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Senate budget raises fees on alcohol, hospitals, fishing licenses

Posted May 29, 2014 2:48 p.m. EDT
Updated May 29, 2014 5:25 p.m. EDT

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— While the bulk of the state Senate's $21 billion budget proposal lays out how money will be spent, a handful of provisions raise fees and refinance debt. 

The most costly of those provisions deal with fees charged to hospitals and local mental health agencies that treat Medicaid patients. Hospitals across the state would hand back $15.1 million more this year than last year – for a total of roughly $110 million – under the bill.

As explained by Sen. Ralph Hise, R-Mitchell, this was an easier provision to enact than potential cuts in how much Medicaid providers are reimbursed for certain services. 

"It's kind of which way do you want it? This way, we don't need federal approval," Hise said. 

However, hospitals object to the change. 

Years ago, say health executives, hospital agreed to pay these kinds of assessments because the fees contributed were used to match federal Medicaid dollars. Those federal dollars were worth more to the hospitals than the money they were putting into the system because the combined dollars helped make up for continued cuts in reimbursement.

Last year’s assessment increase meant the state kept more of the total dollars, explained Julie Henry, a spokeswoman for the N.C. Hospital Association. That means, the hospitals are giving more back to the state but not getting any benefit. The extra $15 million raised by this provision, she said, could go to any item in the budget, not just paying for hospital care.

"That's where we take issue with it," Henry said. "It's not the investment that the assessment was intended to be." 

Other changes bring fees up to date

The second-biggest revenue generator in the package raises the fees on permits to sell alcoholic beverages. For example, those with permits to sell beer and wine in their restaurants would see their annual fees double, from $200 to $400. The fees for hotels that have "guest room cabinets" to provide mini-bottles would rise from $750 to $1,000 per minibar.

The total amount of the new Alcoholic Beverage Control fees charged is expected to raise $9.6 million per year. 

"A lot of these haven't been touched in quite a while," said Sen. Harry Brown, R-Onslow, the Senate budget chairman.

Most of the fees raised by the budget, he said, were to keep pace with inflation. The following are among the other fees:

  • creates a  new fee for companies that handle hazardous materials.
  • allows district attorneys to request convicted driving while impaired defendants to pay toxicology fees when blood work was conducted by a private hospital. 
  • raises fees for six different commercial fishing license fees, including raising license fees from $250 to $400. 
  • allows the Division of Motor Vehicles to develop a new fee schedule to offset the costs of license hearings before the agency. 
  • increases the maximum highway use tax fee on commercial vehicles from $1,000 to $3,000. This fee increase would apply only to heavier trucks. 

The budget bill also includes the issuance of two-thirds bonds, a financing mechanism that commits the full faith and credit of the state without getting a new vote of the people. A two-thirds bond is so-named because how much the state can borrow is based on a calculation of two-thirds of a prior bond that has already been repaid.

In this case, the state Senate would borrow $221.4 million. Of that, $15.4 million would finance the construction of a crime lab in the western part of the state. The remainder would refinance debt that had originally been issued as certificates of participation, a way of borrowing that has a higher interest rate than general obligation bonds.

The Senate Finance Committee has approved these provisions. The budget bill was scheduled for an initial floor vote on Friday. A final Senate vote would come just after midnight Saturday morning. The measure would then go to the House, where members will write their own version of the budget.