provision the law changed that was in your budget for the current year last year. Ya’ll exempted the Department of Cultural Resources from some fees, and now this includes the operating hours so that they can actually set the operating hours at the various historic sites based on the needs of that site, and exempt them from the rule-making which can sometimes be time-consuming. Page 193, 19.6. As I mentioned earlier, this prevents the Department of Cultural Resources from closing the Mountain Gateway Museum during the 14-15 year because the history division had taken a two percent reduction there. 19.7 is a new one with the House. This is budget integrity This is directing the Office of State Budget and Management in the development of the biennial budget for 15-17 to look at those under-funded line items within DCR, specifically within archives and records, historic preservations and personal services, and to fix those budget line items. There are several issues related to specific…

[0:00:00.0] …Whereas the personal services maybe budgeted at one level and it doesn’t match the appropriation. So, there are some things that need to be changed, one item that was in the Governor’s budget was some funding to fix this but this direction is for them for always be into fix it in the development of the continuation budget. Often times there are things are covered in a continuation budget. 19.8 this modifies the roles around the ___[00:30] commission and it brings it more into the department of cultural resources and eliminates it from being a stable owner independent commission and 194 and 195 are the changes to that, low change and moving over to 196 as well, 197 also we are hearing establishes a few more exempt positions within the ___[00:59] Commission they at the bottom or at the middle of the page, the Executive Director, Assistant Directors and Curator shall be exempt from the personal. Moving down to 197 to the Department of Insurance, this raises the insurance regulatory surcharge rate from 6 to 6.5% beginning January, 2015 and it also adds an eligible expense to the regulatory surcharge on 198 at the top to the list that already exist for this fund. Now, on line six it says that the appropriated to the North Carolina Industrial Commission for support of the commissions duties. So, there are some fees that are going away for businesses regarding worker’s ___[01:50] in the industrial commission and the funds will be able to be utilized from the insurance regulatory surcharge for the industrial commission and that would begin July, 2015. Section 22.1 creates the Joint Legislative Committee on General Government and this follows the money and is slightly different than what was in the Senate’s budget. Page 200 is study in the cost of the health insurance mandates this follows the money item for the general assembly of 500,000 on a non-recurring basis. So, we still look at what is the impact of the mandates, the cost impacts of the mandates on all of these different entities, the 500,000 was specifically be used to look at assessing the feasibility and cost of the study so the General Assembly will be looking at what it’s gonna take to complete the study because there are so many pieces to it. And then on page 201, this is the office of State Human Resources 22A discontinues the use of the automatic exploring and screening of applicants for the State Government employment. Item 22A.2 is a review of the temporary solutions and Representative ___[03:05]lays out exactly what the study would include looking at the surcharge, looking at the administrate structure that currently exist with temporary solutions maybe making some recommendations or the surcharge should be and looking at the outside entities, looking at accounts payable and receivable, there have been some issues with agencies paying temporary solution, looking at this account often times it’s in the negative because some agencies don’t pay timely. So, this will be a study and ideally this would be completed at some point next year by January 30th, 2015. Then 22A.3 extends the reorganization through the reduction and this is a Voluntary RIF Program that was set by June 30th end of this year and this continues for one year so that’s where an individual can volunteer to be RIF and then the agency can take the position and repurpose it and ideally save some funds with how they utilize that position. We are moving on to the office of the Governor, this 23.1 is the Education Reward Force Innovation Program it changes a match requirement as well as the composition of this commission and this is located here within office of the Governor but really more education and workforce focused. On page 203 the Officer State Budget and Management 24.3 it eliminates a reporting requirement that’s been on the books for always be in so it’s a staffing announces the state agency business functions so it eliminates that they were doing that annually. And then moving on to the office of the state auditor… [0:04:59.8] [End of file…]

