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Senate | May 29, 2014 | Chamber | Senate Finance

Full MP3 Audio File

Meeting will come to order, please. Before we get started, lets welcome our pages. Darrin Evans from Lanore, welcome Senator Soucek, Davis Jones, Senator Berger, Jack Hammel, Jack Lohill, Senator Foushee, welcome. Benjamin [inaudible], Senator Berger, Jordan Boyd from the foothills, Senator Hise. Is it still snowing up there? You still got snow on the ground up there? Damn. What time does the sun rise? What time does the sun rise up there in the mountains? Good. Good. An hour later. Okay. Abigail Eisenhower, Senator McLaurin, welcome. Emily Witherspoon, Senator Rucho, Elaine Hickman, Senator Walters. [Speaker Change] Approclomate. Our . . . [Speaker Change] Sorry, but I honestly have to do this to you. Wilson, Donna Blake, Hal Roach, Isaac Walker, and Billy Fritzer, thank you for what you do. Members, we are going to take amendments today on Senate Bill 744, those amendments must be in by 1:30. So, if you plan to send forth any amendments, please have them here by 1:30. We will have some public comment today, when that time comes we will call you to the back of the room and we will give each person a couple of minutes, two minutes to talk. So, lets get rolling, our first bill today is Health Bill 230. Anyone here going to present Health Bill 230? [Speaker Change] This is strictly the financial portion. [Speaker Change] Okay. Well, if they come forward. [Speaker Change] Why don't we have the staff explain the financial portion. [Speaker Change] We'll do that. Staff, if you'd like to go through the financial portion, please, of H230 have at it. And, please say who you are as we go. [Speaker Change] Thank you, Senator Evan. I'm Patsy Pierce from the research division. Members of the community if you'll look in the bill, it's second edition of House Bill 230, its under section eight, which begins on line 48 of page 3. If you want to look at your summary, that's on the back of your page 2, section 8. It basically is just giving local school administrative units, also known as LEA's the ability to enroll students into the reading camps that are available to students who do not demonstrate reading proficiency. This would give the LEA the opportunity to enroll students who do demonstrate reading proficiency, if they're parents would like to send them to the reading camp. But, the LEA would be able to charge those families a fee and that fee would be an amount equal to the per student program costs of participating in the reading camp, not to exceed $825, and that's one line 5 of page 4. Still the primary enrollment for that reading camp would be for students not demonstrating reading proficiency. Local boards of education are directed to establish those application and enrollment procedures and that's the finance section. [Speaker Change] Senator Berger, if you'd like to explain the bill, please, you have the floor. [Speaker Change] Thank you, Mr. Chairman. Members of the committee this bill was heard in education yesterday and the primary purpose of the bill is to apply some modifications to the Read to Achieve program and the A through F grading system. The reason the bill is before the finance committee is to deal with the finance aspects of the bill. I'd be happy to answer any questions. I think a lot of the provisions in the bill are provisions that have been discussed with DPI, State Board of Education, and Superintendents from around the state and it addresses some concerns that have been raised. [Speaker Change] Thank you Senator Bergere. Members of the committee.

