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Senate | September 21, 2015 | Committee Room | Finance Committee

Full MP3 Audio File

Would everyone please take their seat. We've got a lot of work ahead of us today. First thing first, we have a finance meeting and I think you've all seen what's on the agenda for today. We're going to try to get through it in its entirety, House Bill 943, Connect North Carolina Bond Act 2015 will be for discussion today and a vote tomorrow. First things first, the Senate Sergeant-at-Arms include Ed Kesler, Matt Urban, Kenton Lewis, Giles Jeffreys and Larry Hancock. Thank you very much for helping us make this meeting efficiently run. Let's see Senator. Let's take on Senate Bill 647 and I think senator Sanderson is the one that is the one that's going to, Oh no, I'm sorry. We are going to catch you a little bit later. Senator Sanderson are you doing  the amend Trapping law. Okay. And this is Senate Bill 647 and I understand this is a PCS and Senator Apodaca makes the motion that we accept the PCS for Senate Bill 647 for discussion. Yes just the part on financial will be appropriate. I'll be glad to, Senator Apodaca Mr. Chairman, thank you. Members of the committee, we had seen this bill. It was here a couple of months ago. We pull it back. It has come back again. The reason is for the finance committee today is that there is a section that was added that any person who applies for a permit through the Department of wildlife to trap. If they are a first time applicant, if they have never been licensed in North Carolina to trap before, the wildlife division would like for them to go through a very basic trappers course. They do that now but it it's not mandatory. It is something that they agree to do if they want to this would make the trappers course mandatory the fee would be in the range of five to 10 dollars and it would only be there trappers cover the cost of materials that is used in the training, and at this point wildlife already covers the cost of those materials and it's possible they may be able if you do that in the future, it just depends on how many people want to come and apply for the brand new for tracking license and that's the financial cost. Mr Chairman I'm here to your left yes sir. I would like to make a motion for a favorable report when you're recognized. For the sake of the people in the committee, does anyone need to have any additional review on this bill before we vote it out of finance? Okay, if somebody can just remind me of what is being trapped, that would help me.  Senator Sanderson? Who are we trapping well we're not trapping canon bears. There's no such thing as a canon bear that [xx] named after a person who designed it. It covers a wide variety of animals, of fur bearing animal. From beavers right down to squirrels, foxes I can't name them all, but wide variety of animals in North Carolina. Alright any yes sir Senator Mckissick  I have talked to my forks at trap in my area and  they still have an heartburn on this thing, and they have a problem trapping raccoons, they're having trouble with others in the fish ponds and their commercial fish ponds and I know this is not all flonase[sp?] but I'm just did we do anything to fix that or is it still kind of like it was?  Sounds like a good Bill to bring up for the next short session. Thank you. Any additional questions? Senator Rabin. I have yet to hear the bill is going to make everybody, we've been over this several times I've almost got it memorized. I think that Senator Sanders has done a great job of putting it together, and I fully support the motion made earlier to move for favorable and move on. Alright, Senator Jackson I recognize you for your motion. Thank you Mr. Chairman, I appreciate that very much.

I move that we accept the PCS that is before us and move for a favorable report. Alright Senator makes a motion that we have a favorable report on senate bill 647 PCS unfavorable to the original bill any additional comments or questions? Seeing none all in favor please say 'aye' Aye. Opposed 'nay'. Ayes have Senator Henderson you will take on that responsibility on the floor, I'm I correct? Okay, House Bill 526 Stenfield annexation, Locus deannexation. I believe Senator McInnis is going to be presenting that for today's meeting, welcome Senator Rabin. Okay sir. Thank you Mr. Chairman. This bill originally started out as the annexation for another town when we delve in to it we had a lot of technical issues and problems. This also was same county with one that has no issues everybody is 100% for it, no problem stand for your list is taking a piece of property that locus is giving to them to straighten out a property line, again nobody is within hot-burn it's very simple and I appreciate your support. Mr. Chairman. Okay. Any questions? Alright, Senator Apodaca makes a motion. You know what we've got to take it back. First of all Senator Apodaca makes a motion that we accept 526 PCS for discussion. All in favor please say aye, aye, opposed nay. Aye's have it. Mrs. Chair,  why I'm I here? Senator Apodaca. Mr Chairman I would like to propose to favorable report unfavorable to the original bill for the proposed committee substitute for house bill 526. Thank you senator Apodaca you have motion before you favorable, house bill 526 PCS in favor of original bill, any additional discussion questions? Seeing none all in favor please say aye, aye,  opposed nay. Aye's have it. Senator McInnis you'll take care of that one on the floor. floor. Yes sir thank you ladies and gentleman. This house bill 531 Senator Curtis makes motion that we have a 531 PCS for discussion. All in favor please say aye. Aye. Opposed nay. Ayes have it. Let's begin by saying this a compilation of three or four different occupancy tax bill. That's why we're calling it omnibus. I think Senator Pate, are you taking on this one? Come one. Senator Pate, welcome. Thank you, sir I'll be glad to explain the Wayne County piece of it and I believe some other senators who are in here who can explain the other parts. Part one proposes and authorizes Wayne County to levy a 1% room occupancy tax and requires the Tourism Development Authority to use 100% of that proceeds for tourism promotion which is standard bill, and I believe other parts include Moore County, City of Sandford, Averasboro and Harnett County and Cumberland County. I know that Senator heard of this year. I don't know if anyone else is to explain those parts of it. Okay. Senator Meredith, are you here to explain another potion of 531? And Representative Szoka, very good. Thank you Mr. Chairman. Members of the committee, representative Szoka and I have received a resolution, a unanimous resolution the county commissioners. This is not implementing a new tax, it's changing the way the tax will be allocated. We are basically here in support of this specific questions, we want to answer those, but, just wanted to let you know that there are very specific guideline in the house. Representative Szoka has worked with common county commissioners and they are attorney to work very hard to try to mirror those requirements in the house and I think they have done a lot on that work, and I think the bill is a lot better than it was originally. So, we are basically here in reference of,  Representative Zoka, any comments?  No Sir. None. Members of the committee, questions on this portion? Okay. Senator Robin, you are going to talk about the next portion? The other portions of the bill

include Harnett County, special set-aside being made for the all-exclusive county council occupancy tax, separates [xx] bolough all folks in Harnet county are in agreement. They want to move forward because it's good for their economic development. The Sanford city bill, authorities a 3% occupancy tax that will be used in part to support the major tourist attraction in the [xx] center now all the parties there that I know of are in accord with the way it's written. Take any questions you have Okay, alright, members of the committee, any questions see Senator Rabin or staff on this portion, alright Mr. Chairman. Yes sir. I guess either for Senator Meredith or staff on Cumberland County here tell me about. Why don't you address the staff for the moment.  Okay, tell me about prepared food tax on there? Miss Griffin Sure so their are four counties and one town that currently levy a prepared food tax they're all at 1% so Cumberland has that prepared food tax and they're modifying two things about their current prepared food tax, one is. Let me just stop you, so they already have the tax? Yes sir never mind. OK. OK Senator Apodaca,  question? Senator Hise, you have a question? I do, I think I'll ask this for staff across the board there have been some very specific guidelines over the years for the occupancy tax and how it's used for traveling and tourism and promotion of travel and tourism through the generally authority, those type of things. Are all these consistent with those rules that have been established and I believe it was specifically rules at the house even required before  they could be heard before a committee and that the Travel and Tourism Board knows they've signed off on. Yes maam, Miss. Griffin. The Cumberland County provision and the Sanford provision do not comply with the guidelines in total. There are some non conformities there. The other provisions, Moore County, Wayne County and Harnet [sp] County provisions due comply with the guidelines. Senator Hise [sp] to follow up. Forbe, could you just give us maybe what those differences are I mean, are we still assured that by putting this, the money will be spent on travel and tourism promotion? [xx]. Sure. Generally speaking the tax proceeds do go to promotion with regard to the Sanford piece. There is a specific year mark of requirement if you will that 1% of the 3% tax be used for the Dennis Wicker Civic Center and while that would still fall into the definition of a tourism-related expenditure. Generally speaking, the guidelines have been reluctant to have specific projects year marked in the local act and rather would have the local TDA's use their discretion and decide how to spend that 1%. And with regard to the Cumberland County piece, the legislation dissolves the Tourism Development Authority and It comes up with some percentages that you can see in the bill as to how that money should be spent. Generally speaking, it's going toward promotion and tourism-related expenditures, but it doesn't fall within that two thirds, one third breakdown that the guidelines have and also guidelines require that the funds be administered by a TDA. Senator Hise, you all set? I got Senator Mckissick.  And this is a collection about the Harnett county provision and I don't know I don't know if Senator Raven can answer it or perhaps staff. I notice we're excluding within that entire county one township Eversborough,  so I was wondering what the logic was for doing so because typically we would not just exclude one township within a county [xx] authority already I don't know.   [xx] do you have an answer to his question. Sure. Senator Mckssick. The Eversborough township already has the authority to levy a 6% tax and so this is sought of a legal mechanism that we've used on several occasions with [xx] tax where because Eversborough is at 6% it effectively blocks the rest of the county from levying[sp?] tax so you can create a special tax taxing district that's made up of everything but Eversborough. so that Hannick county can levy 6% in the other areas of the county. Thank you that puts it in context.

