With unemployment growing, the economy slowing and North Carolina’s tax revenues plummeting, legislators have made some key decisions that will shape how they are likely to deal with the state’s mounting budget challenges.

While the state’s revenues for the 2020-21 fiscal year won’t be in until the July 15 tax filing deadline, budget analysts expect revenues to be short $1.6 billion for FY19-20 and another $2.5 billion for FY20-21. Together, that is about an eight percent hit to the state’s $24 billion annual budget.

Complicating the budget picture is a long list of unknowns, including:

• Just how big are the deficits North Carolina is facing? So far lawmakers are using estimates. Actual revenues won’t be known until July 15 – two weeks after the new state fiscal year is supposed to begin on July 1.
• Can federal COVID-19 relief money be used to fill the state’s budget hole? North Carolina has $2 billion in federal COVID-19 relief money in reserve; state lawmakers are hoping Congress will give them permission to use those funds to address the state’s budget shortfall. But if and when that might happen is anyone’s guess. Complicating matters: under current federal law, all of the state’s federal COVID-19 funding must be spent by December 31, 2020.
• Will Congress provide more help to states? The US House of Representatives recently approved a COVID-19 relief bill that would provide billions to help states balance their budgets, but support in the US Senate is lukewarm.

Look for Governor Cooper to wait until midsummer to spell out his budget plans.

For their part, GOP leaders at the legislature have opted not to produce a FY 2020-21 budget at all; they will leave the current budget (approved all the way back in 2017) in place. Instead, lawmakers in both chambers have agreed to approve 18 separate bills with a variety of appropriations for a discreet list of projects and programs. Their priorities include capital projects at various state universities and funds to address enrollment growth at public schools. The money for these bills comes from a number of sources, including unspent federal COVID-19 relief funds and monies from other sources that are expected to be unspent when the state’s fiscal year ends on June 30.

After completing these bills in the next few weeks, legislative leaders plan to go home. That would appear to leave balancing the budget to Governor Cooper – unless Congress gives the state a windfall of federal cash to balance the state budget. If that happens, it is unlikely that the state’s budget writers will allow Governor Cooper to decide how such a large amount of money is spent, and they would likely reconvene to appropriate those dollars. If help from Congress does not arrive, lawmakers also have the option of staying at home and leaving the politically difficult task of balancing the budget to Governor Cooper, just a few months before his reelection.

The lack of a budget development process at the legislature is a mixed bag for the environment. For starters, it leaves organizations like MountainTrue with no way to engage lawmakers about much-needed investments to protect our natural resources. On the other hand, it avoids – or at least postpones – the steep cuts that the legislature would likely propose for regulatory agencies that protect our air and water if they attempted to draw up a new budget.

As the legislative session continues, MountainTrue will continue to track the budget process and look for opportunities to fund some of the WNC projects we have promoted in the past – while also opposing any effort to cut state agencies that protect our water and air from polluters. We appreciate your continued support for this work and invite you to follow our policy work in Raleigh on all of our social media outlets. Thanks!

When the North Carolina General Assembly convenes its 2020 session tomorrow, it will do so in a state – and a world – that was unimaginable when lawmakers finished their work for 2019 just a few short months ago. 

Back then, legislators were looking forward to a 2020 session fueled by a robust budget surplus, made unusually large as a result of last year’s budget stalemate that left hundreds of millions of unallocated dollars in the state’s General Fund. 

That, of course, was all before the impact of COVID-19 on millions of North Carolinians and thousands of North Carolina businesses. Now, legislators can expect a reduction in state tax revenue of $1 billion or more and debates about how to respond to the pandemic, when and how to restart the state’s economy and what to do about the state’s suddenly frail finances. 

The Rundown

With the legislative session beginning tomorrow, here is a quick rundown of where things stand in Raleigh and what MountainTrue’s priorities are for the session.

• Despite limits on public gatherings across the state, the legislature will go into session with strict limits on the public’s in-person access to legislative proceedings. 
• Lawmakers are increasing electronic access to committee meetings and other legislative gatherings so that the public can monitor the process. You can access those by clicking on the audio icon for the committee or legislative body you wish to tune into here.
• Credentialed media will also have in-person access to the General Assembly.
• Legislative leaders hope the session will be very short, perhaps a week or two, and focused only on COVID-19 bills and appropriations.
• Bills leftover from the 2019 session or new issues unrelated to the pandemic are unlikely to be considered.
• The COVID-19 agenda is still developing – a House Select Committee on COVID-19 began making its recommendations last week, and more are expected to become public before the session begins.
• Governor Cooper will also send a list of COVID-19 requests to the legislature for consideration. 
• The North Carolina Senate has not met formally to develop recommendations for the session, but is expected to have its own list of pandemic response proposals. 
• Once lawmakers complete their work, they are expected to adjourn and reconvene some time midsummer. 

The legislature is not likely to take up the state budget during this spring session. The delay of the state’s tax filing deadline to July 15 means that lawmakers won’t have an accurate estimate of revenues for the 2020-2021 fiscal year until later in July. 