Senator Brock. [SPEAKER CHANGES] Mr. Chairman, at the appropriate time, I’d like to make a move for favorable report. [SPEAKER CHANGES] Any other comments, Senator McKissick? [SPEAKER CHANGES] Thank you Mr. Chair, and Senator Berger, thank you for bringing this bill before us. I did have a couple of quick questions, because I don’t sit on the education committee, and they do deal somewhat with those aspects of the bill. I notice right now the reading camps are running from 72 hours, to no more than 3 weeks. And I was wondering. [SPEAKER CHANGES] Excuse me, Senator. [SPEAKER CHANGES] Yes. [SPEAKER CHANGES] Senator McKissick. This was heard in education, the education part. We’re discussing the finance part of the bill today. But if you have a comment, please continue. But we want to continue the finance portion if possible. [SPEAKER CHANGES] Okay. I think that my comments or question would be appropriate under either umbrella. The thing I’m trying to determine particularly as we’re looking at the cost parameter here, I guess is up to 825 dollars. How that relates back to the timeframe for these camps and how we have moved from 72 hours to three weeks from the original legislation, which as I recall was anticipated about a six week timeframe, conducting these programs. I support the flexibility that it’s offering, but I’m just trying to get some further clarification. [SPEAKER CHANGES] Mr. Chairman, there are two parts to that. The flexibility is something that was requested by the local school boards. They wanted be able to structure the programs in such a way that it was more attractive to the teachers, that they wanted to attract to the program for teaching the kids. The fee is one that to the extent that there is space available in these programs, and you have children who don’t qualify because they’ve actually passed and shown proficiency and it may be some limited proficiency, if their families want them to go to the reading camp, they’d be able to. But they would have to pay a fee and it’s just setting the fee maximum amount. [SPEAKER CHANGES] Follow up questions. [SPEAKER CHANGES] Well what I’ll do I guess ?? address on the floor ?? opportunity to do it here. [SPEAKER CHANGES] Go ahead and ask your question now, and maybe we can save a little time on the floor. [SPEAKER CHANGES] I doubt it, Senator, but we’ll give you the benefit. [SPEAKER CHANGES] I think it actually helps when you can ask questions in committee and I would say that of any member, notwithstanding Senator Tillman’s remarks. But I guess I was just trying to get a little more information in terms of the educational components as well. I know that people at department instruction superintendents were looking for this greater flexibility and they were provided some earlier in the year. So I was simply trying to understand a little bit more operationally how this would actually function as it is proposed in the bill at this particular point in time. And likewise how it gets back to increasing proficiency. Because I thought the original proposal, which really allowed for longer periods, might have enhanced proficiency levels. And it’s hard to see how proficiency can be overcome perhaps in the 72 hour period. [SPEAKER CHANGES] And Senator McKissick, as far as the details of instruction in the program, I can’t provide that for you. It is my understanding that that like a number of other things that would lead to our educational professionals, it would be designed by the folks who are adept at dealing with those kinds of things. It is though a camp that’s legislatively to be one that has a literacy emphasis and a literacy component, to address the real problems that some of these children may have had because they weren’t able to pass the tests and weren’t able to qualify for one of the alternative assessments and pass that way. So it’s a camp that’s designed or it’s a program that’s designed to really deal with those children who are in the third grade who are having the most trouble with catching on to reading. And again, I think the details of the program are details that are being worked out by the folks that are experts in that field. [SPEAKER CHANGES] Thank you, Mr. President. I guess my concern is simply I hope as they do work them out, we do overcome the deficiencies that these students have. Because if they’re not reading by third grade, that is a serious problem. And I think we do need to make sure they’re reading and I guess don’t want us to give them so much flexibility that we don’t accomplish that objective because 72 hours isn’t much time to overcome three years of deficit. [SPEAKER CHANGES] And Senator McKissick, that is a little bit of the push pull that we are dealing with. [SPEAKER CHANGES] Thank you sir. [SPEAKER CHANGES] Senator McKissick if I may, the original was I think over six weeks it was still 72 hours. So the 72 hours