Point one requires a private audit of the states pension fund. So, the state auditor would contract with another entity to have, to have the pension fund audited. Looking at all of the phase and everything that's involved there. 25.2, it expands the state auditors authority to publish reports and to provide discretion when charging and collecting costs of certain audits. This primarily goes to boards that may or may not have ability to pay for the audit. So, it lays the discretion to the auditor and whether or not she collect the fee and the other pieces that she'll be able to publish reports, maybe on her website or however, through emails that she sends out, on audits that are not conducted by her office. Page 205, this requires the state auditor to report any evidence of criminal misconduct to either the state bureau of investigation or the district attorney for the county in which that, the alleged misconduct occurred. It's practice that they do that already but this is now a requirement in the law. And Madam Chair I'm happy to take questions. [CHANGE SPEAKER] Questions from the committee on these special provisions. ?? [CHANGE SPEAKER] Thank you very much. Oh, sorry. [CHANGE SPEAKER] ?? [CHANGE SPEAKER] The misconduct one? [CHANGE SPEAKER] No, the second one before that. [CHANGE SPEAKER] Okay. [CHANGE SPEAKER] ?? [CHANGE SPEAKER] Right, on Page 203. [CHANGE SPEAKER] ?? [CHANGE SPEAKER] 203. [CHANGE SPEAKER] ?? [CHANGE SPEAKER] I'm sorry I can't hear you. [CHANGE SPEAKER] If this section ?? requiring that the court be more transparent. This section. [CHANGE SPEAKER] Madam Chair, Representative Floyd on 205, on Page 205, item 14, the exact words are here, it says, in addition the auditor may publish on his or her website any reports from audits of state agencies not directly conducted by the auditor. And I think that is to get to exactly what you're talking about. If there are some audits out there that may have some findings, may not have findings, or whatever this is. They may go nowhere, they may never get posted and now she can actually post those on her website. [CHANGE SPEAKER] ?? [CHANGE SPEAKER] You want it. ?? [CHANGE SPEAKER] On Page 197. This is my statement ?? constituted under ?? local resources. Is it? Is it normal for executive directors of our state ?? institutions like this? To be exempt as executive director of this ?? and the curators are ?? the general practice across Texas. [CHANGE SPEAKER] Representative Quinn, I'll need to look at, I don't think so. I think they're subject to the state personnel act, but let me get that information. [CHANGE SPEAKER] Anyone else? [CHANGE SPEAKER] Morning, back on Page 205, starting with department of revenue on line 41, this first item modifies tax locators service ?? from the money item I spoke to earlier. You can see the change on line eight of 206. Free secretary of state on line 13, secretary of state statuary changes related to ?? funds ?? clarifying language to ensure that the funds, that the secretary state receives through auction right securities, investigations verified remain in that fund to pay for the.

To protect the investing ?? capital formation and economic development. Madame Chair, that’s it from my perception. [SPEAKER CHANGES] That was short. I take it there’s no comments or questions on that short amount. Are you sure Representative Ford? [SPEAKER CHANGES] Too quick. [SPEAKER CHANGES] Sorry, on page 206, line 36 Department of Administration, Section 30.1, again this follows the money, it follows the elimination of the grant and aid program to county veteran service officers. Item 42 is an item that was in the Senate budget and it’s also in the House. Prohibit the closure of certain Veteran’s Affairs offices in Garner and Wilson. Item 48, this follows the money, this is a transfer of the youth council to the - youth internship and council - to the office of the Governor and the youth legislature is renamed as Youth General Assembly and transferred to the legislature. Going to page 208, line 10, this is transfer of domestic violence and rape crisis center funds to the Department of Public Safety. That again follows the money. Page 211, this is line 5, the Housing Finance Agency. This is for the Workforce Housing Loan Program. This is a modification of the Senate budget; essentially this makes this program technically correct. Originally, what