Leadership in both the House and Senate continue to push for an early adjournment. Rumors started to swirl this week that both chambers would work to finish up most of their legislative agenda this week with the hope of turning their attention next week to constitutional amendments that would be added to the November ballot.
The budget will become law on July 1. The House took the official step to override the Governor’s objection on Tuesday. The Senate took the same step last week, mostly along party lines. The 2018-2019 budget contains one of NCHBA’s top session priorities — a crucial provision which will allow for RMI repair contractors who pay sales tax on materials for an RMI project to pay the sales tax at the retail level and receive credit on the tax dollars submitted to the Department of Revenue.
Our top legislative priority, HB 948 (Building Code Regulatory Reform) was sent to the Governor on Thursday. The Senate approved the legislative priority on Wednesday by a vote of 47-0, with the House concurring with the Senate changes by a margin of 104-0 on Thursday. As highlighted in previous updates, the bill contains provisions that will expedite the inspection process for builders across the state. The latest version of building code regulatory reform was made possible by the leadership of the bill sponsors Representatives Mark Brody (R-Union), Dennis Riddell (R-Alamance), Carla Cunningham (D-Mecklenburg), Larry Potts (R-Davidson).
As expected, Governor Cooper formally vetoed the conference report on the state budget on Wednesday, which set the stage for a veto override vote in the Senate on Thursday. After a brief debate the Senate voted along party lines to override the Governor’s objection. The House is expected to follow suit early next week.
The Governor and legislative leaders were simply unable to bridge the large philosophical divide on spending priorities. The budget conference report contains a finance provision that will now allow for RMI repair contractors who pay sales tax on materials for an RMI project to pay the sales tax at the retail level and obtain credit for the sales tax collected from the homeowner on the entire project which must be remitted to the Department of Revenue. This provision was something our members had asked for over the past year and its insertion into the conference report was one of NCHBA’s top priorities for the session.
“More than two decades have passed since NCHBA led an historic effort to enact major reforms of the state rulemaking process,” said Mike Carpenter, NCHBA’s Executive Vice President and General Counsel. “On Friday, the NC Supreme Court upheld a key component of those reforms from attack.”
Legislators took Monday off in observance of Memorial Day but were back at work on Tuesday and they hit the ground running in a week that included a rare Friday session. The Senate concluded the final of the two required votes on the conference report on adjustments to the state budget on Thursday and subsequently the House concluded their second vote on the report this morning.
This conference report included several changes which your legislative team worked with the legislative leadership on both sides to include:
Final fix to the sales tax on labor regarding repair, maintenance and repair (RMI) projects which will allow contractors who pay sales tax on materials for an RMI project to pay the sales tax at the retail level and receive credit on the sales tax remitted to the Department of Revenue. Those who perform RMI projects will continue to charge customers sales tax on the entire project (i.e., materials, labor and profit) but will deduct the sales tax paid on materials from the sales tax paid to the state. Builders and subcontractors across the state had ask NCHBA staff to seek this important change. These changes were included in SB 715 (Various Change to Revenue Laws) which was incorporated into this conference report
At the request of several legislative leaders, NCHBA helped create a new penalty structure for employers who fail to obtain required workers’ compensation coverage by establishing an alternative penalty for first-time offenders.
An annual NCHBA priority, the Housing Trust Fund, administered by the NC Housing Finance Agency was continued at the same level as was authorized in last year’s budget.
One of NCHBA’s top legislative priorities for this session cleared several hurdles this week in record time. HB 948 (Building Code Regulatory Reform) arose from the work of the House Select Committee on Implementation of Building Code Regulatory Reform and which NCHBA played a key role in creating. This bill, principally sponsored by Representatives Mark Brody (R-Union), Dennis Riddell (R-Alamance), Carla Cunningham (D-Mecklenburg), and Larry Potts (R-Davidson) passed the House on Friday with a resounding vote of 98-1. However, that was not before stops in two important House committees. The House Regulatory Reform Committee was the first to address the bill on Wednesday. Rep. Brody educated the committee on the merits of the legislation. Several speakers including Mike Carpenter spoke in favor of the bill and addressed concerns raised by others. The committee unanimously approved the bill and it was then referred the House Finance Committee which heard and approved the bill on Thursday. After that vote, the Speaker of the House directed that the bill be place on today’s calendar.
Legislators returned to Raleigh this week for the start of the short session and wasted little time getting down to business. The primary business of the short session is to make adjustments in the two-year State budget adopted last year. Appropriations committee chairs from both the House and Senate have been meeting for several weeks prior to the session and the timetable for this year’s budget adjustments is ahead of schedule. The biggest news this week came from the leadership’s announcement that the overall spending target has been reached. This $23.92 billion-dollar target exceeds last year’s budget by $886 million. Once both chambers agree and enact a spending plan, the bill will be sent to the Governor.
Leaders in both chambers have indicated that they expect this short session to wrap-up no later than the July 4th holiday. NCHBA’s legislative team will seek to pass an aggressive agenda in that short time frame including HB 507 (Land Use Regulatory Changes), further reform of the building code process, clarifying changes to the capacity fee law which passed last year, and the final “fix” to the sales tax on labor for repairs, maintenance and installation.