maintain the same and I'll give you an example. My district in Mecklenburg County asked that it have some flexibility so they could attract the better teachers to come there and be able to work and it also provided some ability to save transportation costs when you're moving a child to that location, then, very simply you do it in what would be 24 hours a week and doing it over three weeks rather than extending it over six weeks for a shorter period of time during the day. [SPEAKER CHANGES] Thank you. Senator Barringer. [SPEAKER CHANGES] Thank you, Mr. Chair. I have, actually, a finance question and perhaps a follow-up. In the definition of proficient student does that include the students that are exempt for good cause? Another way of saying that is when we do have a student that has a good cause exemption will they be charged to go to the camp or will they be able to go to camp without charge? [SPEAKER CHANGES] I'll defer to staff on that question. [SPEAKER CHANGES] Senator Barringer, the students who are exempt for good cause would not be charged. [SPEAKER CHANGES] Excellent. Follow-up sir? [SPEAKER CHANGES] Yes please. [SPEAKER CHANGES] This may not sound like a finance question but it really does have a financial point to it. I'd like, and this is really directed to staff, but Senator Berger if you want to take it that's fine, I would like to know what has become of the requirement that all children be evaluated for developmental delays within 30 days of entry into kindergarten? This was a provision in your bill in 2012, the Omnibus Education Bill, and my concern about this from a financial standpoint is is that we funded these things and I wanna know what's happening with these things because we're also looking at finance and funding again. Can staff tell me where that stands because that is a critical piece to make this bill work. [SPEAKER CHANGES] Yes, Senator Barringer, that remains in current law, the 30 day developmental screening. That part of the law just wasn't changed so it's not pulled into the bill. [SPEAKER CHANGES] Follow-up? [SPEAKER CHANGES] Follow-up. [SPEAKER CHANGES] My question is not whether it's still law, I understand that it's still law, but is it being implemented and how? [SPEAKER CHANGES] Senator Barringer, that is, the day for implementation begins in the 14-15 school year. So it should begin as this school year starts in August. [SPEAKER CHANGES] And that would be, follow-up, and that is consistent with this bill? [SPEAKER CHANGES] Yes, it would be consistent, yes. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] Thank you. Thank you Senator Barringer. Any more comments or questions from the committee? If not, we do have one member of the public that has signed up to speak, Ms. Pamela Grundy from Charlotte. Ms. Grundy if you'll let the sergeant at arms assist you please, ma'am, we'll give a couple of minutes to comment. Thank you, and welcome. [SPEAKER CHANGES] Thank you so much and I appreciate you giving me the chance to do this. I do not have a third grader but I have a lot of friends who have third graders and I can tell you, as many of you know, this has been a terrible year in third grade, particularly because of this bill. I think that the concern of many parents is not only to take the financial piece, not only is this exceedingly expensive because retention and the threat of retention is exceedingly expensive but it also, retention, as the bill threatens, does not work. So you're gonna be spending extra money to send children to school for another year and it's not gonna do they any good. They may have a brief jump in their reading scores but that will go down by the time they reach seventh grade. That's been quite clearly demonstrated. And they will be more likely to drop out. So this bill is not a particularly good investment on the part of the finance committee. I think retention, again, simply does not work and the problem with putting high stakes like retention on standardized tests such as the EOG is then that tests become so important that it warps the entire curriculum and that's why third grade has been a nightmare. Because it has been completely focused on preparing for that test because the consequences are so damaging and, as a result, the children have lost the love of reading, they have lost interest in school, and it is doing far more harm than good to children. So not only are you spending more money than you should be, you're spending more money to do harm to children. This is very clearly shown by research. I'd be happy to provide anybody with that research and I hope you will think very seriously. These small changes are not going to make a difference to the experience of third graders next year. They're very small changes, they're not gonna make a difference to the challenge that third graders face and the difficulties they face. And again, the ones that are losing their love of learning, losing their interest in reading, because of what this bill is requiring

their teachers and their classrooms to do. So I thank you all very much and I hope you will really think about this seriously. [SPEAKER CHANGES] Thank you, Ms. ?? [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] We appreciate it. [SPEAKER CHANGES] Members of the Senate, or committee, any further discussion or debate? [SPEAKER CHANGES] Mr. Chairman. [SPEAKER CHANGES] Hearing none. [SPEAKER CHANGES] Mr. Chairman, if I may. Senator Berger, I'd like to applaud you and the folks in education. When we took over about three years ago it was very easy to ignore the fact that many of the students that are in the public system can't read, even beyond third grade, and I applaud you and the other members of the general assembly. When they passed this, primarily because of the fact that now, at the very least, a child, when they graduate, will be able to read and the bottom line is if you can't read you can't learn and that's critical to any chance of being a productive citizen, and I say thank you. [SPEAKER CHANGES] Thank you. Senator Berger, any further comments? [SPEAKER CHANGES] Mr. Chairman, just