it did was it would have looked back and funded programs that had already received an allocation. This looks forward and funds prospective programs. Again, it ties to the Low Income Housing Loan Program – or the State low income housing tax credit that will be expiring at the end of the calendar year. And then the last item, line 44 from the Department of the State Treasurer, this allows them to hire up to 2 positions for the retirement system to look at compliance with existing retirement laws and regulations. So, to prevent pension spiking and that sort of thing, this was a recommendation from a House Study Committee on Pensions and Investments. And that concludes the general government special provision list. [SPEAKER CHANGES] Comments? Questions? What our plan is, is to adjourn for lunch – not adjourn but to recess for lunch. Excuse me. And we’re going to ask – we really finished up earlier than we thought. Still want to do 1:00? We want to give you enough time to eat and we want to give you enough time to write your amendments. What we’re looking at is if you have amendments, to have them to the clerk at 12:30 and then we will come back and resume our meeting at one. Is there any objection to that? Does that sound like a plan? And the clerk will be in the LOB 417A. Amendments will be accepted up until that time. [SPEAKER CHANGES] Where will the clerk be? [SPEAKER CHANGES] She’ll be in 417A. And we are now passing out guidelines for those amendments. Please adhere to those. If you don’t – Would you like to come up here real briefly to see if there are any questions, comments or clarification? [SPEAKER CHANGES] Madame Chair, Members, all of the amendments must be offered by formal amendment. So, you’ll want to see Myra and Matt and/or any of us, if you want to get an amendment drafted. They cannot increase the total spending within the proposed subcommittee report. So you can’t add to it, it’s got to be managed within the enrolled budget. Amendments can only affect appropriations within the department, agencies, or programs within the jurisdiction of the subcommittee and may not cause a change in another subcommittee’s appropriations. So, there are several items being transferred, or at least one item being transferred, out to DPS so that would be up to the Chair’s discretion but likely ruled out of order if there is an amendment affecting that budget – the DPS budget. Amendments cannot adjust salary and benefit appropriations for the departments, agencies, or programs within the subcommittee report. Amendments cannot spin reversions or include language that says

Shall not revert or carry forward language. Amendments can not use non-recurring reductions to fund recurring items. Amendments can not change the recurring and non-recurring designation of funds. Whether recurring, non-recurring if there's an item, well any item that is a non-recurring cut or a recurring cut then you've gotta find recurring money or non-recurring money to replace it. Amendments can not change substantive police or law, it's gotta be directly related to the budget. Amendments may not fund items with management flexibility reductions. There are several items within the money report that's a management flex cut. Like within the office of the governor, there's a management flex, but you may not, I guess go there and increase that cut, according to these rules. Amendments may not affect agency or program transfers to other sub committees, we talked about that, and amendments may not include phase or other finance related maters. [SPEAKER CHANGE] Does anyone need clarification on any of these items? Good Enough. We are in recess, we'll see you back ?? [SPEAKER CHANGE] Lisa, I want staff in my office at 12:30. Are you sitting in for somebody? ?? [SPEAKER CHANGE] There's one. ?? But there's 18 of them out there. ?? [SPEAKER CHANGE] We're waiting for the committee clerk to get organized here. In the mean time I will announce that we have some new pages. Raise your hand when I call your name please. Matt Russell. Over here. Cassidy Souther. [SPEAKER CHANGE] Souther. [SPEAKER CHANGE] Cassidy Souther. Caroline Smith and Shannon Stallman. ?? Alright, first amendment is Representative Cleveland who submitted general government money report on page J17 by rewriting the description of that item titled locator services to read, and this is just a for a technical amendment more than anything else, to make sure the language is correct in the money report. [SPEAKER CHANGE] ?? [SPEAKER CHANGE] Yes. [SPEAKER CHANGE] ?? [SPEAKER CHANGE] Representative Brody moves for his option, all in favor say aye, please. [SPEAKER CHANGE] Aye. [SPEAKER CHANGE] Opposed? You have my witness at top.

