Press Releases and Newsletters
Annexation (The Insider)
Legislation to undo local annexations already approved by town boards and city councils might face a tough time in the Senate. Senate leader Phil Berger said Tuesday that he sees a sharp difference between such bills and a moratorium on future annexation, which appears to enjoy broad support among Senate Republicans. “It’s going to be difficult, it seems to me, for something like that (repealing local annexations) to move all the way through the legislature,” said Berger, R-Rockingham. The House Government Committee has already approved two bills to repeal local annexation ordinances adopted in Lexington and Kinston. The bills were then referred to the House Finance Committee. Another bill to repeal an annexation in Rocky Mount has also been filed. (THE INSIDER, 2/16/11).
Feb. 15th Daily Update
The Governor delivered her State of the State last night which included glimpses of her budget to be delivered in detail later this week. Highlights included a commitment to continued funding of all teachers and teaching assistants, reducing the corporate income tax, and free community college tuition for good grades. You can read the full speech and the Republican response (including a commitment to pass a moratorium on forced annexations) on line. The General Assembly is scheduled to hear the details of the Governor’s budget on Thursday in Appropriations at 1 pm. You can listen to the presentation through the General Assembly’s audio link. The Governor also released a new tool today called the Balance the Budget Tool where you can see some of the options she considered.
One of the revenue generating options in the Governor’s new on line budget tool is to regulate video lottery terminals which the tool says will bring in $700 million. In anticipation of such a discussion in the General Assembly the House Republicans held a closed door meeting with the video gaming interests and those opposed to measure which generated lots of stories.
Both the Joint Transportation Appropriations (House and Senate membership) and the Joint Transportation Policy Committees (House and Senate membership) met today to hear presentations by NCDOT. At Transportation Appropriations the members heard from Terry Gibson, State Highway Administrator, on DOT Maintenance, Construction, and Secondary Roads. Follow up questions focused immediately on the Powell Bill formula with members noting that 7 cities receive Powell Bill funds, yet don’t have any road miles to maintain. The Committee asked for a copy of the 2010 North Carolina State Street-Aid Allocations to Municipalities as well as two reports on the SPOT Safety Program. Expect more dialogue on both in the near future. When asked about NCDOT’s position on transferring roads to counties Gibson noted that the NCDOT has better facilities and yards than counties and the ability to reposition assets after a major storm without having to negotiate ninety-nine different local agreements. He also noted the purchasing power of the department when buying salts, stone, sand, etc.
In the Transportation Policy Committee this afternoon the members heard a presentation on the NCDOT website from Mark Tyler which was given last week to the Transportation Appropriations committee.
Last week NC GO issued a letter encouraging the General Assembly to preserve existing funding sources, explore new funding sources, encourage the use of more tolling and public private partnerships, support transit, and start to consider new ways to supporting our transportation infrastructure.
SB27 Involuntary Annexation Moratorium passed out of the Senate State and Local Government Committee and could be on the Senate floor as early as tomorrow.
Rumor is that redistricting data will be released to the State this week and that the Republican leadership has set a goal of sending the final maps to the U.S. Justice Department by mid April. In anticipation of the data release the N.C. House just announced the membership of the redistricting committee which includes the leadership of David Lewis, Senior Chair; Dockham and Dollar, chairs; Burr, McComas, Samuelson, and West, as vice-chairs.
The City of Raleigh wanted to make you aware of the opportunity to test drive the new Nissan LEAF. Check out the details here.
Feb. 14th Update
First up this week is the Governor delivering her State of the State address to the General Assembly at 7 pm. You can watch it live via the web at www.wral.com. The Governor is expected to provide some insight into the State budget proposal she plans to deliver shortly to the General Assembly. President Pro Temp Berger will deliver the Republican response and then Speaker Tillis will join him for a Q & A with reporters.
This week could also see the first veto of the Session on SB13 – Balanced Budget Act of 2011. The bill was passed largely on party lines and is headed to the Governor’s office for her signature or veto stamp. The General Assembly can override the veto with the support of 3/5ths of present and voting members.