briefly- [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] There, I will acknowledge there is a disagreement among some professionals about retention but what I would say is that for years North Carolina has practiced the non-retention policy and what we have seen is a continuing growth of those kids who are unable to read as they go through school. And I think it's critical that we do everything that we can to give our kids the best opportunity for success and learning to read, being able to read, by completion of the third grade is the one thing that we can do, I think, to improve the situation for our kids. And I would appreciate your support for the bill. [SPEAKER CHANGES] Thank you, Senator Tillman. On a motion by Senator Tillman, no that's another one, that's another one. Senator Tillman moves for a favorable report seconded by Senator Harrington. All those in favor please say aye. Opposed no. Aye's have it. Motion carried, thank you. [SPEAKER CHANGES] Thank you, Mr. Chairman, thank you. [SPEAKER CHANGES] Okay, the bill before the Senate is Senate Bill 744 PCS. We need a motion to accept PCS. [SPEAKER CHANGES] It is not our PCS> [SPEAKER CHANGES] It is what? [SPEAKER CHANGES] It's not our PCS. [SPEAKER CHANGES] It is not, no longer PCS, okay. So we will, do we want to hear the financial part of that bill first? And we will be receiving, for about three or four more minutes, any amendments and then we will cut that off. Senator Harrington. We have, thank you. Okay. Who is going to bring this bill forward? Senator Brown. You've been voted. You've been elected. [SPEAKER CHANGES] Mr. Chairman, obviously I need to let staff take over from here. [SPEAKER CHANGES] Possible. [SPEAKER CHANGES] Mr. Chairman, there are three types of provisions that are in the budget bill that requires it to come to finance. There's some tax provisions, there's some fee provisions, and there are some finance provisions. I'll briefly go over the tax related provisions and Rodney will go over the fee related provisions and Mark Bondo from Fiscal Research will go over the finance related provisions. You have a summary that outlines the tax provisions, they sort of skip around through the bill. The first one is on page 98 in section 12H.18. It directs the secretary of Health and Human Services to implement a Medicaid assessment for LME's and MCO's. The amount of that assessment would be 3.5% of the non-Medicare net payments that those entities receive and what that section goes on to do is to provide that 65% of the amount collected will be used to reduce general fund appropriations for the Medicaid program and the remaining 35% would be used to increase the payments made to the LME's and NCO's. North Carolina first began utilizing these provider assessments in 2003 when it created a similar program for your nursing facilities and intermediate care facilities and did it, the General Assembly enacted the Hospital Assessment, as you may recall, in 2011 to enhance the payment rates for hospitals under the Medicare program. The second

related changes can be found in section 34.6. That's in the transportation part of your budget. That section increases the maximum highway use tax that will apply to commercial vehicles and to recreational vehicles. As you recall, the General Assembly repealed the maximum tax that applies to non-commercial vehicles back in 2001 but the $1500 and $1000 cap has remained for commercial vehicles and recreational vehicles. What this does is increase that cap to $3000 over a two year period. So, effective January 1st, 2015 the cap for recreational and commercial vehicles will be $2000 and July 1st, 2015 it will be $3000. Also, as you know, the highway use tax is imposed when a certificate of title is issued for a vehicle. So if you have someone that's had a car titled out of state and they move it in to North Carolina to be titled that car becomes subject to the highway use tax. The cap on the highway use tax for those vehicles right now is $150 and this bill would increase that cap to $250 effective October 1st, 2014. [SPEAKER CHANGES] May I interrupt for a moment. [SPEAKER CHANGES] Yes sir. [SPEAKER CHANGES] The appointed time for stopping the amendments is here so no more amendments will be accepted. Thank you. Go ahead Stephanie, pardon the interruption. [SPEAKER CHANGES] Last session the General Assembly expanded the base of the highway use tax. Right now the highway use tax, which is 3%, is imposed on the retail value of a motor vehicle. Last year that was expanded to be the retail value of the vehicle plus any dealer administrative fees imposed in the sale. That change was supposed to become effective July 1, 2014, this moves that date to October 1st, 2014. And lastly, in this section, there has been an exemption in the motor, from the motor fuel excise task for years for taxi cabs and buses operated as part of a city transit system. This repeals that exemption effective January 1st, 2015. It does not appear to be highly used because I think the amount of money associated with it is just about $70,000. I can stand to be corrected from fiscal. The next tax related change is in section 37.1. Last session, as you know, the General Assembly reduced the corporate income tax rate from 6.9% to 6% for this year to 5% for 2015. And then the statute puts in to place a trigger so that if net general fund collections for the 14-15 year meet the targeted amount of 20.2 billion dollars then the corporate tax rate for the 2016 will go down and then the statute