Great thank you Senator Brown. Hey Mr Chairman I'm glad to see the house is finally loosened up on the requirement on the occupancy tax, every community is a little different and for a couple of years I've been trying to run a particular bill that would help my community, and it's been blocked in the house. I'm finally glad to see somebody is loosening up this requirement a little bit. I've got a bill that we might talk about later. OK any additional questions Miss Griven[sp?] anything further to add I think we had at least one more county that was impacted in this bill, I'm I correct or did we discuss them all? I think perhaps all perhaps but Moore county and that's pretty straight forward it's just giving Moore county an additional 3% and everything else conforms with the guidelines. It doesn't change the user or anything. Alright, members of the committee, any questions about what has been discussed? Does anyone want to make a motion of this? Senator Rabin makes a motion of favorable report for it must be Tillman, let's try that again. Favorable report for House Bill 531 local [xx] tax omnivous and  PCS and unfavorable to the original bills, questions, comments, members of the committee, seeing none all in favor of the motion on House Bill 531 PCS please say aye. Aye. Opposed nay, Ayes have it. Okay Senator Rabin I think you said you will handle this and you may ask your colleagues for some additional resource on the floor.  I would like to handle at least the parts for the Sunford city in Harnett county if senator Pate and senator Meredith want to handle their part this morning it will be good with me. We can do that. Alright very good. let's go ahead on to house bill 539 charter school funding. Senator Tillman had a death in the family he's not able to be here and senator Barefoot is willing to stand forward and present the bill along with staff, try to explain it. Now senator Apodaca makes a motion that house bill 539 charter school funding was put forward to PCS for discussion. All in favor please say aye.  Aye All opposed nay, the ayes have it. You have it before you 539 PCS senator Barefoot welcome. Thank you Mr. In section 2B see and they have come before this body before earlier in the session. The changes to the last part of the bill or that we've itemized those monies will be collected and appropriated. What's new to this piece is the section 2A which simply states that rather than supplementary taxes following the school districts that they will follow the child that resides in that district and I'll let Staff explain the Bill further if the committee needs it. I think you all going to do explaining any additional parts to this Bill, I'm I correct? I'm happy just do whatever chair pleases. Okay, let's go ahead and then we'll just answer some questions. I'm sorry. I was just go ask we get a quick review. Of the Bill? Can you provide us a review of the Bill. Please identify yourself and help us get a full understanding of the Bill. [xx] Can't hear you. The green light's on, so I don't know what's going on. Can you hear me now? You might try another the microphone. I got it. This feel better? So I'll just go through the various sections of the Bill. Section one of the Bill would add language that the court in any litigation between the Chatter schools in a local school administrative unit would award the prevailing party liquidate the damages in the amount of up to 5% of the money that should have been transferred if there's transer issue between the two units for compensation for administrative expenses incurred by the prevailing party. Section two of the Bill

would remove, currently in the statute there's a requirement that the amount transferred for people share the local current expense fund if the money comes from the revenue derived from supplemental taxes that it only goes to a charter school located in the tax district for which the supplemental taxes are levied on which the students reside. Section 28 would delete that provision. Section 2B of the bill would provide that the monies that are listed, or funds that are listed in NC1 would not have to be shared with the charter schools and could be kept in separate accounts by the LEAs I won't go through the listed 11 items that are on there but that would be money that would be kept separate and would not be party of the local current expense fund that would be transferred. And then if you go further down in E1 of that same section, then those would be monies that would have to be shared with the charter schools there are other monies made available or accruing to the LEA and would then be shared with the charters by the LEA. Senator Ford do you have a question? Yes Mr. Chairman I appreciate you recognize me, I have a series of questions that I did not hear based upon, I think she's looking for a question and so the first question is, do the LEAs have to share the revenue for Medicaid reimbursements? Staff If you look on page two, lines 48, it is reimbursements except for Medicare and medicaid reimbursement for a particular student so that would be excluded. Thank you the next one Mr Chairman is follow up, follow up the next one is the new sharing for [xx] to pay sports and middle school athletics sorry Carol Macoy research division local school funds that are for extra curriculum activities or fund raising are actually dealt with an entire separate statute and so local individual school buildings are allowed to keep their own funds for activities of that sought and they do not have to be shared. Follow up. Follow up the last one I have is for student record, printing and accountability record If it falls under fees for actual cause it would be shared. But I don't know if I can answer that with complete certainty, that would be a question for [xx] We will research that please and see if we can get that at a future time for the committee and present it forward OK all right Senator Bryant, Thank you Chairman Rucho, I see that the reimbursement and CE one two are for a particular student, the fees for actual cost we are going  get more information about it, I had a question mark but end of sales revenues what are those revenues and how would that work, can somebody explain that, and then I have a follow up question. How much of this is different from what we do now? So that will be my next question, has that been applied. Did he answer the first one first? You want her to repeat those questions. Try it again one question at a time please. Okay, I was just giving the man because I know you might come.  I understand.  The sales tax revenues regardless of how they are distributed, not quite sure what all that means. What sales taxes would be included and how is that and is all of that different from what happens now I would. Can't hear you. I would defer that to either fiscal staff or finance staff. Senator, I am not sure what the intent of that language would have been in here in that fiscal can add more context to it we can see. Right now, those sales tax revenues are distributed between, as you know between the city. The county has to give

some of then the city and then the county retains a potion of them. Of the potion that the county retains, there are some restrictions. Some of the money has to used for capital improvement, but outside of that, that money can be used for any public purpose by either the city or the county and education would be one of those public purposes. Mr. Chair? Yes, Ma'am. I just think it''s important for us this language is a little vague demeanor. I haven't read all the back up statutes or anything which might clarify, but it would surely be important that we know what sales, you know we've been doing a lot about sales taxes around here so that we make sure that we know how what sales tax is, how much they are, something that's more specific if we could. Can we among our staff in the different areas work on the question that Senator Bryant set forth? Yes, sir. Alright, we will get you that Senator Brian. Say it again. Okay, if you have any answer to that question, identify yourself please.  Thank you M Chair, Brian with [xx], Senator Brian, I think your question is about the sales tax revenues distributed using the [xx] method is that correct? No it's about E1 which doesn't say anything, it just there's regardless of how they, I don't even know what that language means. Fails tax revenues regardless of how they are distributed and I don't really understand that, is what I'm asking. What the legal meaning or the practical meaning, what money is this and how much is it is, what I'm trying this language was relatively new to me and to my colleague Chris, what I would suggest reading section C that precedes it and the removal of the add alarm piece for the components that can be put in other phones, because I think that this section or specifically that line 51 is to get at that regardless of whether the distribution is [xx] method of the per capital method that both would be. Mr chairman, I may not be the lightest light bulb on the lump however, I think that we.  We will get that information staff. Can we work on that and prior to going to the floor and we get. And we may need to improve this language and then I just had a followup question remember of what is new in terms. Alright we will ask him to do both of those if it's okay Senator Bryant, staff are you okay with that? Alright thank you. I've got senator Waddle. Thank you Mr. Speaker some of my questions have all ready been answered but I still has some that I'm concerned about when it comes to finance and it is related to section two for a student transfers to a charter school but it doesn't address if a students starts off in a charter school and transfers to the traditional school about the transfer funds standing limitations that's connected there. Staff, Senator Barefoot would you like staff to address that issue? Staff. Please Brian Madison again from Fiscal to Senator Waddell's question I don't believe there is anything in this PCS that would otherwise address any sort of issue with regards to students leaving public charter school returning to a public school so the current practice of not making any reimbursements on their behalf except for extraordinary circumstances, after the second month of operations if you might have hear that policy is unchanged am just solid on that less I misunderstand the question. Follow up Follow up Senator Waddell. You did understand the question, I just think it's so very unfair often students go to [xx] they start of in [xx] and they don't like it. They've already received the funds for that student then they, at some point in time have to come back and have to be accepted to their traditional school and the money is already gone. Alright, thank you. Senate Bill. Follow up. You have the follow up, Senator Wadel. The second thing and I'm looking at the amount of money that the court here will award the 5% as a result, seems like it's punitive there and I just want to know this has been an existing sometime there has been a problem and what I've seen, so why is it being so punitive to have the additional 5%? so question is again. Yeah, you're saying that they were, if you look at section line 13.