[STATIC TO 00:00:46] The second amendment is by Representative Cunningham. Would you like to explain your amendment? [SPEAKER CHANGES] ?? report on page ?? County Clerk's offices ?? operating budget of just $530,000 ?? and will be ?? taxes moving out of the county and city ?? as you have seen ?? And I think that if you could put the ?? it would benefit our measure because they have already suffered enough. I ask for your support on the amendment. [SPEAKER CHANGES] Move for the ?? [SPEAKER CHANGES] ?? [SPEAKER CHANGES] 1055. [STATIC 00:01:50-00:02:28] [SPEAKER CHANGES] The money that Representative Cunningham wants to take this from is the $173,000 that's going to the office of State Controller. The State Controller asked for $608,000. This is a continuing problem they have in using a fund to cover their costs of operation, and we're trying to get them out of dipping into that fund so that it is used for what it is supposed to be used for. I do not thing that's a good idea. We're trying to make people whole, and this isn't going to help. So anyone else want to speak on the amendment. And I'll mention, Representative Cunningham mentioned a privilege tax. Along with the privilege tax going away, most municipalities and counties had a considerable increase in sales tax because of the tax plan we passed last year, and if they continue on the way we're going and continue the tax plan the way I understand it, there will be more sales tax money coming in to the municipalities and counties. [SPEAKER CHANGES] Follow up, Mr. Chairman. [SPEAKER CHANGES] Yes, ma'am, Representative Cunningham. [SPEAKER CHANGES] Thank you. As of yesterday in my city the taxes have gone up to 8%, we were at 7.5%, there has just been an increase. ?? [SPEAKER CHANGES] I sympathize with you, my county raised the property tax 11% and my city raised it 9 cents, excuse me, my county raised it 11 cents, my city raised it 9 cents and the rationale wouldn't work up here but they're getting it done. Any other comments on the amendment? All in favor of the amendment please say aye. [SPEAKER CHANGES] Aye. [SPEAKER CHANGES] Could I see the aye hands please? Could I see the nay hands please? The nays have it, amendment fails.

Representative Cunningham, would you explain your amendment, please? [SPEAKER CHANGES] My amendment moves to amend the Joint Government money report on page J2 which is the ?? and remove it to the libraries, only asking for 1% to go back to the libraries. [SPEAKER CHANGES] Representrative Cunningham is taking the money to have this 1% reduction from page J8, item 19, which is the investigators for the board of elections, which I adamantly oppose, and on page J29, item 68, by decreasing, or by increasing the reduction for utilities expenditures. The utilities expenditures as explained during our budget explanation earlier, was taking a reduction that was obvious from their expenditures. I don’t think taking more money from their utilities is a smart move because it doesn’t show in the data that it would benefit or help paying the utility bills of the state. Are there any other comments on the amendment. [SPEAKER CHANGES] ?? Mr. Chair. [SPEAKER CHANGES] GO right ahead, Miss Cunningham. [SPEAKER CHANGES] Thank you. On the investigators, I only ask for reduction of 1 because several people have already been hired at the board of elections that will be participating in some of these events with the investigators for the voter ID fraud. I ask for just ?? of the amendment. [SPEAKER CHANGES] To my knowledge, only one campaign finance person has been hired at the board of elections. And I’ll reiterate, the board wanted five positions, and they have quite a backlog of items that they’re trying to take care of. Any further discussion? All in favor, say aye. [SPEAKER CHANGES] Aye. [SPEAKER CHANGES] Opposed? [SPEAKER CHANGES] No. [SPEAKER CHANGES] The Nos have it. The amendment fails. Representative Harrison, would you explain your amendment. [SPEAKER CHANGES] Sure, thanks Mr. Chair. So my amendment restores the funding cut to the ?? ?? Schedule. And then we’ll research in the break, thank you, and we have historically funded this program of $100,00. Actually, prior to that when we had more money, we were at $200,000. And this is an important program the natural, the ?? ??. They fund a lot of programs in this state into the very small communities with microgrants, and I think my $20,000 doesn’t make much difference, but they said it really would help them supplement some of the funding at the very local level pursuing ?? cultural programs

