Hello Friends! It’s April, which means we are back in Raleigh for the legislative short session. We will be here probably through June, and we have several critically important things to do in this short period of time.
I’m happy to report that we did two of them yesterday:
1. We fully funded the current fiscal year’s Medicaid program by appropriating an additional $319 million. We failed to do this last fall due to a spat between the legislature and Gov. Stein over how much funding was required. Turns out, the Governor was right, so we have now given the program what it needs so that the state can continue to pay doctors who treat Medicaid patients.
2. We adopted a new funding mechanism to maintain Medicaid expansion and continue insurance coverage for the 690,000 people covered under the state’s Medicaid expansion program. This needed to happen because of the need to cover the administrative costs of tracking new work requirements imposed in last year’s federal HR1 and the self-imposed limitation to our Medicaid expansion program that no state dollars can be used to pay the state’s 10% match. Currently, the state’s match is funded by hospitals, but HR1 put limitations on that structure, putting our Medicaid expansion program at risk. The state, working closely with the NC Healthcare Association, worked out a new funding mechanism that should ensure Medicaid expansion remains intact.
This bill also includes some really problematic provisions, such as creating more administrative work for state DHHS employees and reporting undocumented individuals who apply for benefits to federal officials, rather than just denying the applications as they do now.
The third big thing we have to do this year is pass a comprehensive state budget – something we have not done since 2023. While we have passed several mini-budgets that address certain state expenses, we are the only state in the country that did not adopt a comprehensive budget last year. The failure to adopt a budget came down to differences between the House and Senate leadership over scheduled tax cuts and funding for a children’s hospital, and it is unclear the degree to which these differences will continue to derail budget talks. Gov. Stein proposed his budget on Tuesday, but it will likely have little influence on a final budget.
The fourth priority is another Helene relief bill. Gov. Stein proposed his Helene bill, which appropriates almost $800 million that has already been set aside for other things. I think his priority list is just about right.
The final big issue we have to tackle is how to fund the additional administrative costs of implementing SNAP (food stamps), also imposed by HR1. The last estimate I heard was that these additional costs run over $400 million annually. If we don’t find that money, 1.4 million people – including 600,000 children – will lose food stamps. That would be a devastating outcome for our state.
Trickle-down Deficits
I will note the dynamic we are seeing here:
- The federal government creating a number of costly, unfunded mandates that states must fulfill.
- Our state is struggling to find that funding because we are on track for a budget deficit starting in a couple of years due to the planned tax cuts. Those tax cuts also mean that the state has less money to make available to local governments for all sorts of things.
- Local governments across the state are struggling with increased costs of continuing basic services
- Now, the state is talking about limiting property taxes, which are the primary source of income for local governments.
It is unclear to me how federal and state leaders think local governments can keep basic services going without sufficient funding. I know lots of people like the idea of limiting property taxes because property values are increasing and property taxes are likely to as well, but I encourage you to think carefully before jumping on the bandwagon to limit property taxes. Limiting property taxes means local schools will get less money; teachers will get smaller pay supplements; firefighters, police officers, sheriff’s deputies, and other government workers will get smaller raises, if any; government services like trash pickup, parks maintenance, and recreation leagues, may be reduced.
At the very least, if the legislature is going to limit property taxes, then they need to give local governments more options to generate revenue, such as special sales taxes and a food and beverage tax. Asheville could generate millions of dollars with those additional sources of revenue.
North Carolina is the third fastest growing state. To me, that means we are in a time of abundance that could enable us to do important things like repair our schools, expand healthcare services, improve public safety, fund child care and expand early childhood education, and generally get out of the bottom of the barrel in things like teacher pay, per pupil spending, state trooper pay, correctional officer pay, and others. But none of that can happen if the current scarcity mindset continues.
My Priorities
My priorities in this short session are a couple of local bills for Woodfin and Weaverville, as well as statewide policy to expand housing and improve healthcare. More about those in a future newsletter.
Feel free to reach out to Irma or me if you need our help, and come see us while we’re here! I visited with several groups from WNC this week (see below), and would love to see you to. I will also refer you to my legislative website for information that might be helpful.
All the best,
Julie