You have there almost a penalty so probably they be penalized because if you've not had problems before why do you need to have penalties? Well, the courts can already currently order this that is my understanding and I would point out that it cuts both ways senator if the LEA prevails and the LEA against the 5% of the charter propels the charter agonist the 5%. Okay, senator Blue Thank you, Mr chairman, two questions. First, if senator Barefoot would give me the rationale for the provision that requires that money leased while taxes imposed in a district separate it part from when the child and the charter school, where the child lives and where the charter school is will have to be transferred to the charter school in that county. What's the rationale for that? Does the provision, the very first the money that's resolved of especially access tax within a taxing district will have to be shared with the charter school [xx] doesn't have student and the taxing area and number two the charter school is not in the taxing area, what's rationale for it, making them to contribute to the charter school? My understanding is that under this provision the money would follow the child, so if you're a voter and you voted to and you live in a supplemental tax district and you voted in a referendum to allow supplemental tax to have a supplemental school system operate like black Sinton City or Thomasville and that at some point in your childs academic career, you decide that there's a toddler school located outside that supplemental district that may better meet their needs, why shouldn't your child still benefit from those dollars? Follow up. Follow up question. Would that include charter schools not only outside the tax district but outside the county? I would say that it would include anything outside of the supplemental tax district, but this one can correct me if I'm wrong Staff do we have a clarification on that? Senator Blue it would not matter under this whether or not that charter school is located in the county or outside of the county and Greg Roney has done some work on this if you would like perhaps a [xx] I would I have a follow up to I'll get that off line Do you want Mr Rooney to explain that further? Yes if you I'll do it now. Okay Mr. Rooney identify yourself again please. I'm [xx] with research staff there's a court case where the supplemental tax had to be shared with the charter school so the Court of Appeal has said that if you are in the same taxing district then you have to share. So the general assembly came in and said well we are going to put a boundary on that now this PCS takes boundary out so the cash wold follow the child and then the question that's what it's designed to do I don't know if you want to go if there's any other questions. Senator Blue follow up Very very closely related in this formulation and would be the child anywhere he or she went outside the county not just outside the tax industry.  Mr. Roney, you have an answer to that one.  Yes, I think as long as they stay school in the state of North Carolina, it's designed to follow them. One last follow up.  Follow up.  Does that seem through for child who transfers to another school district. I would direct that to maybe[sp?] Madison but when you change your residence that's to determine who has to pay for those schools so if you're resident in a taxing district like the Senator was describing that has a supplemented tax. Then that additional revenue would

follow that student if they went to a total school if a student resides in an entirely different jurisdiction that has a different then that student would be funded based on whatever the tax regime is where he is resident. Senator Blue. One last question that I Last question look further into that. And looking at the analysis of section 2B, I'm trying to figure out quickly it listed what the current law provided with respect to the funds that werelock boxed away, and I was trying to compare the analysis of the new changes could you highlight that for me a minute I haven't had time to read the whole bill yet. What the changes are that are brought about by two 2B. Which section again please sir? 2B. 2B staff can you help with that what new changes we're included there? Yes so in section 2B there are basically the way look at there are two separate section within two B in C1 which is going to be subsection C1 of the uniform budget format those 11 items will now be items that an LEA can keep in a separate fund that does not have to be transferred to the charter school, and the paragraph right above it starting on line four is the current list of items that can be kept in a separate fund so if you have those overlap but the C1 actually sets out all of the new funds like a small linear fashion and then in Section E1 which starts on line 44, those E1 would spell out everything that the LEA would now be required to share with the specific line items, the six items would be considered a part of the local current expense fund that has to be shared with the charter. Thank you Mr. Chairman, simply I'm just trying to see what do they have to share another new formulation they don't share under the old even though it's not set forth in linear form? I'm trying to find out what new funds they have share. Staff is there anything else that you can add to help enlighten Senator Blue on this question? So for things that you could currently exclude is reimbursement, fees for actual cost tuition, sales tax revenue distributed using the ad valorem method, sales tax refunds, gifts and grants restricted to use trust funds. The federal appropriations that would be made directly to an LEA and then funds retrieved for pre-kindergarten programs. So that is currently held in a separate fund that do not have to be shared. As far as things that have to be shared, the statute, section E sets that out. It's basically the appropriations funded by revenues accorded to the local school administrative unit. which is the fines and forfeitures  money. Any monies that the County commissioner gives the LEA, supplemental taxes, those are the kinds of things that are go in the current, local current expense fund currently, and then E1 would then add the six items listed that would also go in the current local current expense fund of monies  received for indirect cost, fees for actual cost, sales tax revenues regardless of how they are distributed, reimbursement and then gifts and grants that do not have restrictions that are set forth in the other such as direct appropriations to an LEA and that type of thing. OK. Alright, we're taking some extra time on this so that we can try to get all the questions that need to be answered, answered so that on the floor it will be a lot easier for us to work. As you can see there are a lot of details of  this and we're trying to work our way through it. I get Senator McKissick. I think my inquiries are similar along the same lines to Senator blew it. I guess the thing I'm looking for is some type of physical impact assessment on the LEAs, I mean I assume somebody did some analysis to see what the impact would have been had this policy been in place during the current financial cycle in the last school year. Is that type of discrete data available so that we really know how many dollars we are potentially looking at shifting. Yes sir, Thank you

Mr chair Brian Madison again Senator Mckissick to your question here previously staff had produced a fiscal note on this bill several literations[sp?]  ago. One of the main challenges with this is that well there are two really one is that inherently these are all local impacts,, 115 different batches of local impacts and then secondly LEAs while they've had the option of putting some of these types of funds usages that you'd see starting on lines four, through lines 10 in page two. Basically budgeting those types of funds as other funds. It was also not compulsory so conceivably districts could also have included them in their local current expense so when we've looked at the session in the past we've had an indeterminate impact we haven't been able to isolate what potentially could happen to locals, as the result of the general assembly enumerating different types of transfer eligible funds forces if you will. Follow up. Follow up. And I guess my follow up in this it's very challenging for me to sit here as a policy maker and make a call as to whether this is smart, reasonable and something that would not adversely impact the LEA's. Unless there are intelligent assumptions made leading to each the accusor articulated, because without then data it's impossible to know what impact we're going to have and how the resource allocations would be shifted with that said is it possible given the fact that we're on a tight time frame here, to make some [xx] related to the parameters to project some financial impact because this may be very normal impact in the early aides or may be very substantial impacting them and without that data and without some assumptions being made it's impossible to meet a judgement call so is it possible to obtain that or to do something that was based upon your initial physical analysis? Yes sir, [xx] Senator Makinsick[sp?], I wish I could answer all your questions, unfortunately Senator Tillman has devoted almost a year in this bill and he said the death in his family and that's why he is not here presenting it today And what I'll tell use, the list in section one and in the last section where we had adarmize the expenditures those moves body in April. What's new to this body is, section 2A. So, there has been a deliberate process, I would wish I can be more detailed for you, but, unfortunately, senator Tillman could not be here with us today. Thank you senator Barefoot, one last question Mr. Chair. Yes sir. Can we hear from the LEAs or do we have a representative here on their behalf?  Maybe they can address some of the concerns which I  have. Is there anybody yourself at the microphone, I can't hear you, you might have to hold you down. Thank you Mr Chairman and thank you senate for the question members of the committee I'm Kathrine Joyce Executive Director of The North Carolina Association of School Administrators we really believe interview we'll have a significant negative impact on the school districts. This is really infusing lots of changes and the delicate balance between funding for chatter schools and funding for your school district students.   These changes are very complex. I'll just touch on a few of the changes that are involved here. When you talk about money received from indirect costs, you're talking about your child's nutrition program that your school districts operate . The school district in purpose for the power, the heating, the air conditioning, the chilling units, all of those things that it takes to run the school nutrition program. And if suddenly the amount of funding that the child nutrition program pays the host school districts for off setting for those posts for them, has to be shifted to a total school that seems an unfair shifting. Simillar shifting and questions about why these things were included acrow what the other things they're now to be shared as listed and deliniated within in the last part of the bill. First of all your reimbursement set a federal, this stills with lots of money that comes to school districts for school technology through the federal irate[sp?] program, those are reimbursement that the school district applies for specifically for the students in their head count and

