New Senate Budget Strategy: truce, sort of.

In a conversation with Sen. Apodaca early Wednesday, we learned he had a plan to kick-start the stalled budget negotiations and start to wrap this session up. Sure enough, later that morning the Senate took the first step at ending the budget standoff using the time-tested strategy of…. removing obstacles. At Wednesday’s press conference the Senate announced the following departures from their own budget proposal in order to bring the House to the table:

• Removal of many controversial policy provisions that can be passed in stand-alone legislation.
• Take out Medicaid Reform and handle in a separate bill.
• Take out the proposed sales tax redistribution and run separately.

Remember that lawmaking is part policy, part politics and part personality. Hats off to Senate Leadership; they’re on to something here.

Medicaid Progress

The current continuing budget resolution expires on August 14th.  Sen. Berger, leader of the Senate, believes they can pass a state budget in time. But Senior House Appropriations Chair Dollar is less confident, saying there is “plenty more work to do.”  (Rep. Dollar is the main drafter of the House Medicaid Reform plan – one of the big obstacles to passing a budget. The new Senate Medicaid Reform Plan makes several compromises, and passed the Senate Health Care Committee the day after the Senate announced its new strategy.

The House-passed Medicaid Reform plan bill was gutted and the new Senate language was substituted. Now, HB 372 – Medicaid Transformation/HIE/Primary Care/Funds– does several things that the House bill didn’t do, including changing the operational structure for the Medicaid program and allowing private commercial insurance companies to participate alongside provider-led entities.  The plan would create a new independent agency, the Department of Medicaid, which would oversee the transition to full-risk capitated plans and become the single state agency responsible for Medicaid.  The new department would be a cabinet-level agency with a secretary appointed by the governor but requiring confirmation by the legislature. 

The plan also calls for three state-wide contracts that would likely go to commercial insurers, and up to twelve regional contracts for provider-led entities.  The inclusion of private commercial insurers in the plan is a sticking point between the two chambers. We think that issue will be decided by but, yet again, it seems that neither side is willing to budge on that issue.

The Senate Appropriations Committee will vote on the bill Monday afternoon, then it will be considered by the full Senate on Monday night.  We expect the House to not concur with the Senate changes, and a conference committee will be appointed to work out the differences.

Economic Development

The Senate’s economic development plan is the new language in HB 117 – NC Competes Act. The bill passed Senate Finance yesterday and has been referred to Appropriations. The proposal includes the phase-in of a single sales factor, the creation of an additional sales tax exemption for datacenter equipment and electricity, and an extension of sales tax breaks for commercial airlines that buy jet fuel in the state -- all things that the House agrees with! But right before everyone started holding hands and singing Kumbaya, the Senate gummed up the moment by adding a provision that provides for the redistribution of the sales tax, which House members and the Governor oppose. (As in “I’ll veto that.”)

Senate Majority Leader Harry Brown, who represents a rural district, has been touting his plan for the redistribution of the sales tax but it hasn’t gained much traction in the House or among legislators representing populous and destination counties.  Under current law, there is a 2% local sales tax that is divided among the counties.  For every sales tax dollar currently raised, 75 cents stays in the county where a purchase is made, and 25 cents is distributed to counties across the state based on their population.  The current plan was enacted in 2007 as part of the “hold harmless” provisions included in the state’s Medicaid Swap.  However,  Sen. Brown argues that this formula puts smaller, more rural counties at a disadvantage because so much money is spent in large counties with big shopping areas. Originally he proposed a formula that would distribute 80 cents of a sales tax dollar to counties based on population and 20 cents based on sale location. But after the Governor threatened to veto any bill containing his plan, Brown compromised to a 50-50 split for sales tax distribution, with 50 cents being distributed based on population and 50 cents based on sale location.  A breakdown by legislative staff showed that 80 counties would gain money under the plan, while 20 counties would lose money.  Senator Jeff Tarte from Mecklenburg County wasn’t comfortable with the plan, even with the 50-50 split, pointing out that large counties would have little time to adjust to newly created holes in their budgets.

