Jobs, education on legislative radar, but specifics are scarce

Posted January 24, 2015 7:00 a.m. EST
Updated March 9, 2015 3:17 p.m. EDT

The state House opens its 2015 legislative session on Jan. 14, 2015.

— If you boil down everything senior lawmakers have said about the upcoming legislative session over the past two weeks, the result would be three words: jobs, education, Medicaid.

But anyone trying to divine the specific proposals the General Assembly will push through this year would be hard-pressed to find someone really in the know willing to make a hard-and-fast commitment to a particular bill or proposal.

"We'll be getting together as soon as we get back," said Senate Majority Leader Harry Brown, adding that Senate Republicans are still working on their legislative agenda.

The House, too, is still developing its list of legislative priorities.

"Speaker (Tim) Moore and I both agree that any big bills we drive out will all be vetted by the (House Republican) caucus," House Majority Leader Mike Hager said Thursday.

Hager, R-Rutherford, said Republican leaders were still in the process of making committee appointments and handling other pre-session administrative tasks. The House GOP, he said, may use the first two days of the legislative session to begin developing a consensus agenda.

Republicans hold 33 of 50 state Senate seats and, counting one unaffiliated member, control 75 of the House's 120 seats, which means the GOP caucuses within the two chambers will have a firm hand on which policies are vetted this session and which never come up for debate. This marks the third consecutive two-year session that Republicans have controlled both chambers.

Even with this broad latitude, Republican leaders are more tentative than they were in the 2011 and 2013 sessions, when bills dealing with tax reform, unemployment benefits, workers compensation and other topics were cued up and ready to debate nearly as soon as the session began.

House Republicans are transitioning to a new leadership team now that former Speaker Thom Tillis is a U.S. Senator. Moore, R-Cleveland, a former Rules Committee chairman who is in his seventh term, has signaled that his approach to running the chamber may sacrifice some efficiency in order to let rank-and-file members have more of a say over the direction of legislation.

Even in the Senate, President Pro Tem Phil Berger will want to take the temperature of his caucus before committing to a specific policy direction.

As well, Republican lawmakers have passed through a number of sweeping measures during their first four years of control. The 2013 tax reform bill, for example, is still taking hold, and budget writers are watching to see whether the state's projected income will rebound from what is now a roughly $200 million shortfall compared with projections.

"There is a sense amongst a number of folks that we've made some big changes. We are seeing some results. We are seeing some things that we like. We've got some things (that) we need to let a little more time go before we know how we're doing," Berger, R-Rockingham, said during a news conference on Jan. 14, the day lawmakers were sworn in. "I'm sure there will be bills introduced. As to what will be taken up and what will be passed, we're going to be here for a while."

With the national and state economies recovering after a recession that hit in earnest two years before they came to power, Republicans may be feeling less constituent pressure to act quickly.

"American attitudes about the economy are improving," said Joe Stewart, president of the North Carolina FreeEnterprise Foundation, a close observer of the legislature for his business-friendly group.

With less of a crisis atmosphere, Stewart said, there's less reason to move quickly on big economic policy items.

Lawmakers will begin filing bills on Wednesday, a process that will continue throughout the spring. But only a handful are likely to be heard, debated and passed this year. Many will see the most attention the day they are first posted online before being consigned to the legislative dustbin.

As well, legislators say they are looking for some direction from the state's chief executive.

McCrory proposals still under wraps

Even as Gov. Pat McCrory helped cut the ribbon on the North Carolina Economic Development Partnership's Cary headquarters on Thursday, he was talking about the need for lawmakers to beef up job recruitment tools in the state.

"The next step as governor that I need to make is work with our legislature to ensure that we have a detailed strategy that this team and myself can present to new businesses who are considering North Carolina," McCrory said.

But, as with the legislature, McCrory is not rolling out specific proposals yet. Asked if he could describe what would be in this new economic development policy, McCrory said, "No," pausing for a chuckle.

"With all due respect, we're developing that. We're working with legislative leaders as we speak," he said.

Earlier this year, McCrory did say he wanted lawmakers to beef up the state's Job Development Investment Grant incentives program for new and expanding businesses. Last year, he talked frequently about creating a new closing fund to help bring in large manufacturing companies, such as an automaker.

However, incentives are a fraught question for Republican lawmakers, many of whom campaigned on promises to curb government grants to private businesses. The 2014 legislative year ended with rancor over a number of bills, including a sweeping incentives measure that stalled in the House.

"I'll have some folks in caucus who are totally against it," Hager said of efforts to expand incentives.

While McCrory works on his broader incentives overhaul, city and town leaders will be pushing lawmakers to restore tax credits used to fund the rehabilitation of historic buildings. Those credits expired at the end of 2014 despite pleas from municipal officials, who said the credits helped spur economic development in aging center cities.

"I would like to defer until I see specifically what they are proposing," Berger said when asked if lawmakers would respond, noting that it ran counter to recent efforts to do away with exceptions in the tax code.

During his Thursday news conference, McCrory said his plans for economic development also included funding for "long-term infrastructure needs." Throughout the fall, the governor has talked about the need to improve the state's roads, bridges and ports, and he has said he will push a plan that includes a $1 billion bond to jump-start repairs on roads and bridges, as well as maintain and better connect the state's ports to rail and highway.

"That's in the governor's wheelhouse," said Rep. John Torbett, R-Gaston, who has been deeply involved in transportation issues.

Lawmakers, he said, wanted to see what McCrory had in mind before putting forward their own proposal. That said, a transportation bond is an idea that legislators have been discussing since the end of the summer legislative session.

If lawmakers do sign on to a bond, Torbett said, it would likely show up on the ballot. McCrory had suggested at one point his bond package might not have to go to voters.