the total schools can make their own application. However, by this change in the law you would be shifting a portion of LEA students technologies support funding to total schools, we think that's an unfair shift as well. Sales taxes you've talked about that as a committee and there are reasons that we have the laws on the books now that said, sales tax for supplemental taxes for specific taxing authorities should stay within those taxing authorities and we know that's something that the attorney general has been looking into as to whether there're changes that would be feasible. But this shift should not occur before that information can be put forward. And then other gifts and grants that are restricted why should those be shared, if a journal has a specific said I want this funds for students in my school district. These are some of the questions that we have with this new bill that we are seeing late today, and so we would ask that you not I move it forward at this time. Your LEAs will be strongly opposed to it, I'll also end by saying that the LEAs through their representatives have spent a good deal of time this year negotiating with those in the charter community, and trying to reach an agreement on some concessions that could be made to charter schools, and those in the charter community choice not to negotiate further and walked away from those negotiations. So to have this bill move at this time will be very problematic for your school district and we urge you to oppose it. Thank you ma'am. Final comment Mr Chair. Senator Barefoot. OK. I think one thing that's important to point out and there is a really a rebuttal to that argument is that this monies that the school district are getting then should follow the child. Why does the child who's in the public school system whether a traditional charter go less equipped to one school over the other, because an LEA wants to keep those funds, and I think what we are trying to get at here is that dollars should the children they shouldn't stay somewhere just because they should follow the child. Off to Mr Chair final comment and that's simply this.comment or question? Comment actually Mr Chairman, and that's simply this, this legislation has fairly deep and far reaching implications which I think gives me a reason for hesitation, I think it's the type of thing we need to take up in the inner room. There's no reason why we can't help our kids in charter schools because they are public schools but if they are not required to provide free and reduced [xx] they are not required to provide transportation there's a lot of things they don't require to do but we are going to go out there start getting them nutrition money and everything else that's a deep reason for me to really look at the details here and say we ought to get the LEAs working with the charter school folks to come up with something that both feel comfortable with and then have it come back before us but this is not something I can support at this time. Okay, thank you good Senator Bryant. Thank you Mr. Chair I have to questions the first one is following up on the indirect calls speech and I didn't ask this before because I thought it might be covered but now I'm concerned if the school is getting indirect calls the LEA is getting indirect calls her account that excludes the Charter schools that students who have left and are not there, will this mean they still have to share a percentage of that and this may be drafting problem, and this does not seem to be the best drafted but do we really mean that we want monies share for indirect calls that include coverage for the students who have left, or even if it is based on students who remain, we still want a percentage of that to be shared. It seems like that distinction ought to be made. And I'm just asking, did the drafters take that into account or is it your intention to take the money even if it's based on the count, still remaining in the LEA. Do you follow my point? Sir Barefoot you haven't answered to that. Current day and I didn't draft it Senator Bryant, if staff followed your point there are welcome to answer it. With, whoever drafted it. Can anybody see? Senator Brian so, this statute does not go into when the money is actually transferred. So the questions that you raised about, for child leaves, wants and LEA in our chatter school goes back and forth that is not addressed in here, this is simply a pot[sp?] money that is not captured[sp?]. Follow up, let me narrow it so you are clear. Follow up Senator Bryant. In the indirect cause, if I apply for my Federal money like Miss Joyce

was discussing, and in my application for the grant that had indirect calls in it for technology, I list the hay account currently in the LEA not including anybody that went to the charter school after, whatever that magic date is, that be monies are distributors or whatever Ok. We need to move it along. Would I still, under this statute have to share that money even if it wasn't applied for to include those kids in the numbers considered. Do you understand my question? Yeah. Mr. Chair. Got any answer here? Carol McCoy research division my understanding is that if you've got a federal grant or a federal program if that federal grants money came in, one of the options is number 3 that was restricted as to use. So for example, if you applied for Federal funds for technology grant, and one of the conditions of the Federal Funds was that it only be spent for those purposes for which it had been allocated, then it could be held separately and it would not be transferred. If it was a more general funds that were provided by the Feds too, the system even if it did not include their same head account if it wasn't indirect cause money that they were receiving, then it would need to be transferred. One more different file I've given up on that. And this is on supplemental tax. My understanding is the Attorney General has issues, some kind of opinion or as researchings this staff could stamp advise as to the nature of that opinion on the supplemental tax where there'll be property or sales tax related to the property tax and what else. I did not have any knowledge of the AG's opinion on this that does not mean there is not one and it could be someone else and who knows but I do not know.  We can find pout of there is indeed one. Staff would you please find that out for the committee. Alright, Senator Apodaca, a question? Senator Brown, excuse me. Thank you Mr. Chairman [xx] if I could Mr. Chairman. Yes Sir. This is confusing I think for all of us. Have chatter schools received this money in the past? Has something changed? Is there something new? give me a little history on the same because I think it is confusing on how these dollars have been allocated over time. That's a great question in our apologize for not doing it sooner but two of the major changes we are making are the wide kind of notoriously became known as the Nesbitt and Hackney amendments. In Section 2 the sentence for striking is what was called the Nesbitt amendment, where when the state started to expand there charter schools and lift the cup a few years ago, they passed amendments to greatly restricts what charter schools could do. That has not always been the case you know the charter schools was created by an act of legislature in the mid 1990s, and so what this bill is really doing to be quite frank about it is it's repealing the Nesbitt amendment and it's saying to the Hackney amendment, we agree with somethings but not with everything, and in section A that's what we don't agree with.   Okay Senator Brown you're all set alright Alright I've got Senator Raven. More like a comment, I was doing pretty well as long as it was the monies follows the child that's pretty simple concept, that's easy to understand, but I do agree that maybe some more data would be available and in that vain, I would ask that the Association of School Administrators also provide data to support what they said on their side of all of these things that's going to happen if we go this way. Alright, thank you Senator Hise, you had a question? Go on, Okay. Alright, members of the committee we have before us. Do I have a motion? Summon Senator Hise Move favorable report to the bill unfavorable to the pro committee substitute unfavourable to the original bill. Okay members of the committee you have house bill PCS favorable report unfavorable to the original bill, comments, questions? Seeing none all in favor please say aye? Aye  Opposed nay? The ayes have it. Senator Apodaca, the recommendation of the Chair is that when Senator Tillman comes back that he can be the one to present this on the floor.  I second that Mr. Chairman, Excuse me Senator Rabin, didn't see you. Senator Apodaca do you