Loser counties: Avery, Brunswick, Buncombe, Cabarrus, Carteret, Catawba, Currituck, Dare, Durham, Forsyth, Guilford, Iredell, Jackson, Macon, Mecklenburg, Moore, New Hanover, Surrey, Wake, Watauga.

Representative Bill Brawley, a House Finance Chair from Mecklenburg County, said that he will fight the change to the distribution formula. And that veto threat is out there.  The bill will be considered by the Senate Appropriations Committee and then by the full Senate on Monday night.

Silver Anniversary

This is Laura’s shout out to Rep. Mickey Michaux. This week marks the 50^th anniversary of Voting Rights Act.  For those of us born in the late 1960’s the Civil Rights movement was important recent history in our southern state, but we learned it in school. It wasn’t until I occasionally joined Rep. Mickey Michaux for breakfast at the Legislative Building that the history came to life. Michaux and his family lived the struggle that we study in school and are entertained by at the movies; he marched at Selma. He has fought and won, and fought and lost. He was discriminated against in obvious and subtle ways that defied my imagination, and made him who he is today.  That’s why he became a lawyer, a US Attorney, and a legislator – in fact, the longest serving legislator currently in office.  At 85 he’s not ready to quit. Most of us will never walk a mile in his shoes. Whatever your position on the Voting Rights Act and whether it’s still relevant today, or the current pending litigation, you have to admire this man even if you don’t agree with him. The folks we lobby who don’t agree with him, respect him.  You can read more about The Voting Rights Act and NC’s pending litigation in the NYT Sunday Magazine.

Constitutional Amendments: TABOR

The Senate is considering three new Constitutional Amendments. The Taxpayer Bill of Rights, commonly called TABOR, would limit the growth of the state budget to the growth of the economy plus population growth. It also provides a new maximum state income tax rate of 5% -- halving the current maximum rate of 10%. And it establishes a Rainy Day Fund that can only be accessed by a 2/3 vote of the House and Senate thereby skirting the Governor’s Budget Emergency powers.  SB 607is calendared for full Senate consideration Monday night. The ballot questions would be put to the people on the March 15^th Presidential Primary ballot – which will be separate from our other primary elections held next May.

Remember that in order to place a Constitutional Amendment on the ballot each chamber of the General Assembly must approve the bill containing the amendment language by a 3/5 vote of all members. Then the ballot must receive a majority of votes cast in the election.

ABLE Act

This week HB 556 – Achieving a Better Life Experience Act was ratified. The Governor will sign the bill with much fanfare at the Mansion next Tuesday. This new law conforms with federal law enacted last year allowing families to set up tax protected savings accounts – much like 529 College Savings Accounts – for supporting individuals with disabilities.

Cabinet Change-up

Nick Tennysen, longtime deputy at NC DOT, was named Secretary after the abrupt departure of Tony Tata. And Rick Brajer, former biotech executive, will replace the departing Aldona Wos as Secretary of Health and Human Services later this month.

On Jones Street we’re really all just one big family some of the time

DeleteBloodCancer.org held a donor registration event in the Legislative Building this week in support of Kevin LaCount, a well-liked lobbyist for the State Employees’ Association – not Dana Cope who is under indictment – was diagnosed with acute myeloid leukemia in June. This cancer is treated with a stem cell transplant using donor cells. Kevin’s diagnosis comes after Superior Court Judge Carl Fox was diagnosed with myelodysplastic syndrome – both need bone marrow matches for transplants.  We watched as lobbyists, staff, legislators, elected officials, and folks off the street swapped their cheeks to join the registry – Angel did it. If you are matched you will be asked to donate either through a bone marrow donation or through apheresis (which I’ve done). Sometimes something beautiful that transcends politics is happening on Jones Street.

To learn more about joining the bone marrow donor registry click here.