also put in a trigger for the fiscal year 14-15 that if net general fund revenues meet the targeted amount, which is set in the statute at 20.975 billion then the rate could go down once more. The question is, how do you decide what the net general fund revenue collections are? We realize they're just many different charts out there. The bill referred us to the report that the state comptroller puts out, the state's comprehensive annual financial report, but there are several charts in that report. None of which are the ones that correspond with what you, as a body, use when you put together your availability statement and start your appropriations process. So what this does is to line that target up, where you go to see if you've met the target, it lines it up with the information that you have been using to make your budget availability statements, which is the report that the Department of Revenue puts out. And lastly, as far as tax related changes, is in section 37.2, I believe, right under that. And that is the modification of the county hold harmless for repealed taxes. As you may recall, back in 2008, the state assumed the county share of the non-federal Medicaid cost, the administrative cost, and financing that change it repealed the third half cent local sales tax. To hold counties harmless from the repeal of that local sales tax the General Assembly put that each county would benefit by at least $500,000. What this does is to be

Begin to phase out that $500,000 so by the year 2017 we will truly only hold counties harmless. We won’t give them an additional amount and by that point we believe there will be about twenty-four counties that will continue to receive some type of payment from the state under this provisions. Mr. Chairman that’s all of the tax related changes. [SPEAKER CHANGE] Senator Brown. [SPEAKER CHANGE] Mr. Chairman I think that explains it pretty well. [SPEAKER CHANGE] You ready to do the fees Senator Brown? Are you ready for staff to take over on the fees? [SPEAKER CHANGE] Mr. Chair. [SPEAKER CHANGE] Do you have a question? [SPEAKER CHANGE] Mr. Chair. [SPEAKER CHANGE] Okay. Senator Walters. [SPEAKER CHANGE] Thank you Mr. Chair. I just would ask a question about removing the cap or increasing the cap on the highway use tax. Could staff tell me how much revenue that’s going to generate? [SPEAKER CHANGE] It’s about eleven million is what I understand. [SPEAKER CHANGE] Ms. Cameron. [SPEAKER CHANGE] Thank you Mr. Chair, Amna Cameron with fiscal research division. The commercial cap when it is fully in place at $3000 will raise ten million annually. The recreational cap when it’s raised to $3000 will bring in one million annually. The out of state cap when it is fully implemented for a full year will raise $3,225,000. [SPEAKER CHANGE] Follow up? [SPEAKER CHANGE] Thank you Mr. Chair. I’ve got a concern about this as we’ve talked in the last two sessions about business friendly and everything and Senator Rucho explained it very well on several occasions about how we need to be friendly to our businesses here in the state but now we’re going to go back and increasing taxes on commercial vehicles that provide all the services and construction and agriculture-related industries across the state. [SPEAKER CHANGE] Senator Jenkins. [SPEAKER CHANGE] Thank you Mr. Chairman. This is just a request not a question is if we could get staff, Ms. ??? could help us with this, on this Medicaid hold armless piece and sort of give us a before and after schedule as to how the counties are impacted. [SPEAKER CHANGE] Ms. Johnson. [SPEAKER CHANGE] Once the phase out is fully implemented it will increase general farm revenues by 18.6 million. [SPEAKER CHANGE] Follow up. [SPEAKER CHANGE] Follow up. [SPEAKER CHANGE] Mr. Chairman what I’d like and I’m sure Ms. Johnson can do it is I’d like to see the schedule as how, what is the impact to the individual counties. [SPEAKER CHANGE] Certainly. I’m sure staff can provide that. [SPEAKER CHANGE] That is available it’s out there. [SPEAKER CHANGE] Thank you. Senator Tucker. [SPEAKER CHANGE] Thank you Mr. Chair. Following up on Senator Walters’ question, this doesn’t all commercial vehicles does it? Did I understand it to be.. [SPEAKER CHANGE] Over 27,000 pounds is my understanding. [SPEAKER CHANGE] Yes sir, three axles or so. So not all commercial vehicles are taxed? Maybe Mr. Walters’ vehicles will be taxed, but not mine. [SPEAKER CHANGE] Mr. Chair. [SPEAKER CHANGE] Can I follow up on Senator Tucker’s remark? [SPEAKER CHANGE] Yes you may. [SPEAKER CHANGE] I assume you all the ??? will not be affected but a lot of trucks and agriculture trucks will be. Is that correct? [SPEAKER CHANGE] Yes it is my understanding that Senator Tucker’s and that sort of thing would not be. I think they already pay 3% on the total price though. [SPEAKER CHANGE] Thank you. Other members of the committee, questions? Senator McKissick. [SPEAKER CHANGE] A couple of quick questions here. First one, in terms of the repeal of the exemption on the motor fuels excise tax for taxis and city busses, you know those busses that are operated by cities. Does staff have some type of projections as to first how much revenue is anticipated from taxi cab operators throughout the state and then secondly what kind of revenue is anticipated from the ??? [SPEAKER CHANGE] Senator McKissick we do have that number and I think Ms. Cameron can answer that for you. [SPEAKER CHANGE] Thank you. Again, Amna Cameron fiscal research. First let me..