Committee work is expected to be the focus for much of the week with bills being heard on charter schools, the UNC Board of Governors elections, and continued presentations in Appropriations subcommittees from agencies.
As I have mentioned before, capping the gas tax is an issue that is getting some attention. Remember that capping the gas tax at the current rate (32.5¢ per gallon) will eliminate at least $1 billion from the DOT 10-year work plan. This includes an approximate loss of $800 million from maintenance, $200 million from construction, and $30 million from municipal Powell bill and secondary road funds. The impact will be immediate, roughly $150 million per year, and be felt across all 100 counties. See the potential impact on your county here (letter size) (legal size) and talking points here.
Horns of a Fiscal Dilemma
RALEIGH – With North Carolina facing a $2.7 billion projected gap in its General Fund for the coming fiscal year, it’s not surprising to learn that there are all sorts of possible ways – championed by all sorts of interested parties – that the state legislature might reduce the gap.
But just because a maneuver would help bring the General Fund into technical balance does not mean that it is a sound fiscal policy likely to advance the interests of North Carolina taxpayers. In particular, proposals that merely substitute one tax dollar for another, without reducing total expenditures, are not sufficiently responsive to the grave fiscal situation we face.
As daunting as the state budget challenge is, the federal budget challenge is bigger. In all but five fiscal years since 1967, presidents and members of Congress of both parties have approved federal budgets with large operating deficits. In some years the deficits were fairly small, within 1 to 3 percent of the gross domestic product. In many years, however, the deficits have been large – in the 3 percent to 5 percent range. Over the past two years, the deficits have been ruinous – nearly 10 percent of GDP.
Simply put, that is fiscal insanity. America isn’t fighting World War II. There is no justification for such irresponsibility, particularly as America is about to enter several decades of rapidly increasing price tags for Social Security, Medicare, Medicaid, and other entitlements.
There is not a single North Carolinian paying taxes into the state who is not also a resident or taxpayer in a county. Nor is there a single North Carolinian who is not also an American paying taxes into the federal treasury. So initiatives that merely shift funding responsibility from the state’s General Fund to localities, or from the General Fund to Washington, don’t save taxpayers anything.
As state policymakers close the state budget gap, they should do nothing to worsen their country’s larger fiscal problems. In particular, they should avoid the temptation to try to shift Medicaid costs onto the “federal government,” as some North Carolina hospitals are proposing.
Under their plan, the state would levy a new fee to artificially jack up the price of hospitalizations by $216 million. The state would keep $43 million of the money for its General Fund and return the rest to the hospitals. They, in turn, would use their higher billings to draw down $350 million more in Medicaid reimbursements from Washington.
North Carolina is not an outside recipient of federal largesse. Virtually all money that North Carolina “receives” from the Feds was first collected in North Carolina. Unfortunately, the shipping and handling charges are substantial. Furthermore, because Washington can borrow money for operating expenses and North Carolina can’t, shifting state programs to federal funding is a circumvention of the state constitution’s prohibition of deficit financing.
To put it another way, the problem with North Carolina’s Medicaid program is not that Washington pays too little of the bill. In reality, “Washington” pays none of the bill. North Carolina’s Medicaid program is paid for by current North Carolina tax payments plus borrowed money that will be repaid by future North Carolina tax payments. Whether these funding responsibilities are categorized as “state” or “federal” is in this context, beside the point.
The real problem with North Carolina’s Medicaid program, as with the Medicaid programs of nearly every other state, is that it covers too many people and services. It isn’t just a safety net program aimed at the truly destitute who would otherwise have no access to emergency care or long-term care. It covers large swaths of the population, including families with incomes well above the poverty line and seniors with middle-class incomes, assets, and family members who are gaming the system to force others to finance their nursing home bills.
You can’t fix North Carolina’s real Medicaid problem through accounting gimmicks – by dancing around and waving a cape in an attempt to hide what is really going on. You have to take the bull by the horns.