Despite the tax filing delay, budget analysts in both the Governor’s office and the legislature predict that the pandemic’s impact on the state budget will be significant – in the range of a $1 billion to $2 billion reduction in state revenues for FY2020-2021. 

The state’s overall budget totals about $24 billion annually. While the state has considerable fiscal reserves, the reduction in tax income and the cost of the COVID-19 response and recovery will result in significant budget reductions for the coming fiscal year. Click here to view a recent presentation by Governor Cooper’s budget director about the pandemic’s impact on state finances. 

MountainTrue’s Priorities 

As the only WNC environmental group with a permanent presence in Raleigh, MountainTrue will be active during both the upcoming spring session and the summer session expected later this year. For starters, we will be on the watch for any effort to roll back clean air, clean water or clean energy laws. In WNC, so much of our economy depends on our natural resources, which must be protected if we are to bounce back from COVID-19. Towards that end, we will also oppose any effort to balance the budget with cuts to state agencies that enforce environmental rules. These agencies are already woefully understaffed and underfunded after years of budget reductions. 

MountainTrue will also continue to support key investments to protect WNC water quality and increase public access to our rivers. We have just finished a round of teleconference meetings with two key WNC legislators who have power over budget appropriations: Rep. Chuck McGrady and Sen. Chuck Edwards. Topping our list of priorities are funds for water monitoring and pollution detection for WNC rivers and streams, as well as new investments in public access along the French Broad, Green and Watauga Rivers. While these investments may not seem pressing, outdoor recreation will likely be one of the earliest, safest and most popular forms of recreation available when the pandemic abates. It’s important that our region has improved infrastructure, both for our residents and visitors, to boost our local economy when widespread recreation is safe again. 

Taking a step back, we know that many of our supporters face extremely difficult challenges as a result of COVID-19. We also realize that many of you may not have the time and energy to think about North Carolina politics and policies and their impact on our environment and our economy right now. And that’s okay. That’s why MountainTrue is here: to be a permanent, trusted, informed voice for our region and its natural resources. We thank all of you who provide the support that allows us to do this important work.

Do you value the Raleigh Report? It takes a lobbyist and staff expertise to bring this resource to you. Please consider making a donation to support this work and protect the places we share:  https://mountaintrue.org/join

1/22/20

If you missed the General Assembly session last week, don’t feel bad. It lasted all of a day and produced, well, not much at all. 

Republican leaders in the House and Senate brought lawmakers back to the capitol, hoping to override Governor Roy Cooper’s veto of the legislature’s version of the state budget. House Republicans succeeded in overriding Governor Cooper’s budget veto last fall using tactics that left many Democrats crying foul.

But completing an override takes a three-fifths vote of both the House and the Senate. And Senate Republicans have had trouble finding even a single Democrat to join them in voting to override the Governor’s veto.

Governor Cooper and Republicans in the General Assembly have been at loggerheads over the budget since last summer. Cooper insists that the legislature expand healthcare coverage via the state’s Medicaid program. GOP leaders in the General Assembly have refused and put most of their political efforts into finding the votes to override Governor Cooper’s veto of their budget. 

That effort failed last week when Senate Republicans could not find the single Senate Democrat they need to collect a three-fifths majority for the veto. Without that single vote in the Senate, the effort to end the budget stalemate collapsed and the General Assembly adjourned until the beginning of the 2020 session, which will begin April 28. 

So, to review: North Carolina does not have a budget. The legislature went into session to address the budget issue. The session lasted a day. North Carolina still does not have a budget. 

In the absence of a spending plan for the state, any recurring funding from the last approved budget (fiscal year 2017-2018) continues. That’s why government offices are not shut down. But the absence of a budget leaves hundreds of millions of dollars unspent on education, health and human services and the environment – including open space conservation, water quality projects, clean water investments in the French Broad and other rivers, as well as new staffing needed to maintain the state’s environmental protection efforts. 

Prospects for an end to the budget stalemate are nowhere in sight. In fact, last week GOP Senate President Pro Tem Phil Berger said that the legislature may not even approve a budget for FY2020-21 – its most important task for the 2020 session. 

Instead, Senator Berger said, the General Assembly will leave the 2018 budget in place and, perhaps, approve smaller appropriations bills during the 2020 session. The bills could contain less controversial parts of the budget, such as the use of federal block grant funding. The General Assembly approved a number of these “minibudget” bills last year – some of which Governor Cooper signed, while vetoing others. 

Here at MountainTrue, we are already beginning to prepare our agenda for the 2020 session. We will share the details later this spring, but you can expect it to include new investments in water quality monitoring, improved public access for hiking and paddling, help for the region’s farmers to pay for fencing around streams and other water quality protections, and sustainable energy policies that protect consumers and address climate change. 

Thank you for making our voice in Raleigh possible!

Dec. 10, 2019

It’s been a strange year at the North Carolina General Assembly.

There have been lots of votes – and vetoes – on various budget bills, but no final state budget. There was just a smattering of problematic environmental bills, the worst of which either didn’t pass or were defanged before becoming law.

