2014: Coal ash and the Carolina comeback

by Patrick Gannon, The Insider, December 29, 2014.

In 2014, "coal ash" became a household term, some state lawmakers wanted to gamble on extra lottery revenues to help balance the budget and Gov. Pat McCrory touted the "Carolina Comeback."

Here's a look back at a few of the top issues and news-makers of 2014 – another eventful, yet tumultuous time in state politics.

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Coal Ash

Residue from burning of coal at power plants was thrust into the spotlight on Feb. 2 when tens of thousands of tons of ash spewed into the Dan River from ponds at a former Duke Energy plant in Eden. The spill raised significant environmental concerns, such as potential groundwater contamination, and prompted calls for Duke Energy to remove the coal ash from pits across the state. The issue quickly became a priority for the Legislature.

After months of wrangling, the House and Senate agreed to a plan in late August that set the framework for the cleanup or capping of Duke's ash ponds and created a special commission to oversee it. Meanwhile, the U.S. Justice Department opened a criminal investigation into the relationship between Duke Energy and the Department of Environment and Natural Resources, which regulates the company.

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State budget

The 2014 state budget debate pitted McCrory and the House against the Senate, with teacher pay raises, teacher assistants' jobs, lottery proceeds and Medicaid funding playing starring roles in tense and lingering negotiations.

Budget talks typically held behind closed doors played out in public, with Senate Republicans walking out on one meeting because they disagreed about who should be allowed to address legislators. Democrats argued throughout the process that Republican tax cuts left the state without enough money. McCrory played a larger-than-usual role in budget negotiations, an involvement frowned upon by GOP senators.

By early August, weeks after the start of the new fiscal year, the chambers finally agreed to a $21.3 billion spending plan for 2014-15, with average 7 percent raises for public school teachers and $1,000 bumps to most state workers, little change to teacher assistant funding or Medicaid eligibility and no increase in lottery advertising dollars, which some legislators proposed to try to bolster revenue from the controversial game.

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Taxes

Republicans implemented additional tax code changes in 2014, but not to the extent of 2013's effort, as some wanted the gauge the financial consequences of the earlier cuts before enacting major new ones. But lawmakers told cities and towns that they no longer could levy privilege taxes on businesses beginning in July 2015. Advocates for cities said they would have to raise taxes or cut services to make up the lost cash and pressed for changes to make up some of the losses.

Also, after much debate and impassioned pleas from interest groups on both sides, legislators allowed the state's film incentives program and historic preservation tax credits to expire at year's end, saying it was part of their philosophy of ridding the tax code of special tax credits and exemptions. They replaced the film incentives with a less generous grant program, funding it with $10 million for the first half of 2015, far less than the state had paid out to film production companies in recent years under the existing policy. McCrory vowed to try to launch a program to encourage renovations of historic buildings in 2015.

Meanwhile, calls from economic developers to create a special "closing fund" to help the state compete with other states for big projects, as well as replenish other incentives funds that were running out of money, went unanswered by the conservative Legislature in 2014.

As the budget and taxes were debated, Democrats and a couple of high-ranking Republicans openly worried about whether recent cuts to personal and corporate income taxes would put lawmakers in a precarious financial position come 2015. Administration and legislative leaders so far haven't expressed major revenue concerns, however.

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McCrory

The governor told reporters before the 2014 session that he planned to be more assertive on the policy front. After delays, his idea for a new private economic development agency – the Economic Development Partnership of North Carolina – finally came to life in Cary in early October, taking over from the Commerce Department the task of recruiting new companies and retaining existing ones. It will take time to measure its success.

McCrory spent time in 2014 touting his new transportation formula that supporters say will take the politics out of road-building, and promised to seek additional funding sources to improve the state's transportation infrastructure.

The governor also joined forces with two former governors to sue General Assembly leaders. The lawsuit claims the Legislature violated the state constitution by encroaching on executive branch functions with the creation of certain commissions, including the coal ash commission, and giving lawmakers most of the appointments. The suit is pending.

McCrory didn't steer clear of controversy. In July, his pick for state poet laureate – a longtime state employee with two self-published poetry books – was roundly criticized in literary circles as unworthy, and she resigned almost immediately. In December, the governor made a new, apparently more popular pick. Early in the year, a brief encounter between McCrory and a cook at a Charlotte food store led to the cook's firing and McCrory's office trying to explain what happened.

Near year's end, the governor also picked public battles with the media, including Lesley Stahl of "60 Minutes" for a story about coal ash. In December, he aggressively fought back against questions raised by The Associated Press about McCrory's receipt of a six-figure stock payout from Tree.com, on whose board he served until shortly after he became governor. The governor's dealings with the media led some to suggest he needs thicker skin.

Throughout the year, in interviews and news conferences and on his website, McCrory used the "Carolina Comeback" as his slogan, referring to the Republican tax cuts, a declining unemployment rate and the quick payback of unemployment insurance debts to the federal government as signs that the state is rebounding from the recession.

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Protests and Elections

The "Moral Monday" protests continued at the legislative complex through much of the 2014 session, but far fewer arrests were made than in 2013. By the hundreds, disgruntled residents made their voices heard on issues such as Medicaid expansion, voting rights and education funding.

But through it all, not much changed in the Legislature's makeup as a result of the November elections. Republicans maintained veto-proof majorities in the state House and Senate. House Republicans nominated Rep. Tim Moore, a Cleveland County attorney, to replace U.S. Sen.-elect Thom Tillis as House speaker for the 2015-16 session. Senate Republicans plan to keep Sen. Phil Berger of Rockingham County as their leader when lawmakers return to work in mid-January to do it again.