Clarify sir there is an exemption in the motor fuel tax for any type of city or county purpose. There’s an another exemption that says when the cities or counties hire a nonprofit to perform their transportation services that is exempt so this applies when a city or county hires a taxi or a private company to transport people. That’s why there is so little revenue effect. The total revenue effect for an annualized amount is $180,000. [SPEAKER CHANGE] Follow up sir? [SPEAKER CHANGE] Yeah quick follow up. So it’s only in those instances where a city or a county is contracting out of a private sector that this exemption would apply to and that’s where the $180,000 comes from is that correct? [SPEAKER CHANGE] Ms. ??? [SPEAKER CHANGE] Correct. [SPEAKER CHANGE] And then secondly this moves over to this issue with the Medicaid and in particularly this hold harmless provision that we’ve put in place. Is it possible to know right now how many of these counties are getting the $500,000 above and beyond I guess what they would otherwise receive simply for hold harmlessing their expenses related to that? [SPEAKER CHANGE] Ms. Duff do you have an answer for that please? [SPEAKER CHANGE] ??? fiscal research. Yes, once a ?? is fully implemented, forty-four counties were originally estimated to receive the hold harmless payment. After that, twenty-four counties will still be getting a hold harmless payment to bring them to zero so in sum twenty counties lose the guarantee between zero to five hundred thousand. [SPEAKER CHANGE] Follow up if I could. [SPEAKER CHANGE] Yes. [SPEAKER CHANGE] Could you provide us with a list of those twenty counties? [SPEAKER CHANGE] Yes we have that. [SPEAKER CHANGE] They mostly small rural counties or what are they? [SPEAKER CHANGE] It varies, I can provide you the list. [SPEAKER CHANGE] If you can provide it that’d be excellent, thank you. [SPEAKER CHANGE] Further questions or comments from the committee. Okay if not we’ll move on to the financing portion. [SPEAKER CHANGE] Mr. Chairman. Rodney Bissel, fiscal research, and I will be referencing the long spreadsheet in your packet that includes at the top has SB744 fee related provisions and this spreadsheet has the fee items by ???, category. It also includes the section number in the bill if you’d like the reference the bill. The first category is JPS fees, the first one is the hazardous materials facility fees. This creates a new fee for hazardous materials for persons that are required to submit a report on their inventory on hazardous materials under federal law to the division of emergency management. The fee will be $50 for hazardous materials and $90 for extremely hazardous materials. The next item is ABC permit fee increases. This would increase the renewal and registration fee for ABC beer and wine permits from $200 to $400 and for mixed beverage permits from $750 to $1000. The private hospital toxicology fee it would simply allow DA’s to request a fee when they have toxicology reports done at private hospitals. The fee is $600 and that’s the same amount that is collected when the test is done by a local or state crime lab. The community work crew fee would allow the department of public safety to charge a fee that’s sufficient to cover their cost when a work crew is used to assist local governments with work projects. The fee currently is capped at 150 so this would just allow. Under the transportation section the first item is DMV hearings fees. This one would allow DMV or direct DMV to develop a fee schedule to offset their cost for administering hearings and report those findings to the joint legislative transportation oversight committee by December first. The next one is DOT signage fees and this allows the board to increase fees for their logo, the logos for businesses that are included on signage as well as tourist or directional signs so that they can recapture the cost for those programs. Those are currently capped at $300 and $200. Under..