I just compare that to the $7 plus million that we're funding the North Carolina Arts Council, which is a very important ??, this is just a tiny bit for a ?? for cultural experience. Now I'm taking the $20,000 from that same item, the ?? on the utility savings and it seems like $20,000 won't make up the difference and I know that we're increasing the energy efficiency of all State Government facilities so it should start to pan out, it should be panning out right now. So I would urge your support. [SPEAKER CHANGES] You, ?? to speak on the amendment. I'll point out that again I don't think it's a good idea to increase the reduction for the utilities. I'll also point out that the Humanities Council has in excess of $1 million that they bring in every year, they support a staff of 5 and they do their grant funding, and $20,000, although it sounds like a lot of money to us who don't have a lot of money, I don't think it's going to have much effect on the Humanities Council. Representative Queen. [SPEAKER CHANGES] I'd just like to say about the Humanities Council, it's a small amount of money but it's our state's share of what this Humanities Council does, it's the North Carolina Humanities Council. So to keep state government as a partner, they do do a fabulous job of fundraising on their own, over $1 million, so our taxpayer's contribution is leveraged very substantially and the issues they ?? on the issues of like the Humanities the ?? and interesting people, so I think this is just a reasonable gesture and ?? utility. So I urge your support for the ??. [SPEAKER CHANGES] I wish I could give all the folks the money they need and want, but I can't and I recommend disapproval of the amendment. All in favor of the amendment say aye. [SPEAKER CHANGES] Aye. [SPEAKER CHANGES] Opposed. [SPEAKER CHANGES] No. [SPEAKER CHANGES] The nos have it. The amendment fails. Representative Ford, would you like to speak to your amendment? [SPEAKER CHANGES] This amendment is a ?? another part. [SPEAKER CHANGES] Is there anybody else that would like to speak on the amendment? This amendment does what we just voted down on another amendment. It's taking operating budget adjustment monies from the Controller that she needs, and the state provides a lot of training for the local veterans, people. It provides other areas of expertise whenever needed and the amount of monies that go to each one of these organizations is not of any substansible amount. Is there anyone else who would like to speak on the amendment. All in favor of the amendment. Did you want to speak Representative Ford? All in favor of the amendment say aye. [SPEAKER CHANGES] Aye. [SPEAKER CHANGES] All opposed. [SPEAKER CHANGES] No. [SPEAKER CHANGES] The nos have it. The amendment fails.

[NOISE] Representative ?? would you like to state your amendment? [SPEAKER CHANGES] This amendment ?? This changes wording from ?? to ?? give that person ?? [SPEAKER CHANGES] This change on page 205 for the auditor, gives her permission to publish audits done by third parties, that she may be privy to and may come to her office. And my concern about changing the shall is if she gets audits that have no findings in them and no germaine reason to publish them, why would she want to publish them? And in addition, in changing it to shall might require her to publish audits that she has in a stack in a corner someplace in her office. And I think we would be putting a burden on the auditor that's not necessary. Is there anyone else that'd like to speak on the amendment? Representative Bell. [SPEAKER CHANGES] ?? [SPEAKER CHANGES] There has to be a cost. If she has a hundred audits and she goes through the audits and say 65 of these should be published because there's findings in them, etc. etc. And the remainder have no findings, the audit was okay or whatever, publishing a hundred ?? 