agree that our chairman in looking a little pink around the gills after the message that he received from you and I just want to know if wanted me to take over or if he thought he could finish the committee?  I think he lost some weight in his wallet additional [xx] still a lot of vigor there's plenty of room and some other presidential camps.  OK so let's move on to house bill 679 I think assuming Representative Brawley and Representative Szoka will be presenting U. N. C self liquidating project, Senator Apodaca. [xx] Okay [xx]  Al right, Senator Apodaca makes a motion that we on House Bill 679, we entertain a PCS for discussion. All in favour please say aye. Aye. Oppose Nay. Ayes have it. We have before us house bill 679 PCS. Senator Apodaca the floor is yours. Mr Chairman thank you very much. This is the true sign that we are winding down, getting to the end of the session.  This is our annual Self-Liquidating Projects Respond. I'm sure most in the room can read. If any of you can't, feel free to ask me I'll read it to you, but these are the projects here, but I would like to call your attention to section 5, which is the reason for the proposed committee substitute. And what this does is authorizes NC State University University to set up $14 million for advanced planning for the planned science building. 5 million of the Dollars of this amount may come from General Funds carry forward by NC State university into either the 2015/16 or 16, 17 fiscal years the remaining nine million must come from none general receipts available to NCSU just paid cost of the buildings of a $180 million and it is anticipated that NC state would do very much as they are doing with their engineering building and get over half of this paid for by private donors. I think it's an outstanding project, something we need to do and I highly recommended to all. Representative Brawley would you have anything else would you like to add to that wonderful explanation? Expand the PSC would be concured and will be done. Sounds like a reasonable thing. Members of the committee, questions? Senator Blue? I do thank you Mr. Chairman and I agree with Senator Apodaca, I think that this is a great way to get them started, but maybe I'm somewhere rather confused about the language, but I see in a self liquidating bill, a provision, and I'm talking specifically about the deferred maintenance and infrastructure improvement, that is self liquidating. Because apparently you are imposing a fee on students to do deferred maintenance on buildings and typically you think of self liquidating to be from building that are paying from themselves in the normal course of business. For example dormitories since the kids have to pay rent to live in the dormitory you can build the dormitory and the anticipated revenue from the rent will pay for the dormitory, and some other building like that. Scientific buildings is this sort of a strange approach that we take that we're going to assess student fee this is the only one in here that has a new fee Representative Blowley. We are going to process students fees to do deferred maintenance? Representative Browley please senator is correct [xx] North Carolina central came forward with this and it was approved by the overall UNC board, and yes I'm embarrassed that they feel the students are actually committing to tax themselves with a fee to improve things like the North Carolina central law school, but they have brought it forward. They asked that it be included in the bill and so I'm bringing it forward. Mr chairman.   Follow up. If the administration and the students are determined that there is no hope the scene from Star Wars that this is the only hope for it, I can understand doing it but the next bill that we are going to talk about is one borrowing $2 billion, and we have money, we're spending on a lot other things. This seems almost a cruel way to do it from those students who didn't get the benefit of the buildings when the maintenance was being deferred. Senator Blue what I would ask you is that the

time this came forward the bonds were a future, hope they may still be, regardless of what we do in this body it will still will go before the voters, and the voters may not approve. The folks of North Carolina Central have asked us to allow them to go forward with it. I would ask that we defer to their judgement, and the things that we do within this building to address it otherwise would be a separate issue, but at this point, what I would ask you to do sir, they've asked us yo do this, let's do it. Yeah, one last. Last comment. I was simply saying that if there are ways we do renovation on state property all the time, and if the situation is so dire on this campus, the students are willing to pay $100 fees a year to do deferred maintenance, roofs and things like that, and to do, needed infrastructure whether it's high speed, internet or something like that, it seems that we could be a little more creative than putting this burden on the students. Senator Apodaca. Thank you Mr. Chairman, Senator Blue we share your concerns, there is good news on the horizon for some additional projects there, that we're looking at and negotiating within the bond[sp?] package, and I believe it's the business goal and also we're going to be looking at additional R&R  money going forward. This was just brought to us by them. So we were trying to assist them, but there are others coming as we move through with the bond package, so I do agree with you. All right. Senator Blue are you all set? OK, seeing no additional comments I believe we have a favorable report if not senator Apodaca makes a motion for a report on house bill 679 PCS unfavorable to the original bill. Questions, comments? Seeing none all favor please say aye? Aye. Opposed nay? Ayes have it. Senator Apodaca you'll handle that on the floor okay?  Yes sir. Alright let's move on to house bill 698, Representative Zocher[sp?] Mr. Chairman? Where am I?  Oh, okay.come on forward Mr. Chairman, if I could have an amendment on the adoption. Yes, okay. Let's go ahead because I think it's dealing with the title correct. Alright, let's first entertain, let's be sure I did talk about the PCS correct? Alright, let's have it. First of all your motion is that house bill 698 PCS be set before first forward for discussion, Senator Bryant. Alright, and I'd like to send forth an amendment and what the amendment does.  First, first all in favor please say aye? Aye. Opposed nay. Senator Bryant you have a motion for an amendment, excuse me. And all the amendment does is technical and it just takes the free piece out of the title of the bill. Okay. Things have been taken care of in the bus.  And my understanding is this is primarily due to the fact that a lot of this is already in the budget I'm I correct? Alright do any of the, do y'all need to discuss that any further or I'll bring that up before the committee. Okay, seeing not, all in favor of Senator Browns amendment please say aye. Aye.  Oppose nay. Ayes have it. Okay Senator Alexander. Thank you Mr. Thank you Mr. Chairman. Senator Tod was to present the bill here today, but he's had some automotive problems, so he has asked me to bring the bill forward and we're fortunate enough to have Representative Adcock, one of the House sponsors to be here to explain the bill. Representative Adcock? Thank you Representative Alexander and thank you Mr. Chairman house bill 698 the baby current budget bill passed by the house on May 28 with the vote of 109 to 1. This is the bill that adds to the current neo-natal screening test required by the state testing for severe combined immunodeficiency. It's an illness that is a guarantee death sentence for a child that's born with it and by screening early we can not only save lives but we can also save the state a great deal of money because they should know at least half of the births is our state are medicaid children. So if I could finish. So what this PCS does is it takes up the two sections of the bill that speak to the fee because they are already in the budget and then it renumbers it Requires the commission on public health to develop rules that speak to this testing. Okay, I completed with your discussion correct? Yes sir.

Senator Ford you have a question? At the appropriate I move for a favorable report. Alright, Senator Hise? Thank you, Mr. Chairman. Just got a lot of complaints when we had to raise the fee for newborn screenings in the budget, and a lot of people chose to bring that up. Just want to ask the question that if the new tests added here are accomplished underneath the new fee, that we've a change $5 fee I think that went up to the new born screening test the additional amount was to cover these additional tests, and others that were in [xx] that was the $5. Okay any additional comments? No sir You're not a member of the committee? No sir Okay I've got two people speaking.  I've Stephanie Nugent who's Kelly's mum speaking for two minutes we've, please identify yourself followed by Dr Rebecca Buckley, two minutes please. Thank you. I am Stephanie Nugent,  I'm Kelly's mum, and I asked Kelly's mum I know first hand how it's important scid at birth Kelly was my second born child and on February 23rd at 2000 at 7 months of age. I held her in my arms and I watched helplessly as her heart beat faded, and her life slipped away from me. Six weeks prior to that Carly had been diagnosed with scid. She seemed perfectly healthy when she was born, there were no visible signs of illness. That's the danger with scid signs of illness are not there. All of the symptoms that Carly presented were dismissed as common ailments that any infant can have especially in the middle of winter. You're talking common illnesses like pneumonia, RSV virus and common cold. By the time Kelly was diagnosed and under the care of Dr Buckley it's too late, 20 days after I gave her my bone marrow the viruses and the bacteria infections had overcome her body and she couldn't fight them anymore. I'll forever be honoured by the idea that if a $5  blood test is all that stood in the way of watching her grow up and no other family to have to live with that when babies are born with SCID's time is not on their side, and it's very important that we understand that. They have to receive treatment before they show signs of illness. It was hard enough for me to watch Carly's health decline, but you couple that with knowing that an inexpensive blood test at birth is all that stood in the way. The injustice of that is beyond measure. I'm here today trying to make a difference for other North Carolina Families. With the winter months coming upon us rapidly, I'm very concerned about the North Carolina babies who haven't been screened. You hold the power in your hands today, to make a difference for other North Carolina's babies. It is too late for Carly, but it is not too late for them. Please say yes to the baby Carly Nugent Bill. Thank you for your time. Thank you ma'am. Doctor Rebecca Barkley. In two minutes please identify yourself Yeah, I'm Dr Rebbeca Buckley, I'm a paediatric immunologist at Duke university, and evrybody knows about bubble boy disease that is the situation where you have no immunity and if you contract even harmless viruses like Stephanie just told you about  this can be fatal.  I have been transplanting babies with for the last 33 years at Duke, and we have 92.5% of  survival rate for those that are transplanted in the first three and a half months of life it drops down to 69% if you transparent somebody who's older than three and a half months and particularly those that come in already come infected. So the people used to say, well this is too rare to even be considered, but we now know that it's more common than thought and the article published last summer by Anjema The incident is one in 58, 000. People used to think it's 1 in 100, 000, but some of the conditions that are already being screen for are more rare than that, and, the treatment for those conditions is not nearly as effective as treatment for skin. So, in January 2010, the secretary advisory committee unanimously approved the addition of skill to the recommended uniform screening panel, and this recommendation was approved by the secretary of HHS and May of 2010. In January of 2011 the North Carolina new born screening committee unanimously approved this with the understanding that it wouldn't be started until the new public health laboratory building opened.