The MHS fees. The first one is private well water testing. This is an existing fee it would be increased from $55 to $74 to recover the costs of the testing and it would also add existing wells to be tested. The state retention of the hospital gap plan assessment. This would increase the percentage of assessments that the state retains from 25.9% to 28.85%. In the NER area, the first item is the forestry management plans. This would implement a new fee for forestry management plan produced by the forest service and those fees are tiered, based on the acreage of the plan. The natural poultry improvement plan fees would increase the fee for natural poultry improvement plan certifications. For initial certification the fee is $50 plus $0.10 per bird. Then, the subsequent years thats $10 plus $0.10 per bird. Finally, the last item is commercial fishing licenses. This is increasing the amount of fishing licenses for, we have a list of the categories here, and I won't go through those in detail unless someone would like that. But, we have the total amount of the fee increases here, the 26.8 Million that you see that's the general fund impact for FY 14, 15. Then the 1.3 Million would be impact on special funds. That completes the fee provision, Mr. Chair. [Speaker Change] Thank you. Thank you, Rodney. Questions and comments from the . . . Yeah, Senator Blue. [Speaker Change] Thank you, Mr. Chairman. Senator Brown, two questions. The first, and I raise it briefly this morning, the first has to do with the, under transportation, the DMV hearings fee. I looked at the provision, you don't mean that every DMV hearing would recover the full cost associated with that hearing. Which would include salary, wherever the meeting room where the meeting was held, the Attorney General's presence there. If you mean that, that's strange that you're going to imposed all that one someone who wants a drivers license reinstated and has to have an administrative hearing to do that. [Speaker Change] Senator Blue, I believe what ?? can answer that for you. [Speaker Change] Can you speak up, please? I don't know if your mics on, brother. You have to hold it, you have to hold it down. Thank you. [Speaker Change] Bryce Ball, again with Physical Research. Senator Blue, the provision in which you are referencing is section 34.9, DMV is directed to develop at fee schedule that is offset the cost of all the hearings it administers. That would be a separate distinction, which are conducted by the office of administrative hearing. But, you are correct, all of the hearing types would be incorporated into this fee schedule, however there is a specific reference to hearings that are initiated by the division and a waver of the fee in situations where the initial determination is not upheld, follow ups are. [Speaker Change] I look at the language and when it said, direct and indirect, I was worried that you were really trying to get that. So, in order for someone to get a license reinstated, a drivers license, at DMV they would end up paying thousands of dollars if you infact you mean for them to develop a schedule based on all of these costs. You'd have to factor all of those in it, so if you don't mean that I wish you'd change it so it . . . [Speaker Change] Maybe poor wording here? [Speaker Change] Yeah. I don't think that's the intent. [Speaker Change] Okay. The other question I had, had to do with health and human services provision on the state retention on the hospital gap plan assessment. I know that the hospitals, a couple of years ago worked out the deal so that they found this unfound money for the state and were willing to change some formula, so they were able to draw down more federal dollars. In exchange for that, share the found money with the state, and they signed off along with the leadership at a specific level. Are they in agreement that you can unilaterally raise that level on them? [Speaker Change] Senator Blue I'm going to let Senator Hise, if he would, address this. This is his expertise. If I could. [Speaker Change] As a.

Earlier this morning. I don’t think this is one the hospitals are asking for. ?? direction of the information. Assessments under the federal regulation are allowed to go up to a 6% assessment on each of them. I think this would bring the hospitals to about 3%. On the assessment we charge nursing homes and others an assessment of 6%, to get them to the federal maximum. Hospitals have reached the federal maximum and did that at about 1% initially, the almost 100 million added to the assessment last year got them to almost 3% level in coming forward. So the assessment on the hospital is less than the other hospitals and we spoke about the LEMCO, we’re proposing starting that one at 3 ½ as well, in coming through. So ?? over so. No, I don’t think the hospitals want the amount the state retains to be increased. I don’t think they would ever do that. But it’s the equivalent of saying otherwise we go in and we’re going to change rates and reduce provider rates for the same amount to stay within the same budget. So it’s kind of which way do you want it. And this one’s the easiest one because we don’t need federal approval. [SPEAKER CHANGES] Follow up to that. [SPEAKER CHANGES] We made a deal with them. They didn’t have to do it the way they did. We made a deal and it seems that we would feel somewhat obligated to the deal and just wouldn’t decide unilaterally that we’re going to break the deal. [SPEAKER CHANGES] Senator Hise. [SPEAKER CHANGES] I would just respond that the current assessment package that we have looks nothing like the original package that was agreed to already. [SPEAKER CHANGES] Other questions and comments from the Senate. Senator Tucker. [SPEAKER CHANGES] Thank you, Mr. Chair. It’s just a question, probably for Rodney. National poultry improvement plan fees. This sheet shows it generates about 