65 there's got to be a cost. I have no idea what it would be. Any other comments? [SPEAKER CHANGES] ?? [SPEAKER CHANGES] Yes Representative ?? go ahead. [SPEAKER CHANGES] I think that it's great to give her that latitude as relates to the ?? But I do think that the public should know, she should not have that latitude to determine what she should or should not publish. Because given me that option, even if I see one that I don't want, the maybe ?? my organization, with that latitude then I have the ?? and make the state aware of what may fair. ?? That's my concern. That ?? I just think that giving one person that kind of authority, flexibility, is something I think that ?? in order to have ?? [SPEAKER CHANGES] I would hope the auditor is a person of integrity. And we depend on that with many of our leaders in government. Occasionally we get disappointed. But I do have reservations about putting shall honor in his area. Any other comments? All in favor of the amendment say aye. [SPEAKER CHANGES] Aye. [SPEAKER CHANGES] Opposed? [SPEAKER CHANGES] No. [SPEAKER CHANGES] Nos have it, the amendment fails. [NOISE]

Representative Floyd. Oh Wait. Wait a minute. About thirty seconds till I get the rest of the eleven passed out to members. This looks familiar. [SPEAKER CHANGES] Yeah, I guess I’ll give it up. This is the third try. The third try. ?? $488,00 that’s coming from another pot of money. So it ?? [SPEAKER CHANGES] 64. Again, we’re addressing the item line J30, the Veteran’s Services. At this point, Representative Floyd would like to take the money from item 64 on page 28. Is there anyone else that’d like to speak to the amendment? Item 64 is vacant positions. In the Senate Budget, there were enumerated positions that were to be taken. The administration asked us to give em the flexibility to determine what positions would be eliminated, and we said yes, as long as that dollar amount remains the same . In effect what we’re doing, if we pass this amendment, is telling the administration to go find a couple more positions to get rid of. I have a problem with that. I don’t think it’s appropriate. Representative Queen. [SPEAKER CHANGES] These are vacant positions. Is that not right that they’re asking to ?? into? [SPEAKER CHANGES] I don’t know if they have two more vacant positions of not. [SPEAKER CHANGES] It says in this 64 eliminates vacant positions. [SPEAKER CHANGES] Yes. Throughout the department. Representative Queen. [SPEAKER CHANGES] Let’s say there’s ten. You’d be putting 8 in flexibility and taking 2, the money from the two vacan positions, and preserving the veteran’s services, is that what we’re doing? [SPEAKER CHANGES] Well, in essence that’s what Representative Floyd is asking, and I’m saying, I don’t know if admin has two more vacant positions to give up or not. I’m saying that, in negotions with the department of administration, this is what we’ve worked out to make sure they could pick positions that they wanted to pick that were vacant. Is there any other questions? All in favor of the amendment say aye. [SPEAKER CHANGES] Aye. [SPEAKER CHANGES] Opposed? [SPEAKER CHANGES] No. [SPEAKER CHANGES] No. Gotta do a division. Okay. All in favor please raise your hands. Thank you. All opposed please raise your hands. The ayes have it, or the nos have it. The nos have it. Amendment. We have five amendments that were submitted that were ruled out of order. Would you like me to read to you sponsor of the amendment? Representative Ross, the amendment was ruled out of order. Representative J Bell, Representative Fisher, Representative Fisher, and Representative Fisher. You hit it right outta the park. Do I have any questions from the committee? [SPEAKER CHANGES] Yes. [SPEAKER CHANGES] Yes? [SPEAKER CHANGES] On these amendments that you had would you be so kind as to state why they were ruled out of order. [SPEAKER CHANGES] I’m supposed to remember this.