By John Hood
February 11, 2011
Time for a Road Trip
RALEIGH — North Carolina legislators need to take a road trip, going east on Interstate 40 for about 30 miles, and then heading south on Interstate 95 for another 35 miles or so to Fayetteville.
After tooling around for a while, they can jump back on the road, heading north for 200 miles along I-95 to Richmond.
Taking in these two cities, North Carolina’s elected representatives can get a good gander of what places look like when they aren’t allowed to grow, when political leaders prohibit annexation.
Right now, the new Republican majority in the legislature seems intent on not only stopping future involuntary annexation, but on undoing some controversial annexations already approved by local town boards.
The state Senate has begun considering legislation to put a one-year, statewide moratorium on involuntary annexations. Bills have also been filed to repeal recent annexations in Lexington, Kinston and Rocky Mount. More bills affecting more towns and cities are expected.
Legislators are responding to angry constituents who don’t want to be taken into city limits and don’t want to pay city taxes. Many are transplants from states with far less aggressive annexation rules.
Their belief that North Carolina’s annexation laws are overbearing and unfair shouldn’t be unexpected. They also make the case that cities and towns have sometimes applied the laws unwisely or improperly, giving back residents little in return for their taxes or throwing too much costs on residents — for things like sewer and water hook-ups — too fast.
Still, there’s Fayetteville and Richmond — case studies in what cities that cannot grow can and will become.
For 24 years, from 1959 until 1983, Fayetteville was legislatively prohibited from taking in the surrounding urban areas. The result is uneven sprawl and ugly commercial development, created first by disparate development standards and then by a race to the bottom between the city and county regarding those standards.
The city where I live, outside of its revitalized downtown, remains one of the ugliest in North Carolina. That ugliness damages residents’ quality of life and hurts the recruiting of major industry. Thirty years ago and today, Fort Bragg is the city’s economic savior.
Up the highway, in Richmond, legislators effectively blocked annexation in 1981. A “temporary” annexation moratorium went into effect in 1987. Virginia legislators extended it multiple times since then, allowing the prohibition to remain in effect for the last 24 years.
Ever since then, Raleigh and Charlotte have been racing past Richmond..
That’s not my opinion. In 2010, Forbes magazine ranked Raleigh third and Charlotte 17th when it comes to best places for business and careers in the United States. Richmond ranked 50th, its job growth 104th, its projected job growth 129th
Republicans have come to power in Raleigh saying that they are all about promoting job growth. They’ve also come to power on a populist wave demanding more responsive government.
They might want to recognize that how they respond to the second can affect the first.
By Scott Mooneyham
February 10, 2011
Shrinking Shortfall ( M2M POLITICS)
The projected state budget gap has been revised downward for the second time in less than a week. Gov. Beverly Perdue, during her State of the State address Monday, said it was now at $2.4 billion. Just a week ago, state officials said they were looking at filling a $3.7 billion gap for the upcoming fiscal year. And on Wednesday, Perdue said that she was “over-the-top happy” to announce that gap had closed to $2.7 billion. Mark Johnson, a spokesman for Perdue, said there were two factors involved in lowering the budget gap figure. First, the stock market is performing better, meaning the General Assembly won’t be required to appropriate as much money to the state employee pension plan. In addition, the governor will propose a change in the way funds are allocated to schools. The latter could result in a cost shift to county governments. Enrollment growth money will now only pay for classroom instruction, Johnson said. Student services and funds for libraries were previously included in the calculation for average daily membership costs, Johnson said.(Barry Smith, M2M POLITICS, 2/14/11).
State of the State (THE ASSOCIATED PRESS)
Democratic Gov. Beverly Perdue told the Republican-controlled General Assembly on Monday that the state’s budget problems will not stop her from fighting to protect teacher jobs, seeking to recruit more companies and reworking state government. “Hear me now: I will not back down from those priorities,” Perdue said in her second State of the State address. “I will not play partisan politics, and I will reach across the aisle day after day to find compromise.” It was her first such address since the GOP rode to its first complete majority in the General Assembly in more than a century. Perdue gave some snippets of the two-year state government spending proposal she’s expected to roll out later this week. She said she would “fund every current state-supported teacher and teaching assistant position.” She also wants to revive a 2008 gubernatorial campaign pledge to offer high school students with good grades a free two-year college degree. But she gave few details about what she intends to cut to close a projected budget gap that has fallen from $3.7 billion to $2.4 billion in less than a week partly due to an improved revenue picture and new cost savings found by her budget office.