Well it took longer for that building to open than they thought, but it did open the following year, but that was three years ago and still kids screening hasn't started and it's all because we need to increase the fee for new born screening by $5. now in the five years since the Secretary [xx] Jesse approved the new born screening I've transplanted 11 infants for [xx] four of these were born North Carolina all were diagnosed late, and were very sick when they came in. The overall cost for North Carolina Medicaid for treating the free Medicaid babies was over $10 million and the cost of private insurance for the other baby was over $4 million. Contrasts this with the average costs of transplanting a healthy infant [xx] was diagnose at birth which is less than $100000 thus North Carolina couldn't setup [xx] screening 10 times over for the cost it is paid for medical treatment of this very sick babies thank you. Thank you madam, okay, we have before us House Bill 698 PCS, Senator Alexander makes a motion for a favorable, Senator Brown.  I just have one question for senator [xx]. The question is about whether the test will be made by the hill prick in the panel that often is done with newborns and is the $5 covered in the appropriations or by third party pay or does anyone know how that will be arranged? Dr. Buckley can you help us with that question? We can't hear you. Please come to the microphone. The test will be done on the dried blood spot from the hill stick like all the other tests. Okay thank you madam. All right Senator Alexander, we have house bill 698 PCS as amended as a favorable report an unfavorable to the original bill. All in favor please say aye, oppose nay, ayes have it and senate Alexander who will present this on the floor?  Senator Tarte. Senator Tarte or I will do it. Very fine, thank you very much. Okay moving along bill 850 EBOC law enforcement, Senator Hise are you presenting this one? Okay. Are you going to present this from the floor also? Good. Okay if it's favorable the new lead the presented. Okay. There is no PCS for this one so the bill is before you. Thank you, Mr. Chairman. Yes sir. Thank you, Mr. Chairman and members of the committee. I'll start by saying for both this 850 and 912 that's coming, both have full support both across parties of the western North Carolina delegation and those that represent those areas. House Bill 850 is basically a codification of session law that we've had in previous years that allowed Cherokee to have its own police force they have specific duties that have been assigned to different officers. This bill allows them to carve out and have separate agencies that would allow them to have establish a police force ' alcohol enforcement, probation, and parole and a natural resource enforcement agency. They will have those as separate agencies under what they have under session law now and gives each of those the access to the information and others that they would need as separate law enforcement agencies, and this applies to the tribe and to the areas it patrols and watches for [xx] Is that it Senator Hise? Alright members of the committee questions? Mr. President move for a favorable report, Mr. Chairman, excuse me. Alright, Senator Apodaca moves for favorable report of House Bill 850 EBOC Law enforcement.comment or questions? Seeing none all in favor please say aye? Opposed nay? Ayes have it. Senator Hise you'll be handing that on the floor. Senator Jim Davis are you handling 912? You are? OK, perfect. Senator Hise it's your turn again on House Bill 912. Senator Apodaca makes a motion that House Bill 912 the SB set before us for discussion. All in favor please say aye.  Aye. Oppose nay. Ayes have it. House bill 912 taxation of private property and tobacco products PCS, Senator Hise.

Thank you Mr Chairman, this bill that you have in front of you two things that is done also with Eastern band would exempt from property tax personal properties are located on the lands within the trust for the Eastern band regardless it's ownership and will allow the department of revenue to enter into an agreement with the Eastern band regarding the excess tax on tobacco products. We've done similar agreement on alcohol and others so we just had expanding that and it's really recognizing what I think the federal supreme court is ruled in regards to taxation on the tribe as they provide the services their that therefore local governments cannot imposes a double taxation on those and we are trying to bring that in conformance with that ruling. Alright members of the committee their will be an amendment to this bill but let's first handle this portion any question on what Senator Hise presented? Do we get any further explanations. Okay. We'll set that a side for a moment senator Wells do you a have an amendment to Yes Mr chair, To the House Bill 912, PCS Being distributed as an amendment to clear up the some confusion around the sale alcohol at Craft Distilleries, or we, as you remember, we allowed Craft Distilleries to sell one bottle of their product once a year in counties where there's an ABC store and for the same price as the ABC stores selling that bottle. There are a number of these seven fees I believe involved with freight and handling and warehousing distilled spirits where the ABC board is handling those spirits they keep all those seven charges those charges include things like a bottle charge and an additional bottle charge in a running adjustment but staff can feel you in on all of the details in there if you like. What this amendment does is ensure both are treated the same. So in the of a distillery sale, the distillery keeps those seven charges. This has no effect on the excess tax and customer buys still repays the same excess tax as a customer buying it the local ABC store I ask for your support. Alright members of the committee this amendment is clarifying some language that was misunderstood and this is some clarity to this issue any questions or comments you have the the amendment before you senator Bryan. Yes has our ABC chairman and boards do we know their position on this Does anybody have a comment on that one? Senator Gun do you have a comment? Do you know the answer to that question? Yes. Thank you Mr Chair. I have discussed this with ABC folks they are opposed to allowing the distillery to keep the bottle charge and the markup even though they never touched the bottle and never had any costs associated with this. So they are opposed but the intent of this language and this bill was always to get allow them the opportunity to make a living to have this tour one bottled once a year, it should overall promote the sells of our local distilleries and healthy economy. Okay, thank you Senator Gun. Senator Brian did nod in favor of that. Alright, any additional question Senator Davis. Any questions on the amendment? Is that you have?  That's what we have, yes sir. Sorry I have a question but later on. Okay, Alright. Ladies and gentleman of the committee, you have the amendment before you as presented by Senator Hays, all in favor please say aye aye. Aye. Opposed nay. The ayes have it. The amendment will be part of House bill 912 PCS. Are there any additional questions on the bill as amended? Senator Davis? Thank you, Mr. Chairman, Senator Hise has accurately described the intent and what happens with these bills. So I have a question probably from staff for staff, having to do with the property tax part of this bill. If the local county is not getting any property tax from any property on the boundary, is there

any expectation of service from the county, for example fire service and EMT associated with that. Senator Hise Local governments are allowed to enter into agreements with the tribe in which the tribes may be responsible for fire protection or EMS or they could enter into an agreement for payments for those services and the payment would come from directly from that agreement and not from tax on the property itself.  Follow up. Yes. And I understand that, Senator Hise. Thank you what I'm asking about is if there is not agreement. Staff, if can we help that? I would verify with our local government, except I do believe the county may have some responsibilities, but I'm not as familiar with that aspect of local government services and would have to verify it. Follow up?  Could we find that out before, and this is for discussion only, this bill right now.  No sir, this is about there was a discussion you  No, the 943 is the one for discussion  I'm sorry, so if I may Mr. Chairman could we have an answer to that question before it gets to the floor? Yes, before it gets to the floor, I would put it out of this committee, and it would be help up by Senator Apodaca, and staff would you work to see if Senator's Davis' question can be answered OK? Done. Senator Hise. Real quick it won't answer the question of what happens, but I would assume any facility could not be insured had it had no agreement for fire inbuilt protection on that so the ability to operate a business without an agreement means that it probably just wouldn't open, becasue you could not ensure it. We'll have your answer. Members of the committee any additional questions?  If not, I have one person speaking from North Carolina association of County Commissioners Johanna Reese, and you have two minutes. Identify yourself please? Thank you Mr. Chairman I am Johanna Reese with the association county commissioners and I may be able to get some clarity to the questions earlier their are four counties that are affected by this legislation and they do provide some services, varies from county to county that the types of agreements or the level of services their are some emergencies services, some sanitation services such as trash collection or restaurant inspection that the counties does their may be non tribal members who have property on a tribal ground, who own things on tribal properties who's children may go to school and the counties providing construction for that so their are some level of services provided by the counties that may not be happening under agreements right now the counties involved in this association do have some concerns with that exception and the precedents it sets down the road to. Thank you Mr. Chairman. Thank you, OK members of the committee I see no additional questions or comments Senator Heis puts a favorable report for house bill 912 PCS as amended unfavorable to the original bill. Motion is before you all favor please say aye? Aye.  Oppose nay? Ayes have it. Okay I've got Senator Heis and Senator Gun handling that on the floor. Thank you, Senator Heis. And now last but not least from Hollywood, Senator Harrington welcome, talking about house bill 943 I think this is a PCS I'm I correct? Senator Apodaca makes a motion that the house bill 943 PCS before us, be before us for discussion, all in favor please aye, Aye, Opposed say nay, ayes have it. Okay Senator Harrington, Thank you Mr chair members, I'm pleased to present to the committee a bond plan that prioritizes our pressing infrastructure needs across the state the proposal injects more than 900 million into the UNC system positively affecting higher education needs across university system particularly in the areas of Science and engineering also including $400 million to support new constructions on R & R needs on the community college systems and community colleges provide valuable service preparing student and workers for 21st century economy, the bill also supports the plans send forth by the national organized to modernized or military facilities across the state and it could also include significant water and sewer assistance for local communities as well as funds for agriculture and the zoo.  The bottom proposal does not include borrowing money transportation projects or public school construction. The budget that was signed by the Governor on Friday injects more than the $700 million over the biennium into roads and bridges, a big part of this additional dollars comes to

