On May 12, 2010 the short session of the NC General Assembly will convene. The session is restricted in its scope by the 2009 adjournment resolution, limiting action to legislation that “directly and primarily affect[s] the State budget,” amends the State Constitution, has “cross-over,” is a recommendation from an interim committee and a few other very specific (and rare) actions. These limitations in theory focus the short session on its primary goal of adjusting the second fiscal year of the State budget based on new revenue projections. While this is the primary goal, the short session is likely to see discussion of the following major issues as well:

Tax Modernization – The House and Senate Finance committees have met jointly during the interim to review the State’s tax code and to examine possible “modernization.” The individual income tax and sales tax have been targeted as options for reform, with the sales tax the more likely path, if any. During the interim, the Joint Finance Committee has expressed strong interest in expanding the sales tax base to include certain discrete services while modernizing the way it is applied and collected.

Ethics Reform – Due to the recent indictments and investigations of former public officials, the legislature is likely to revise the Ethics Act and certain campaign finance laws. On the ethics side, there is interest in a statutory requirement for members of state boards and commissions to report their campaign contributions and fundraising activities in order to better determine the relationship between political appointments and fundraising. On the campaign finance side, a disclosure requirement for people who raise money for campaigns (bundlers) and a restriction on the amount of contributions that candidates can give to each other or to political parties have been discussed.

ABC System – North Carolina controls liquor sales through its “ABC” store system. After some controversial stories about local ABC boards, the legislature has formed a study commission to review reforms and the possibility of privatization. Governor Perdue has taken the discussion one step further by hiring a consultant to determine the value the State’s wholesale and retail liquor operations. The Program Evaluation Division of the General Assembly has also released a report detailing the ABC Commission’s lack of oversight of local ABC Boards and its need for modernization.

Mental Health Reform – North Carolina’s recent efforts to move from a system of state hospitals to community care for mental health patients has been heavily criticized. In addition to reform delays and increasing costs, mental health services have been cut causing lawsuits against the State.

Tort Reform – The debate over repeal of contributory negligence in favor of some form of comparative fault rages on. A bill favored by the plaintiffs’ bar passed the House last session and is currently in the Senate. A proposed compromise version affecting several related areas of the law (including joint and several liability) has recently been circulated. This will likely be the major non-tax business and industry issue of the session. Last year the General Assembly increased the statute of repose from six years to twelve as part of this discussion.