Perdue talked up a previously announced government reorganization that could reduce the number of state agencies from 14 to eight. She also said she’d offer an early retirement package that could eliminate 1,000 positions. The new Republican leaders were pleased when she said she wants to lower the corporate tax rate from 6.9 percent to 4.9 percent, which would be the lowest marginal rate in the Southeast. “Right now, we have the highest corporate tax rate in the Southeast. That means our businesses are paying more taxes when they could be creating jobs,” Perdue said while also announcing she wants to offer more robust incentives for small business and “green” industries.
But GOP lawmakers wanted more budget details from her and wondered aloud how she could pay for this and the other programs without extending a pair of temporary taxes approved in 2009 by Democrats to close that year’s gap. The GOP is committed to letting the higher sales and income taxes expire, said Senate leader Phil Berger, R-Rockingham, who delivered the official Republican response to Perdue’s speech. Perdue didn’t discuss those taxes, which would generate another $1.3 billion if left in place. “I’m concerned about some of the promises that were made,” Berger said. “I think that’s one of the ways we’ve gotten into the mess that we’re in now, by promising to do things and not having the money to pay for them.” Republicans said unemployment still hovers nears 10 percent in North Carolina, and Berger blamed “inefficient, irresponsible” policies by Perdue and Democrats and high tax rates for part of the economic problems.
While nearly everyone knows somebody who is unemployed, Perdue said the state is doing better than it was two years ago. She said businesses have pledged to create 58,000 jobs and are investing $12.5 billion in the state. “Two years ago we stood at the precipice of economic disaster,” Perdue told the legislators in the speech, televised statewide. “We squared up and put the bat to our shoulder, and swung hard. And two years later, North Carolina is winning this game.” Senate Minority Leader Martin Nesbitt, D-Buncombe, said he was pleased to hear Perdue’s ideas and believes the improving economy could mean more opportunities than previously projected. “I think her priorities are in order,” he said.(Gary D. Robertson, THE ASSOCIATED PRESS, 2/14/11).
Chapel Hill works with UNC to determine impact of budget cuts (The Daily Tar Heel)
Kleinschmidt, Thorp work to inform others
As the reality of upcoming budget cuts sets in, town officials are considering how the University’s economic troubles will affect Chapel Hill.
Mayor Mark Kleinschmidt and Chancellor Holden Thorp have been working together to gauge the impact the budget crisis could have on the town’s workforce and economic development.
Additionally, Kleinschmidt has approached other mayors of towns that host UNC-system schools to help them prepare for the cuts and the effects they will have.
“What I’m trying to do is provide information and increase the awareness among mayors who host UNC schools on how budget cuts will affect their communities,” Kleinschmidt said. “The idea is that they will share these concerns with their local legislators.
“Hopefully, it will have an impact. Hopefully, they will minimize the cuts.”
North Carolina is facing an estimated budget deficit of about $3.7 billion for the 2011-12 fiscal year, and the UNC system is being asked to consider reducing spending by up to 15 percent.
While the University has absorbed budget cuts during the past two years, most of these cuts were administrative and didn’t have much of an impact on the town, Kleinschmidt said.
“Now they’re going to go deeper. It’s likely going to involve real people this time,” he said.
“We’re looking at potentially thousands of jobs.”
Kleinschmidt said Chapel Hill’s main employer is the University, which has been credited with keeping the area’s historically low unemployment rate far below the national average during the recession.
And of the University’s more than 12,000 employees, about 4,300 live in Chapel Hill.
“When they make cuts, it’s affecting people who live here,” Kleinschmidt said.
Thorp said he and Kleinschmidt have met multiple times, most recently Monday, to discuss the different effects the budget cuts could have.