"Of course, we'll do the math and make sure that works," Torbett said. "Our biggest concern is that it would go to a vote of the people."

If lawmakers do take up a bond, they will have some big decisions to make about how to use the money.

"The discussion so far has been where do you get the money, not so much what projects you do and their scope," Stewart said.

During their news conference earlier this month, both Berger and Moore said they were looking to the governor to put out proposals on a number of issues, saying that anything he put forward would be taken seriously. That said, when asked if they would look at a measure to expand eligibility under the state's Medicaid program for the poor and disabled, as McCrory has broadly hinted he might ask for, both men said that idea was a non-starter.

Still, Medicaid is likely to figure prominently in the coming session.

Debates left over from 2014

North Carolina's Medicaid program spends around $14 billion per year, roughly $4 billion of that coming from state taxpayers and the rest in federal funding. However, the program's costs have a history of unpredictable swings that have frustrated state budget writers and sent lawmakers on a series of reform efforts.

Under the current system, Medicaid is directly overseen by the Department of Health and Human Services, and health care providers are paid on a fee-for-service basis. Two broad reform measures debated during the interim could change both of those features.

The first would change the fee-for-service arrangement to something akin to managed care, although the shape of that managed care has been much debated and led to a legislative stalemate last session. McCrory and House leaders have favored an approach that would create homegrown accountable care organizations but take longer to put in place, while senators have pressed for a model that could end up relying more on established managed care companies and would move faster.

A second Medicaid measure, debated as recently as this week, would turn the management of Medicaid over to an independent board. The board would be responsible for controlling costs and making adjustments to the Medicaid program, taking over roles traditionally played in some combination by DHHS and the General Assembly.

Sen. Ralph Hise, R-Mitchell, said this would give legislators greater certainty when budgeting.

"This would mean for the first time that, if we allocate $4 billion for the Medicaid program in state funds, it is our expectation for them to spend $4 billion," Hise said.

But that proposal drew immediate skepticism from House members, who said it would undermine the legislature's authority, and McCrory's current Medicaid chief, who said it would "derail" other efforts to change how Medicaid does business.

Medicaid debates occupy such a prominent place in the legislative agenda because the program makes up a fifth of the state's roughly $20 billion general fund budget. The program has become a scapegoat for budget hawks who say they have been stymied in their attempts to address other big-ticket items.

Between the looming replay of the Medicaid debate and state revenue coming in slower than projected, it makes sense that lawmakers are slow to say how they might address a host of pressing budget needs, including a court system that is straining for dollars to pay court reporters and operating on antiquated case-tracking technology for District Court and Superior Court cases.

However, virtually all say they will follow through on plans to raise starting state-funded teacher salaries to $35,000 per year and say that helping veteran teachers, many of whom were slighted in last year's pay raise plan, will be a priority.

As with teacher salaries and Medicaid, many of the other issues likely to be on this year's agenda will have something of a back-to-the-future quality about them. For example, Hager said that the legislature could look at changes to legislation passed in the wake of a Feb. 2, 2014, coal ash spill on the Dan River. The hottest coal ash issue will likely be whether lawmakers decide to set limits on how much of a rate increase Duke Energy can ask to pay for the cleanup of coal ash pits across the state or leave that to the discretion of the North Carolina Utilities Commission.

Pressed as to what else might be a high-priority bill this session, Republicans frequently name "regulatory reform," a generic label applied to anything pitched as curbing government fees or oversight of businesses and individuals. However, they did not call out particular topics. Meanwhile, during their pre-session news conference, the only somewhat specific proposal that Democratic leaders put forward were a pair of ethics measures, the broadest of which would increase financial disclosure by elected officials.

Special interests, surprises always on agenda

While lawmakers are somewhat circumspect about their agendas, special-interest groups that regularly lobby the legislature are not. Over the past month, groups representing teachers, cities, businesses and others regulated by state law have been putting out their legislative agendas:

  • The North Carolina Association of Educators, the state's largest teachers group, plans to push for more textbooks, higher salaries and lower class sizes, among other things
  • The North Carolina League of Municipalities' list of legislative goals includes finding revenue to replace the local franchise tax on businesses, which will expire this summer. Big cities such as Raleigh stand to lose millions of dollars and have no way to replace it.
  • The National Association of Social Workers' North Carolina chapter says it will work on medical reimbursement rates for services provided by social workers.
  • The state chapter of Americans for Prosperity says getting rid of requirements that power companies buy or produce renewable energy is one of its legislative goals.

As much as special-interest groups aim to pass legislation helpful to their members, they are equally interested in blocking laws they see as problematic. For example, Brown says he favors a tax change that would change how sales tax revenues are distributed.

Currently, counties where somebody makes a purchase benefit form the bulk of sales tax collections. Brown, R-Onslow, says this favors large, urban counties with big shopping centers over smaller, rural counties, which lack the tax base to pay for teacher salary supplements and other needs. The result, he said, is that bigger counties have been able to use those taxes in programs that attract more private investment, spurring more sales tax growth.

"What it has created over time is the wealthier counties are getting wealthier and the poorer counties are getting poorer," Brown said.

He would like to see the state redistribute some sales taxes collected in urban counties such as Wake County to lower-wealth counties such as Jones County, which is part of his Senate district.

If that proposal gains traction – likely in a General Assembly where Berger, Brown, Hager, Moore and other top leaders all represent lower-wealth, rural counties – it will see opposition from bigger counties as well as the North Carolina Association of County Commissioners.

"We can't support anything that's going to cause our members, even if it is a minority of counties, to lose money," said Todd McGee, a spokesman for the group.

Of course, the thing that ends up dominating the legislative session may not come up for weeks. This time last year, very few lawmakers would have been able to tell you much about coal ash.

"It's going to be a typical session," Brown said. "Once you get in, you never know what comes up."