25,000 dollars under this new fee schedule, is that correct, or am I seeing ten cents a bird? What does that mean to me, because we produce millions of turkeys in Union County. What does that mean? [SPEAKER CHANGES] Mr. Chair, ?? [SPEAKER CHANGES] Mr. Chair, somewhat familiar. [SPEAKER CHANGES] Yes, over here. Timothy Dale with fiscal research. This is a voluntary program. Essentially what this does is it helps this program if the producer wants to elect to be part of this national poultry plan certification process, it helps with certification and I guess the branding of your product as well, to show that you have a quality product. It’s completely voluntary and those fees are based upon the numbers that are currently electing to do that. [SPEAKER CHANGES] Just one follow up. So that means that they want to volunteer ten cents on ever bird and they produce several million birds, you would expect them to do that, with this fee? Is that what we’re saying? [SPEAKER CHANGES] Yes. [SPEAKER CHANGES] I’m sure that’s going to happen. [SPEAKER CHANGES] Any other questions or comments? [SPEAKER CHANGES] Senator McKissick. [SPEAKER CHANGES] And this might be for Senator Hise, perhaps. If you could help me with this provision here dealing with the LMEs LCOs 3 and a half percent. What are we currently getting from that income stream and how much would that change with this particular provision? I see it’s going toward the general fund and Medicaid but maybe you can help me a little bit to see what the difference is. I know you’re very knowledgeable about these details. [SPEAKER CHANGES] The ?? assessment, and this is back to the tax side versus fee. But the LMEO assessment assesses three and a half percent of all the services rendered at the ?? that they would pay to the state that would generate about 60 million dollars in the state. We then take that 35%, put it back in, get a 35/65 match, so the exact same amount of money goes back to the ?? that we took away from the ?? and the state maintains the amount that I think is 60 million dollars in the budget. I think it’s 59 million 900 thousand. So we take the funds out, when we put them back in, we get a two to one federal match. We keep the state portion so they’re held harmless. And since we fund them in a capitated contract, it’s quite literally an insane method the federal government allows to move money out and back in, and receive a match by doing so. If we tax several hundred dollars, we pull it out, we would keep 65 cents of that. We’d put the 35 back in to increase rates. [SPEAKER CHANGES] Thank you Senator Hise. Thank you. That’s a clever idea.

Members, it’s the end of that. We have one more part to go over and this time Mark Bondo will be covering financing. Are we right on that, Mark, please? [SPEAKER CHANGES] Yes, Mark Bondo, fiscal research. If you go to the Senate Bill 744, page 264, section 36.12, two-thirds bonds act of 2014. Two thirds bonds are a form of general obligation debt. That can be issued without a vote of the people. It’s based on a calculation of the outstanding general obligation bonds that are repaid in the last biennium. And the state has some capacity there. What this part of the bill does is two things. Essentially it refinances some authorized but unissued debt the state has which is non-voter-approved and thus at a lower bond rating. It refinances that 206 million dollars as general obligation debt, which gets a slight savings. The first year would be about 200,000 dollars in savings and it will go up in the out years. The second thing that this does is finance the construction of a western crime lab in Edneyville, North Carolina. This building was planned in 2012 and then again in 2013. And that’s 15.4 million dollars, so the total amount of debt authorized under this section is 221.4 million dollars. [SPEAKER CHANGES] Thank you, Mark. Members, questions? Then we have. You move to stop? I will entertain that motion in just a minute, Senator Apodaca. Did you get lunch today? Okay, I thought you were a little cranky, I didn’t know. We do have one amendment coming forward and that was Senator Harrington, if you would explain your amendment. Does everyone have a copy? [SPEAKER CHANGES] Thank you, Mr. Chair. Does everyone have a copy? This is just an amendment to make a correction to last session’s MPO Ethics Bill. The amendment just clarifies that the existing $250 fine applies to both the filing statement of economic interest in the additional real estate disclosures. It also clarifies that the ethics commission will report to the attorney general for investigation. Referral to the district attorney. And ethics is here if you have any questions. [SPEAKER CHANGES] Thank you, Senator Harrington. Senator Meredith moves to accept the amendment. Is there a second? Second. All in favor of the amendment please say aye. Opposed no. Amendment carries. Thank you, Senator Harrington. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] And now, without further discussion, we will take a motion. Thank you, I think we have it written out so we won’t mess it up Senator, thank you. Thank you. [SPEAKER CHANGES] Mr. Chairman. [SPEAKER CHANGES] Senator Curtis is recognized for a motion. [SPEAKER CHANGES] I move for an unfavorable report as to the original bill. Favorable as to the committee substitute as amended, with amendments to remain unengrossed and with ?? for staff to make technical corrections. [SPEAKER CHANGES] Senator Rabin, you couldn’t have said it any better, could you? [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] I understand that Senator Rabin did not hear a second from you. [SPEAKER CHANGES] We are standing at ease for a moment. The motion seems to be correct and in order. All those in favor of the motion please say aye. Opposed no. Motion carried. Thank you. Thank you pages and sergeant at arms, and staff. Meeting adjourned.