Then there’s the legislative session itself, which started in January but didn’t end until Halloween – only to be serialized in November and when the legislature is scheduled to come back in January.

Confused? No worries. We’re here for you with a quick rundown on what happened this year at the legislature and where things stand as the political stalemate between Governor Roy Cooper and the GOP-controlled legislature continues into the new year.

The Budget

You’ll recall that Governor Cooper vetoed the legislature’s budget for the 2019-2021 biennium earlier this summer. Governor Cooper wants the General Assembly to include expanded Medicaid coverage for more than 500,000 North Carolinians in the budget. Most Republicans in the legislature disagree. The result is a political and policy battle in which the two sides have been sparring about budget issues all year. In a surprise September vote, the House overrode the Governor’s veto, but the Senate has not been able to find the votes needed to complete the override. Thus the state’s budget stalemate.

With a budget deal stalled, the legislature has moved sections of their overall budget into separate “mini-budget” bills and sent them to Governor Cooper – some of which he has signed, while vetoing others.

So what does the budget battle mean for the environment? For starters, important funding for open space conservation has not been approved. Also held up is funding for a variety of conservation and water quality projects that MountainTrue supported in the legislature’s budget this year. The budget stalemate has also stalled funding for expanded water quality testing in the French Broad River and other WNC rivers to address E. coli pollution that can make people sick.

The budget impasse also cuts off new investments in the NC Department of Environmental Quality’s ability to protect water quality. The Cooper administration requested 37 new water quality positions, of which the legislature funded five. DEQ Secretary Michael Regan described the legislature’s budget for the Department as insufficient to protect the state’s natural resources.

When will the budget battles in Raleigh end? That’s the $24 billion question. Senate Republicans need just one or two Democrats to join them in overriding the Governor’s veto. So far, the Democrats in the Senate are sticking with Governor Cooper, who continues to call on GOP lawmakers to negotiate a budget deal. Lawmakers will return to the legislature on January 14 to continue their 2019 work.

Environmental Wins

Without the veto-proof majorities necessary to easily override Governor Cooper’s veto, Republican lawmakers have significantly reduced the number of bills sent to the Governor for approval. This has resulted in fewer environmental bills being taken up, let alone approved, during the 2019 session.

The biggest environmental bill of the session, SB559, put renewable energy advocates as well as many industries on red alert over a provision to allow the North Carolina Utilities Commission to approve electrical rate increases up to five years in advance in a single proceeding. Advocates including MountainTrue were concerned that the bill would reduce public feedback and transparency about rate increases, making it easier for utilities to pass costs onto their customers. The bill would have also allowed utilities more cushion on their allowed earnings, including a “band” of allowed profit above and below a certain percentage.

After months of debate, a veto threat by the Governor, and weeks of behind-the-scenes negotiating, the most controversial sections of the bill were turned into a study and the bill was signed into law by Governor Cooper. This was a big win for renewable energy supporters and consumer advocate groups.

This moderating trend for environmental bills also showed up in the debate about a bill reducing local governments’ regulation of billboards. After a veto by Governor Cooper this summer, supporters of the bill have been unable to muster the votes necessary to override the veto, essentially killing the bill altogether – and giving environmentalists and local governments another win.

And for those of you in need of an unarguably positive and feel-good environmental story, we give you the legislature’s authorization of the new Pisgah View State Park, which will preserve 1,600 acres in Buncombe and Henderson Counties. Three Republican Senators – Senator Chuck Edwards, R-Buncombe, Henderson, Transylvania; Senator Ralph Hise, R-McDowell, Mitchell, Polk, Rutherford and Yancey; and Senator Jim Davis, R-Cherokee, Clay, Graham, Haywood, Jackson, Macon and Swain, introduced the bill in April. It was passed unanimously by the Senate in June and by the House in early July, where it was championed by Representative Brian Turner, D-Buncombe, and Representative Chuck McGrady, R-Henderson. The park is expected to cost $18.1 million and to take five years to complete.

Looking Ahead

With the General Assembly out of session until January 14, its agenda in the new year is still unclear. Senate Republicans will almost certainly continue to try to find a few Democrats to help them override the Governor’s budget veto. If the Senate does not override the budget veto, the legislature may continue to send Governor Cooper more mini-budget bills. Some House Republicans, led by Rep. Chuck McGrady, would also like to invest state funding in a variety of strategies to make North Carolina more resilient to storms and flooding – not only on the coast but, hopefully, in the mountains as well. These strategies include increased funding to buy out industrial hog operations with a history of pollution problems in the flood plain, as well as assistance to local governments to improve flood control infrastructure. While the Senate’s appetite for these investments is unclear at the moment, MountainTrue will support these appropriations and remind all legislators that, like the coast, WNC needs new investments to prepare for the bigger and more frequent storms and fire seasons we can expect as a result of climate change.

Finally, a note of thanks. MountainTrue is the only WNC environmental organization with a lobbyist in Raleigh. This makes us a stronger advocate for our region in the state capitol, which wouldn’t be possible without your support. Thank you for your part in our 2019 policy work, and we hope you will continue to be part of our team here in WNC as well as in Raleigh in 2020.