Thorp said the University helps to support the town through sharing the costs for public events, paying property taxes and, most importantly, through participating in the Chapel Hill Transit system.
“But the biggest impact for the town will be if the University has to continue to shrink — if there are fewer people paying rent or fewer people investing in town businesses,” he said.
“If there are any layoffs, then obviously the town will be affected if employees have to move to find employment elsewhere.”
Kleinschmidt said he has been talking to mayors of towns who host other UNC system schools to discuss ways to prevent potentially damaging cuts.
He said he has set up a conference call with host-town mayors next week and will also discuss the issue at the North Carolina Metropolitan Mayors Coalition winter meeting on Feb. 24 and Feb. 25.
Greenville Mayor Pat Dunn said her city has already started preparing for the repercussions of possible cuts at East Carolina University.
Dunn said the University is one of the area’s largest employers in addition to the health care industry.
“At this point we don’t know exactly what the impact is going to be,” she said. “But we are conscious of the economy in 2011, and we are adopting a conservative budget to be able to meet the needs of the citizens of our city.”
Kleinschmidt said the effect of the budget cuts on the Chapel Hill economy are hard to predict, but changes could be seen if fewer people are spending or living in town.
He also said he does not know how the potential layoffs could affect the town. But as the main supplier of the local workforce, layoffs from the University could drastically affect employment in Chapel Hill.
“It’s not that we get ‘X’ amount of dollars from the University,” Kleinschmidt said. “It has indirect impacts.”
By Chelsey Dulaney | The Daily Tar Heel
Feb 14, 2011
GOP Response: State of the state’s economy is grim ( News & Observer)
During the Republican response to the governor’s State of the State address, Senate President Pro Tempore Phil Berger said the new GOP majorities at the legislature will make cut taxes and make government smaller.
“The state of our economy is grim,” Berger said. “And North Carolina faces serious challenges. These demand our undivided attention – and Senate and House Republicans already have taken steps to get our state back on track.
“But instead of maintaining the status quo, and continuing the failed policies that got us in this mess, we’re working to usher in a new era of government responsibility and accountability.
“For far too long, decision-making in these halls has been driven by the belief that government has all the answers.
“Over the past decade, Democratic officials insisted government incentives and programs create jobs better than the private sector. They said government knows what’s best for our kids, government should provide your health care, and government can fix almost any problem.
“And though the policies championed by the governor and Democratic lawmakers may sound appealing, they have proven ineffective, irresponsible, and costly. The result – North Carolina has the highest taxes in the southeast, nearly 10 percent unemployment, and a record-high, multi-billion dollar deficit.
“Republicans have a better plan. While Democrats think government is the answer, we think it’s largely the problem.
“We heard the voters last November. Government must get out of the way if the private sector is to prosper. And government simply can’t continue spending beyond its means and expect a different result.
“Instead, House and Senate Republicans are passing legislation that empowers citizens to make their own decisions about health care, create their own wealth, control their own education, and pave their own way to a brighter future.
“To help foster an environment favorable to job-creation, we have taken steps to scrutinize outdated rules and regulations that unelected bureaucrats impose on our businesses. Those businesses need and deserve the freedom to innovate, and profit.
“To attract the best and brightest doctors and give citizens the ability to access quality health care, we have started crafting common-sense medical malpractice reform.
“To help you protect your property rights, we will pass a moratorium on forced annexations.
“To give parents more of a choice in their children’s public education, we will pass a bill to eliminate an arbitrary cap on public charter schools.
“Governor Perdue promised the tax hikes passed two years ago would be temporary. We will keep her promise, because the best economic stimulus we can provide is letting people and businesses keep more of their own money. Reducing these taxes will help us compete with surrounding states for much-needed new jobs.
“Finally, we have begun tackling next year’s budget gap by targeting hundreds of millions of dollars in savings — now. And we have given the governor the power she requested to make additional cuts that will carry over into next year. These savings help ease the pain ahead, while protecting the jobs of school teachers and state employees.
