Raleigh, N.C. — Gov. Pat McCrory started his second year in office last Monday by giving a speech to a group of bankers and business leaders, displaying the affable, self-deprecating personality that made him a good campaigner.
"In my introduction, they just said I was sworn in yesterday, a year ago, as the 74th governor of North Carolina," McCrory said, setting up the punch line with a smile. "What they didn't say was, a year ago today, I was sworn at as the 74th governor."
It has been that kind of year for the former Charlotte mayor. After a primary campaign in which he was the presumptive nominee and a general election that rarely tested his ability to handle a crisis, the realities of serving as governor have surrounded the Republican with all the challenges he could ask for.
To his political right, the General Assembly plowed ahead with legislation that tied his hands on key policies, such as unemployment insurance and Medicaid expansion, leaving him to merely sign off those policies rather than lead on the issues. Later in the year, lawmakers would easily brush off his objections to two bills and override a pair of vetoes.
From his left flank, McCrory has been pilloried by Democrats and those in the "Moral Monday" movement who see him shedding his skin as a business-oriented moderate and embracing a hard-right agenda that included going back on a pledge not to approve any new laws restricting abortion. Liberals paint him as the cheerleader for a legislature that has curbed spending on progressive priorities, such as public education, and pushed through a tax reform package that favored the wealthy.
Squarely in front of him is the mammoth task of managing a $20 billion state government. Particularly troublesome has been the Department of Health and Human Services, which has erupted with a geyser of negative news throughout the year, tarnishing McCrory's image as a problem solver and derailing his repeatedly stated desire to rework the state's Medicaid health insurance system for the poor and disabled.
To be sure, McCrory can point to some policy successes from his first year in office. The legislature approved a new formula for distributing transportation funding, and he said his administration will roll out a promised 25-year plan for building and repairing North Carolina's highways and byways. Also, the state has just named a new chief executive for a private nonprofit that will handle much of the job recruiting and marketing responsibilities once handled by the state Department of Commerce. This public-private partnership was an early priority for McCrory and one that will take shape in 2014.
With one high-profile exception, McCrory has been able to keep or work toward promises made on the campaign trail. But headlines about troubled computers systems, rising Medicaid costs, highly paid staffers and other problems at DHHS have swallowed up coverage of those policy successes.
In fact, as he left his speech to the bankers ready to talk about his agenda for the coming year, McCrory faced questions about what was at that point the latest gush of bad news from DHHS – the agency mailed nearly 50,000 cards containing personal information to the wrong Medicaid recipients. Much as he has throughout the year, McCrory fielded questions about the agency by expressing confidence in Health and Human Service Secretary Aldona Wos and saying he is dealing with problems he inherited.
Administrative problems disrupt agenda
"There's been 10 years of operational neglect, not only in that department but others. You can't fix something in just one year," McCrory said when asked why he still backed Wos, a wealthy campaign donor and fundraiser who is working for $1 a year.
The problem, political observers say, is that McCrory sold himself to voters as an able manager who could fix what's broken.
"We have a mandate to fix our broken government and to fix our economy," McCrory said in late 2012 just after he was elected.
"He's got to fix something," said Carter Wrenn, a veteran Republican strategist, when asked about DHHS. "That department has an ongoing series of problems. You don't have to wave a magic wand and turn it into the most efficient agency overnight, but you've got to fix something."
Two massive software systems – the NCTracks Medicaid billing system and the NC FAST system for providing public assistance benefits to clients – have been at the heart of many of the negative stories surrounding DHHS. Both are massive systems that were designed and purchased by prior administrations. McCrory frequently points out that he "inherited" those systems from his Democratic predecessors. But, as some Republican lawmakers have pointed out, it was McCrory and the GOP legislature that gave the green light for those systems to go.
Most recently, documents disclosed by the state and federal government show DHHS has downplayed some of the issues with NC FAST, putting federal funding at risk.
"They can't continue to play the previous administration blame game," said Michael Bitzer, a Catawba College political scientist and longtime McCrory watcher. "They now own the problems. If the pattern continues to emerge and all you see is DHHS problems, that pattern can begin to gain ground in voters' minds."
