Legislative compromises close for some issues, elusive for others

CalendarAug2015-2RALEIGH – Budget negotiations appear to be going well in Raleigh, after both chambers agreed last week to a $21.74 billion top-line number for the 2015-2016 fiscal year, which began July 1. The state has been operating financially via two continuing resolutions, stop-gap spending measures that have funded the government. The question is whether negotiations can wrap up and the budget get through both houses and to Gov. Pat McCrory before the current CR expires at 11:59 p.m. on Aug. 31.

At this point, insiders say the General Assembly would be hard-pressed to meet the deadline. A third CR likely will be needed, perhaps a one-week CR to expire September 4, the Friday of Labor Day weekend. The goal would be to pass the budget Thursday, with an implicit threat to lawmakers that they might have to stay in Raleigh on Friday if the budget is not passed Sept. 3.

Of course, passing the budget does not mean ending the session. The scenario outlined above would necessitate a return of lawmakers – perhaps with a week-long recess on Labor Day week – to handle the other pressing items on their agenda. Most notably, issues that need to be handled before the General Assembly adjourns sine die are Medicaid reform and economic development items – including the governor’s bond packages.

Medicaid reform
Rep. Donny Lambeth (R-Forsyth)

Rep. Donny Lambeth (R-Forsyth)

On Medicaid reform, lead House negotiator Rep. Donny Lambeth (R-Forsyth) and Senate negotiators have both said they are close to a deal. Both chambers agree that reform is desperately necessary and want to move to a system in which providers would be reimbursed per patient rather than per procedure.

Management is where the chambers have differing opinions.The House creates a capitated, provider-led system while the Senate takes Medicaid out of the state Department of  Health and Human Services and puts an appointed board in charge.

“Management of the patient care will be the responsibility of the primary care provider,” Lambeth said of the House plan.

More than 1.8 million North Carolinians are on Medicaid. The federal government pays about two-thirds of the cost and the state pays the remaining one-third.

Economic development, sales taxes and bonds

The negotiations over an economic development bill is actually several different conversations:  There are the two infrastructure bonds, the Senate’s sales tax redistribution plan, and the funding for the economic incentive programs including the Job Development Investment Grant (JDIG) program and the Historic Tax Credit program.

McCrory spent the summer crossing the state to build support for the bond package, which he calls the Connect NC bonds. He has endorsed the House’s reworking of the proposal,  which keeps the $2.86 billion price tag the same but shifts more of the funding to infrastructure projects (such as construction and renovation projects at universities, community colleges and the N.C. Zoo) and away from highway projects.

Meanwhile the Senate has stuck firm to its sales tax redistribution plan, which would split all sales tax revenue 50/50 between counties with higher populations and the counties where the money was generated. Senate proponents say that the move is needed to help rural counties compete, but opponents — Republican and Democrat — have called the plan “Marxist” and say the current formula was a compromise rural counties agreed to when the state agreed to take over more of the counties’ share of healthcare spending.

By delaying a popular bond proposal that McCrory would like to champion going into an election year, the Senate may be holding out for leverage on a number of other issues. For as much as removing policy items from the budget has helped move the ball forward in Raleigh, it is still the same people negotiating even if the bills are separate.