“We are making all of these efforts, because we understand what government should do – provide the basics, like roads, schools, and public safety. And we understand what government should not do – tread on your personal freedoms.
“Government should help foster a business climate that helps the private sector create jobs. But government cannot create jobs in the private sector.
“And though government should applaud innovation and prosperity, it can’t force it. “Our plan right-sizes state government – it reduces its size and scope.
“To this end, we welcome the ideas of the governor, our colleagues across the aisle, and citizens. We want constructive suggestions on how to make government more responsible, and less intrusive. Leadership means providing real solutions, not just sitting back and saying ‘no.’
“Together, we can make government smaller, smarter and more efficient. We can pass policies consistent with the limited-government views held our country’s founders, and still held by you.
“We must restore North Carolina to its rightful place as the South’s leader in job creation, education, and quality of life.
“Thank you. God bless. Good night.”
Justice Reinvestment (THE ASSOCIATED PRESS)
Republican legislative leaders say they support an effort started under Democratic leadership that seeks to reduce the number of repeat criminal offenders in North Carolina, and in turn inmate beds. The “Justice Reinvestment” project started nearly a year ago and was billed as a bipartisan effort by Democrats who held the majority at the time. Outside experts are evaluating state crime, prison and probation statistics and will suggest options later this month to improve public safety and avoid costly prison construction.
Proposing swifter, short-term penalties for probation violators and supervising more felons once released from prison are among ideas that could be presented to a working group comprised of all three government branches. The Legislature would have to approve changes. House Majority Leader Paul Stam, R-Wake, said he’s willing to reduce some nonviolent drug offenses from felonies to misdemeanors- a move that could be perceived by some as lessening punishment for criminals. “We’re not going to coddle criminals. We’re going to put them in prison for the appropriate amount of time,” said Stam. But “if a criminal is willing to not be violent, we don’t need to punish them as much as someone who is violent.”
Justice Reinvestment, a project of the Council of State Governments with help from the Pew Center on the States, wouldn’t embark on the effort last year unless it had buy-in from both sides of the political aisle. “With both parties involved, it takes away the desire to use that ‘soft-on-crime’ stick,” said Rep. Alice Bordsen, D-Alamance, who helped get the project started last year. The effort nears a critical stage soon after a new annual report by the state Sentencing and Policy Advisory Commission projects the rate of increase in the projected prison population is actually slowing.
The commission attributed it to many factors, including demographic and sentencing changes and a decrease in the number of overall convictions. The commission said last year the state would have to look for an added 8,500 beds by 2019 to house 50,829 prisoners. Now the commission says less than 2,300 extra beds are needed in the same year because projections have fallen to 44,208 prisoners.
In September, the Department of Correction began evaluating probationers more closely and calculating individual risk levels. More intense supervision is shifting to those with the highest risk levels, department spokesman Keith Acree said. Stam and others contend many probationers return to prison because they’re not experiencing immediately the consequences of failing to meet the requirements of probation until after they make several mistakes. Instead, Stam likes a proposal that would ship probationers to a county jail for a day or a week if they miss a curfew or drug test – giving them a shock that hopefully would keep them out of long-term trouble. Georgia and Hawaii have met with success with such sanctions, said Marshall Clement, the director for Justice Reinvestment, which has been carried out in more than a dozen states over the past several years.
North Carolina’s report also found offenders sentenced to prison for lower-level felonies aren’t supervised once they’re released, resulting in higher re-arrest rates. Requiring post-release supervision for these crimes could lower those rates, Stam said.
While Stam supports creating a new class of misdemeanors nonviolent drug offenses, it’s unclear if Clement’s group will propose it as an option for state officials to consider. Law enforcement is taking a wait-and-see approach about proposals before they see data, such as whether the jails sheriffs operate would become more or less crowded. “If we can better use our resources in a manner that doesn’t jeopardize public safety, that would be good public policy,” said Eddie Caldwell, executive vice president of the North Carolina Sheriffs Association.(Gary D. Robertson, THE ASSOCIATED PRESS, 2/13/11
