The session was unusual in many ways. Bills were filed electronically rather than in-person, and the COVID-19 bills were heard and crafted in virtual committees via Webex, Zoom and conference calls. The House’s Rules were changed to make accommodations to comply with social distancing requirements, including allowing a longer period of time to vote and the use of proxies. The bills also passed using a unique procedure where the COVID-19 bills in the House were put into a Senate bill and that ultimately included all of the various changes in policy made in light of the pandemic. The Senate then used a House-passed bill to move the spending portion of the COVID-19 package.
The monies being appropriated were not state funds. They were federal funds coming to the state following Congress passing four, federal COVID-related laws. Many legislators didn’t initially realize only monies coming from the federal government were being appropriated. They also didn’t initially realize that Congress did not allow these monies to be used to make up for lost revenues. Thus, whether local governments’ lost sales taxes revenues or the NC Zoo’s or NC Arboretum’s lost gate receipts, those lost revenues could not be replaced by the federal funds coming to the state. One other unusual fact about the bills is that they are explicitly tied together. Either they both become law or neither of them become law. With Governor Cooper saying he’ll sign the bills, they will apparently both become law.
The reason for using a House bill in the Senate and a Senate bill in the House was to allow for quick passage; this proves that if something has to be done, there are ways to expeditiously do it. The House bill passed by the Senate, and the Senate bill passed by the House necessitated only one vote in each chamber.
In House Bill 1043 [2020 COVID-19 Recovery Act], $1.52 Billion of the federal monies were appropriated as reflected in this chart:
While the 25-page bill is complicated, the largest allocations go to K-12 Education, Higher Education, COVID-research at NC universities, hospitals, state and local government and for COVID-19 supplies and support. Social services, including support for food banks, community health centers, and free and charitable clinics, are also funded. Expanding rural broadband got a $9 million boost.
Senate Bill 704 [COVID-19 Recovery Act] is a 70-page bill which is even more complicated than H 1043 since it includes all of the policy changes enacted in an effort to address the pandemic. Broadly, the bill includes tax relief provisions, unemployment changes, a wide range of changes related to K-12 education and an equally wide range of changes related to health care. Finally, there are a large number of provisions to ensure the continuity of state government during the pandemic.
Surprisingly, both bills don’t include any add-on provisions—with one exception — that weren’t in the bills moving through each chamber. The exception was a provision added by Sen. Chuck Edwards (R-Henderson) that authorized the Buncombe County Tourism Development Authority to use existing occupancy tax proceeds to provide grants up to $50,000 to businesses that promote tourism and patronage of lodging facilities that have been closed or suffered significant economic loss due to the pandemic.
Going into the session, everyone expected that the State would waive the accrual of interest on underpayments on a range of taxes, including income taxes. That relief was provided. Similarly, more flexibility was clearly needed in determining one’s eligibility for unemployment compensation, and that flexibility was provided.
Teachers and school administrators received a host of waivers, since the school year has been cancelled. Among those were an extension of various licensure requirements for teachers and administrators. The bill also establishes the school opening date for the 2020-21 school year of August 17, 2020, a little over a week earlier than past years.
One of the few controversial provisions included in the bill relates to health care liability protection for emergency or disaster treatment. The fear is health care providers may be subject to a host of civil and criminal liability unless given some limited immunity. A similar time-limited civil liability immunity to essential businesses for injuries or death resulting from customers or employees contracting COVID-19 at the business was enacted
Signing legal documents and getting them notarized is difficult during a pandemic so these things can now be done via video conference technology. An old anti-KKK law outlawing masks in certain situations was modified to make clear that such masks are legal to ensure the physical health or safety of the wearer or others, with an exception that the wearer must remove a mask upon request of a law enforcement officer during a traffic stop or when an officer has reasonable suspicion or probable cause during a criminal investigation.
During the pandemic, many constituents couldn’t renew driver’s licenses or vehicle registrations. The bill extended the validity of all credentials issued by the Division of Motor Vehicles for five months for any credential expiring between March 1, 2020 and August 1, 2020.
Rather than trying to read the entire 70-page bill to know whether a provision important to you or your business is included, the better way to get an overview of what is in the bill is to read the bill summary. Anyone having questions about any regulatory reform provisions, should not hesitate to contact my office. Moreover, the legislature is going to be back in two weeks and these bills are likely just the first of many COVID-19 bills that will be considered. Please send me other ideas for needed regulatory changes or let me know what your funding priorities are.
As noted above, at the present time federal funds may not be used to make up for lost revenues. Thus, lost sales taxes revenues or lost gate receipts cannot not be recouped from the federal funds, although various congressional offices advise that may change.
Some might assume the State could easily make up local governments’ lost sale taxes or the Zoo’s or Arboretum’s lost gate receipts since the state has been running budget surpluses in recent years. The problem with that assumption is that the time for filing and paying a whole range of taxes was moved. The state didn’t get the usual tax revenues in and around April 15th. It is likely we’re actually running a budget deficit in this fiscal year because those revenues will not come to the state until the next fiscal year. Moreover, the tax revenues for the next fiscal year are clearly going to be adversely impacted by the economic slowdown caused by the pandemic.
In other words, the state isn’t in a position to make up the revenue shortfalls for other governmental entities or nonprofits. While North Carolina is likely in a better position than many other states, it isn’t able to print money or run a budget deficit like the federal government to allow local governments and others to recoup their lost revenues.
One final observation. This week will probably be remembered as a time when bipartisan squabbling was put aside. The House committees that drafted the bills had Republican and Democratic chairs, and they largely worked by consensus. The bills passed unanimously and quickly. While there were differences of opinion, lawmakers were willing to compromise.
The only obvious partisan trend related to the wearing of masks. Republicans often didn’t wear them, and Democrats generally did. Of course, there were plenty of exceptions to that generalization, but I had to laugh when I heard a staffer quip that he never expected wearing or not wearing a mask would become a partisan fashion statement.
As for me, my constituents are probably not surprised to learn that I was sort of in the middle. I wore a mask during the two times I was on the floor to vote, and I voted a third time by proxy which didn’t require me to go to the floor. On the other hand, while crafting the final bills — much of which was done by the full Appropriations Chairs, which are all Republicans — it was rare to see a mask even though we were in tight quarters. I tried to stick to the end of tables, allowing me increased space, but it was usually only staff that consistently showed up with masks for meetings.
As already noted, the committee processes were all electronic. More importantly, no one other than legislators and staff were allowed in the legislative buildings, and legislators and staff had their temperatures taken prior to being allowed access to the buildings each morning.
It was strange not having the usual crush of lobbyists and constituents in the buildings or being stopped by reporters for a legislator’s perspective. Of course, the ReOpenNC group held a rally outside the legislative chambers , creating some difficulty in getting around — that made it feel just like normal.
The legislature will hold skelton sessions this week and next week before returning during the week of May 18th. That will likely kickoff a somewhat more normal Short Session. The House intends at this point to develop a budget, but serious budget work will have to wait until we get a consensus forecast of the state’s revenues for FY20-21.