the elimination of the highway trust fund transferred to the general fund.  Our budget also includes funding for a study to access the critical need school construction wich is currently supported by lottery dollars, and Mr Chair if I may at the appropriate time, I would like to have staff just walk through the bill. I'm sorry. Okay. Members of the committee, Senator Blue Thank you Mr. Chairman I had the benefit of reading through this bill before I got here I'm sure staff explanation can be helpful but couple of comments I want to make first I commend senator Harrington I think that he's got the right idea in the way that the pieces have been put together. But I would call to your attention one thing because of the optics and it's probably an oversight because of maybe some other people in this sanctum sink term of King Solomon's temple that can see certain aspects of this. But I would suggest that the universities 900 plus million dollars for the university is a gigantic infusion for them and a shot in the arm and well I think and enhance our position to be competitive around the world but I would ask you look at some of the final details to consider that of the Six institutions, colleges that are omitted for HBCUs and as importantly as the science projects the ability to take ideas to market doing what business schools do and stuff is very important too because that's how we do bench to market in many instances in the business slope. So I would ask you to at least take some thought about the request from two of the institutions that were omitted for business schools and related stuff like that a third one I understand requested a science lab a favorable state which seems to be the only one out of the university not getting it and that's important for two reasons. Number one, they serve more GIs, veterans and soldiers than anybody else in the state because of the location of Fort Bragg just up Bragg Boulevard state but also that entire region, the south-east region of the state with [xx] and Pembroke State which is the other school asking for a business school, they represent the region of the state where development of business is most important and most needed. So I know that you will be looking at some other things as you move along to tweak this and I would certainly urge you to take those things into account, that is the request from NCCU, from Faithful State, from Brook State and Elizabeth City be included in it because we need unanimity, and I think that you can have it from this body as well as from the general assembly, if you can sort of fill in those gaps that seem to be obvious in this bill. Alright. Thank you Senator Blue. Are there any comments Mckissick and today ladies and gentlemen, this is going to be for discussion. Only tomorrow we will have a vote on this. Okay. This will be for staff and I'm just trying to make certain, in terms of clarity. Assuming this moves forward, it's one thing to have the bond amount tied up in an order or a referendum going before voters, but to what extent are we actually linked to the mix of projects which are before us today, and the allocations which are specified. The question really being, if it goes up for a bond issue, are we linked specifically to the [xx] with you? figure today and what opportunity is there for flexibility on a later date? Senator Harrington any thoughts about that. You would have to forgive me Senator McCallister. Sure well that's really more directed to staff rather than Senator Harrington whoever would have the expertise to address that issue Yes sir please identify yourself Thank you [xx] for bill drafting the flexibility regarding the fund will be found primarily in section one so three of the bill, it permits modification proceed allegations, among projects set forward specifically in the bill, certainly there will need be set forth in the bond bill, in the bond question to be considered probably viable beyond that what the bill does provide for

reallocation among projects not listed in the bill but listed in six year capital improvement plan develop pursuant law provide the arguable[sp?] amount does not exceed the two billion authorized and provided the question links to the project to which the funds are reallocated. Follow up? Yeah, what I'm hearing from you Dan, is that there is a possibility that, as long as in that long term, it could come in, and likewise there is some flexibility among the items which are already specified here, is that a correct interpretation or is that erroneous.  Yes sir. It is correct. Yeah follow up? Yeah quick follow up. I agree with some of the observations made by senator Blue, I guess the thing we can, with hope that we could do as this moves forward is to either naming specific projects within here if we felt were necessary to do so at this time, but it's certainly to have an acknowledgement that they would be an opportunity to redistribute some of these proceeds. I had assumed that what Dan stated would be the way it would go since that's the way it works for most bond issues, but I think we need to kind of look at the mix, and then maybe a need for changing some of the [xx] that are here, so I hope that we will reflect upon Senator Blue's observation, but more importantly look at other projects that may not have made it here that deserve some merit and consideration. Senator Harrington. Thank you, Senator McKissick, for you comments and Senator Blue as well. If we could, Mr. Chair just have staff walk through the bill. I think that will help with some of those formulas. Staff, can we walk through the bill? They do Senator Harrington wants it. She wants you to be familiar with the bill as Senator Harrington indicated, the PCS for House Bill 943 would authorize the issuance of $2 billion of general obligation debt. Of the majority of those voting in the November 2016 general election voted in favor of the measure. Now the purpose of the funds would be for updating and constructing public facilities for economic development purposes, and can broadly be categorized in the following way. The 100 million would go for construction for the new lab for the Department of Agriculture and consumer services, $45 million would go to replacing the African pavilion at the North Carolina Zoo which would include real property acquisition, new construction, rehab of existing facilities and repairs and renovations 460 million, $600, 000 will be used for the department of environmental quality, grants and loans for water and sewer improvement would be divided equally between the state drinking water reserve, and the waste water reserve which provides grants for construction of critical needs for waste water collection systems, waste water treatment works, and public water system projects. For the loan component, as long proceed exceed project demand discuss stray along the mile limitations to the way to allow for utilization of the land proceed, priority for proceeds would go to projects subject to an EPA administrative order or consent decree the proceeds would be capped for those project as follows, for grants funds from the waste water reserve would be lesser 50% of the project cost or one-third of the proceeds that were allocated to the waste water reserve, for the loans proceeds that go to the waste water reserve the cap is the rest of all projects costs minus any grant funds received for the project or $15 million. $82.731 million  would go to projects for the National Guard including readiness centers, armory renovations, and helipads. There is an error in the summary regarding the allocation of proceeds for the North Carolina community colleges, I apologize for that, it indicates that $400 million is allocated among the given in the summary that actually is 200 million or the 400 million is given according to that allocation method which is 35% for county wealth as determined by the annual tier ranking done by Department of Commerce, 35% based on repairs and renovations patients needs based on the age of the square footage, and 30% based on the need for additional square footage. The remaining $200 million would be fully allocated based on county wealth which is also tied to the development tier ranking of the community college where the main campus, or the community college is located. The remainder of the money $921, 667, 000 would be allocated among the 11 projects listed in the bill for new construction for constituent institutions of University of North Carolina.