The Family Stabilization Fund is going to affect another agency. Re[??]-come-historical structures is a fiscal item. [Speaker Changes] Finance. [Speaker Changes] Excuse me, a finance item, I'm sorry. Rehabilitation Tax Credits, a finance item. Representative Bill, yours was a finance item, and the investment treasures- investment program- what problem did that cause? [Speaker Changes] [??] [Speaker Changes] It increased the availability, and we cannot do that. [Speaker Changes] Just a followup. [Speaker Changes] Followup? [Speaker Changes] Is there room in the rules to debate the reasoning behind no accepting [??] [Speaker Changes] We can debate it but the rules are the rules. [Speaker Changes] I'd like to, I have a question about the rules. If you-could you with my [??] [Speaker Changes] Go right ahead, dear. [Speaker Changes] You stated that the Family Stabilization Program Fund affects another department. Well- [Speaker Changes] There's a little- okay. The fund that they're trying to set up, first of all, it is trying to take a program that this committee said would sunset next year. Everyone in that program knows that it was sunsetting and everyone in that program knows that if they expand their services a little bit they can still apply for grants. And we're moving all of that to JPS. [Speaker Changes] And the followup? [Speaker Changes] And it's going to be JPS's problem. [Speaker Changes] Followup? [Speaker Changes] Go ahead. [Speaker Changes] It isn't moved to JPS yet. And there will be contraries appointed on this budget once we are done with our House version. Isn't it- I have a question about the fairness and the mechanics that would suggest that our House committee cannot make ammends to what is under our bailiwick before this budget comes together as one. I'm trying to understand that, and I'm hard-pressed to find a good explanation. [Speaker Changes] And I'm- [Speaker Changes] Many staff- [Speaker Changes] I'm probably hard-pressed to give you an explanation that you would like. [Speaker Changes] If maybe staff could maybe be more specific about why it doesn't have to follow under our rules? [Speaker Changes] Does staff want to interject anything? Mark? [Speaker Changes] Mark [??], Fiscal Reseach, under Item ten, "Ammendments may not affect an ageny or program or transfer to another subcommittee." So this item would be transfered to another subcommittee. It is as Representative Fisher had stated it is a program that is currently right now will sunset at the end of this fiscal year, but at the time DPS would take ownership and it would be a new- it could be considered a new program for them. [Speaker Changes] Thanks for your thoughts. A little fuzzy- [Speaker Changes] A lot of fuzzy things. Representative Ross? [Speaker Changes] [??]... stamped explanation as to why my [??] [Speaker Changes] Mark? [Speaker Changes] Yes sir. The treasurer is funded by an upfront appropriation by the Bureau [??] appropriation that is reimbursed throughout the year. So in order to have that ammendment work, it would basically take your treasurer off [??] support, and reduce that [??] it would eliminate that general fund reimbursement. And at the front of the budget, there is a revenue line item for availability that is taking into account the treasurer's money that's coming back into the state. So potentially, it's normally sort of an accounting problem that it has to be addressed. It might create a availability problem, it probably would create a availability problem for the state in the amount of the reimbursement [?]. So it's- [Speaker Changes] Really all it does, is [??] [Speaker Changes] Follow up? [Speaker Changes] Follow up. [Speaker Changes] What my review [??] is that it instead of [??] the treasurer would directly fund themselves from their accounts under management. So for investments, it would be the investments under management by the state, or it would be- (recording ends)

Primarily your retirement funds and then your other investment funds. And then for the financial division with the essential percent funds. So, instead of drawing on those funds and then reimburse the statement, the appropriation, it would strongly respond correctly to funding studies. But the general fund would then lose the ??, under the amendment as written, the general fund would lose that appropriation for receipt backing. So it's sort of a technical problem. [SPEAKER CHANGES] Is there a ?? [SPEAKER CHANGES] She added a follow-up? [SPEAKER CHANGES] Possible follow-up. [SPEAKER CHANGES] I can work between ??. [SPEAKER CHANGES] Okay. [SPEAKER CHANGES] Any other questions? Alright, representative ?? recognized for a motion. [SPEAKER CHANGES] On the subcommittee, appropriations committee, on general government adopt the appropriations report, as amended, and further move that staff be authorized to make technical corrections and conforming changes related directly to ?? various amendments adopted and that the appropriate totals may be adjusted accordingly. [SPEAKER CHANGES] All in favor say aye. [SPEAKER CHANGES] Aye. [SPEAKER CHANGES] Opposed. The subcommittee report on general government is accepted. We are adjourned.