McCrory has three years before he has to win over voters again. His more immediate task is to wrangle support from a General Assembly that, while controlled by fellow Republicans, does not always see eye-to-eye with the chief executive.
For example, in April 2013, McCrory pitched a plan to remake the state's Medicaid system. Under the plan, the state would have hired a group of private managed care companies to manage health care payments for the poor and disabled. Although a wonky, bureaucratic proposal to some, it would have been a huge shift away from the state's existing system involving hundreds of millions of dollars. It met with skepticism from lawmakers who not only rejected the change but limited how far McCrory could go in pursuing future reforms.
"This is going to have a tremendous impact on what money is available for anything else in North Carolina," McCrory told last week's economic forum.
Throughout 2013, McCrory frequently blamed spiraling Medicaid costs for soaking up money that would otherwise have gone to education. The state, he said, needed to make a big change to the Medicaid system in 2014.
Medicaid reform is one of the big priorities McCrory has named for the coming year, but outside observers say pushing a comprehensive bill through the short session of the legislature – which convenes in May and ends during the summer months to allow lawmakers to go home to campaign – is a dicey proposition in the best of years. But the problems that have plagued DHHS and Medicaid during McCrory's first year in office could make them even more reluctant to approve any plan by the governor.
"If somebody is seeking to make wholesale reform, you've got to demonstrate you've got the capability to run it in the first place," Bitzer said.
Energy, education, jobs are also priorities
Information technology problems and taming Medicaid were much on McCrory's mind as he took office a year ago, and much of his 2014 agenda will sound familiar to anyone who listened to him give speeches around his inauguration.
"We've been on the sidelines for over 10 years in energy exploration," McCrory said, vowing to push the state toward exploring for natural gas and oil offshore as well as pursue natural gas drilling on land. "We have to bring in new revenue and participate in our county's energy independence."
Lawmakers have already created a commission charged with developing rules that will govern onshore drilling, particularly a group of technologies typically referred to as hydraulic fracturing, or "fracking." The governor himself has traveled to high-profile panels to promote offshore exploration, but current federal law limits what, if any, proceeds the state would see from offshore drilling, and state lawmakers have not been willing to lift the state's current moratorium on fracking.
"He must think it sounds good," said Grady McCallie, policy director for the North Carolina Conservation Network. "It's hard to see the reality of that."
Offshore drilling, he said, is years away from becoming a reality. McCallie recently co-authored a letter to the Mining and Energy Commission that says North Carolina doesn't have enough onshore natural gas to make the costs and environmental impacts of drilling worthwhile. Even if the state does lift its moratorium, he said, it would likely be McCrory's second term before North Carolina reaped any revenue.
McCrory has been consistent on the energy issue, promising during the campaign that he would clear the way for fracking in the state.
By and large, McCrory has stuck to pledges he made in 2012. But he did sign a bill that by most measures will make it harder for women to get an abortion in North Carolina, something he said he would not do during the last debate of the 2012 campaign.
"During the campaign, he had the air of a preppy, moderate mayor from Charlotte. Not at all extreme," said Mac McCorkle, a former Democratic consultant who worked for McCrory's two predecessors and now teaches at Duke University. "I don't think there's any way you could say the body of work so far adds up to that."
While partisans argue over the effects of a massive tax reform measure or his efforts to streamline the state's regulatory environment, signing the abortion bill, McCorkle said, was symbolically potent.
"He so clearly went against what he promised the people," McCorkle said.
McCrory, he said, will need to rebuild rapport with those voters. The best way to do that, he said, is to have some policy and management successes.
Along with changes in Commerce and Transportation policy, McCrory has also said he will pursue raises for teachers and state employees during the coming year.
McCorkle said leading the charge for teacher raises could help McCrory regain some ground in the polls and regain traction with moderates.
"With teachers losing tenure, with them losing their teaching assistants, with them losing (extra pay) for the master's degree, the larger atmosphere says he's part of going after teachers," McCorkle said.
McCrory declined to give specifics regarding plans to raise teacher pay and other second-year priorities, saying he was still working on goals for the coming year.
"We want to continue the momentum we started this year," he said. "We've got to continue to move forward and look for positive results."