The bill requires that all boards proceeded recipients report quarterly beginning 1117 to the joint legislative oversight committee on capital improvements whih is committee created on the the budget bill into the appropriations committees, and the report would include total project costs, amounts funded from the bonds, expenditures to date, and the percentage of project completion. There is a provision in the bill that would disallow the state treasure from issuing bonds of issuance would violate the debt affordability advisory committees recommendations on debt capacities. Thank you. Senator Harrington any additional comments? I don't have any additional comment. Senator McInnis. Is there any preference that will be given to tier one counties for the eligibility for the water, and sewer funding? Or will everybody be treated the same? Those monies are split out in tiers. Half of those monies will go based on the tier. Follow up. And on the UNC buildings, I've noticed some of the renderings, and the drawings on those, they are very elaborate, and I know there is not much to do. I've been accused of being a meddler on this but little say I want the most graffiti's in the most functional building we can get to last the longest for cheapest amount of money, and I appreciate you bringing forward this session I know that somebody is going to be looking that number specially thankfull for the community college money because that would directly be working in the rural communities in North Carolina to make a difference in lives of that.  Thank you senator Hues Any additional questions? Senator Floyd.  Thank you Mr. Chairman I've got past for staff, the staff that recall for me the last two budget circles or at a minimum, the latest budget cycle. The capital expenditures that the general assembly has appropriated for the university system. Those universities escape me but I do recall at the general assembly, specifically setting aside capital expenditure funds for university systems and the staff could remind me or remind the rest of us, who were the recipients of those appropriations from the General Assembly, if you've got it for the last two. If not I'll take it for the latest one Mr. Bondo. Mark Bondo, Fiscal Research. In the current budget bill there are only appropriations for two entities for capital and that's the North Carolina School for Science and Math. For their campus in Durham they got $4 million for repairs and renovations, and technology upgrades, and then for the NC State University Engineering Building there was a bill that, self lucrating[sp?] bill that financed one potion of that. The second portion would be financed by this bond bill in front of you all, and then they also received $2 million in the budget for planning. In the previous fiscal years there was money appropriated to Appalachian State University to plan the Health Sciences Building of which this bond bill would finance, and then I believe there was also money appropriated to UNC Asheville Campus for some land purchases there. Other than that, the other main items that fund the university system are within the reserve for repairs and renovations which is allocated by the General Assembly between state agencies and the University of North Carolina system. Last The current allocation is, one third of that amount goes to the University system to be allocated amongst the campus, and two thirds of that allocation goes to the opposite state budget management to be allocated to the state agencies. Right now I believe that there is, I have to go back and check but, if the bond bill were to pass, 150 million dollars be allocated to repair for allocation through the preserved renovation of which, a third goes to UNC for the campuses and two third goes to state agencies.  Follow up? Follow up senator Floyd. I would hope with the final, senator Harrington, with the final formulation of the bond package, that thought would be given in consideration for those universities that have already received special allocation in our general appropriations prone from the state and I would also ask you just to look back one budget cycle and additionally to see those universities that have got money. I understand that money is tight and it is limited, but it appears to me that some of the Universities are paying better than others and some universities are doubling or triple dipping into the general appropriations funds as well as in the bond package, and so again any consideration and thought that would be extremely helpful. Thank you. Mrs Hoffman, would you explain a little clarity on the water sewer so that we can be sure that everyone understands how those are to be distributed? Yes Mr. Chairman Jennifer Hoffman with fiscal research, I want a follow up on the question

about which counties were eligible for the water and waste water grants, Senator Harrington was correct in saying in the past bi-ennium [xx] and two counties were the only counties that were eligible to apply for grants. However changing the budget bill this year allows all 100 counties to be eligible for those grant fund, but there is a new affordability factor that would be considered in reviewing those grants and that affordability factor compares the relative affordability of a project in one community to other communities in North Carolina based on factors like water sewer rates and the rates community and household income, and that factor would help the division of water and construction of the State Water Infrastructure Authority make the determination of which community actually gets a grant versus a loan. So everyone is eligible at this point in time. Thank you, members you have a little more clarity on that issue. I've got a. Senator Sanderson. Thank you, Mr. Chair. One of the proposals in the bond that is before is $82.73 million for the North Carolina National Guard which we didn't talk about very extensively in this committee this afternoon. I would like to ask the committee's indulgence to see if, Mr. Chair, you would give general Cornell Wilson, who heads the Governor's Military Affairs Commission, two minutes to speak whether to the National Guard or to the in general seeing as how the military is so important to the state of North Carolina. Thank you. General Wilson, would you come forward and help clarify Senator Sanderson's comments. Please identify yourself. You might need to press the button Good afternoon. I'm the military adviser to the Governor of North Carolina, and I certainly appreciate the opportunity to address the Body. This state has been very good for supporting our military. You've done a great job we are number four in active military in the entire country. We also have the largest population of veterans at number five in that respect of almost 300, 000 veterans, and we have done a great job of supporting our military. However there is also the fact that we face a potential [xx] in the future BRAC was a four letter word, Base Realignment and Closure. We gained from BRAC in 2005. The [xx] secret station act is still in place in federal congress and so that applies to a lot of different things. We're going to lose 40, 000 soldiers in the next two years ready and that will continue to happen if [xx] in place, the 30, 000 million dollars will be lost. So we think it's important, we know it's know it's important to be able to have a bullet in our hoister, and that bond is our issue to do that.  We can have an opportunity to help our bases in insulations, be able to preserve our bases and offset at some time grow our insulation with some opportunities. But we also know that in Fort Bragg they lost an elite unit of helo-paratroopers a few years ago because of [xx] or the fact that they had basis. We also have the [xx].  that is going to gain a lift fund maintenance facility of USD 40M and we all know it best can be the area and also the joint strike fighters is coming there as well. [xx] Johnson, we have an opportunity in the game, the KC-46 tankers, the newest tanker in the world. And that will be interesting what John if we can get that approved. So the bonds will help us be able to increase the opportunities to draw our military vision at those bases, and if we can have some money put in up for that bond, we could appreciate that. We put 100 million dollars in the military [xx] commission, the government penetrated 7 million dollars and they cut that down some, and at this point there is no money bondage of what marks it at all. This is not something we have to use by the way. If the DOD approves it, we work with them they must have matching funds, and it does not cost the extra bit or you don't have to use that at all. So I urge you to put some money into this bond military field to preserve our bases and hope to grow to keep our bases strong. Thank you Sir.  Thank you General. Senator Sanderson you good? Senator Apadaca? Okay. Senator Brown? Thank you Mr. Chairman I also want to thank general Wilson as well there's many issues about date on bonds for the military as it deals with putting money on federal installations. Other states are doing it and senator Harrington I have talked about this. I don't know how the state is doing this, but there has got be a way to get around some of this. I know Senator Sanderson a lot of concern about this in our districts and you know, I think there has to be

research done on this, because if other states can do it I don't know why we can't do it and its just something we've got to dig into further our time. Okay, members of the committee any additional questions at this moment? Senator Wade. Senator Harrington I just want to thank you for your hard work on this. I think we could all sit here and tell you several other needs we all need, but I want to thank you for your hard work and I think you've done a great job. Thank you. Al right members of the committee I have one person that signed up to speak Mr. Brown, you have two minutes please identify yourself on the bonds package. Senator Rucho and members of the Senate Finance Committee. My name is Lynn Brown and when I served in the North Carolina House some years ago, I handled just about all of the bonds legislation that moved from the House to the Senate or from the Senate to the House. The Bill in the form of the PCS does address concerns that were previously articulated relating to the amount of the bonds, debt service capacity, and North Carolina's triple A bond rating. On the matter of the bond rating I would think that we can reasonably issue this amount of bonds without jeopardizing that rating as long as there is full compliance with Section Three of this bond bill which you will find on page 14 at line 22. The original house bill I think would have stripped out most of our debt service capacity, and would have left no cushion or room for either emergency needs, or for rainy day issues in the future. I think we can now dress those with certainty, the real issue that I have the House Bill contemplated a vote, a referendum vote here in North Carolina to correspond with the next presidential preference premiere, it looks like legislation now will see our primary being held in March of next year, as this bill is drawn the PCS, that referendum bond vote would be November a year from now corresponding with the General Election, here's the issue. Eight months is the spread of time between those two days, what may happen to the net interest cost associated with the issue of $2 billion of bonds in this interim period. If the Federal Reserve raises interest rates and that's more likely than not going to happen in the forth quarter of this year, is that going to increase the costs of the bonds which would be reflected in the overall burden to the states general fund because of the eight months gap. I think that is an issue that does need to be addressed Mr. Chairman before the bill in the present form is voted on. Thank you Mr. Brown. I know there is a lot of discussion Senator Harrington on this issue and I know that the people that have to get behind this bond package. It's not just going out there and putting it out for a vote. There is a lot of hard work by the Boards of Governors, by all of the different universities and community colleges to get behind this for a victory and the interest rate won't make a difference if it doesn't pass. So, the point is there has to be a lot of work done to accomplish that, I know there are a lot of folks who say, we need more than a couple of months or three months to accomplish it, so that will be taken into consideration when the date is put forward. Members of the committee, we have accomplish our work. House bill 943 will be over to tomorrow's meeting it will be at one o'clock, Senator Laban who's chairing the committee, stay tuned for the room that we will be in, in addition to 943 we will also have house bill 730 dealing with the next generation 911. Are there any comments or questions before we adjourn? Seeing none, this Finance Committee meeting is over.