Recapping the 2019 legislative session; what happened and what didn't

It’s over. On November 1, the session many lawmakers thought would never end, did. After 1,717 bills, nine vetoes and 186 new laws with the prospect of even more over the next few days, the legislature finally adjourned and ended one of the longest legislative sessions in recent history. It was a session defined by Gov. Roy Cooper’s veto of a $24 billion state budget, largely because the budget failed to include Medicaid expansion. On September 11, House Republicans overrode the governor’s veto with a controversial vote. However, seven weeks later Senate Republicans failed to win the one Democrat needed to override the governor’s veto and ended the session. In so doing, lawmakers froze budgets for state agencies at last year’s levels and tried to address other budget problems through a series of mini-bills.

Gov. Cooper and lawmakers blame each other for the lengthy session. While the public points fingers at both parties, all things considered, most North Carolinians seem to have gotten along fine without a new state budget. That may be because most state services are still funded and the economy is good. Yes, the state budget veto and Medicaid expansion dominated the budget session. Still, significant legislation was approved in other areas. These include:

2019 Session Recap: Budget and Taxes: 

As previously stated, the state legislature adjourned for the year November 1 without an official budget bill being passed.

Gov. Cooper vetoed the budget on June 28. However, due to legislation passed in 2016, North Carolina state government continued to function without a budget bill being passed for the current fiscal year. In what was called a “continuing resolution,” state agencies are funded at the same levels as the prior fiscal year. HB 111, which provides a base-budget funding and adjustments for many state agencies was passed by the legislature and is waiting on the governor’s signature.

To address concerns about growing or new fiscal obligations, lawmakers approved a series of “mini-budgets” before adjourning. These bills addressed specific projects or funding increases, including:

• Lawmakers approved 3.9 percent raises for teachers and 2 percent raises for noninstructional staff, pending the governor’s signature.
• Pay increases of 2.5 percent for state highway patrol, correctional facility employees, non-education state employees, and SBI & ALE employees.
• Funding for previously-approved Medicaid transformation – changing it from a largely fee for service program to a plan paying per patient (Cooper vetoed)
• Funding for rural broadband access
• Transportation funding
• School and prison safety
• $117 million in disaster relief funds
• $6 million for funding to eliminate the rape kit testing backlog
• $77 million in funding for the ‘raise the age’ legislation, which requires more juvenile justice workers

Because tax law changes are so often included in the budget bill, the absence of a state budget meant no tax changes of note were approved via the budget process. However, action on several tax bills was taken.

• HB 399 was signed by Gov. Cooper on November 1. The legislation would extend the sunset date for several targeted tax exemptions – including motorsports companies, certain airlines and historic rehabilitation – which will result in continued targeted favoritism in the tax code.

Two other bills impacting taxes also passed the legislature and are awaiting governor’s signature:

• SB 557 – approved by the legislature at the end of October. The legislation would increase slightly the standard deduction for personal income taxes, exempting more income from the state tax. The bill would also make changes to the methodology of taxation of multi-state corporations as well as increase the sales tax burden on online retailers like Amazon and eBay. On net, this bill will result in a tax increase on the state.

Senate Bill 578 – approved by the legislature would reduce the state’s franchise tax, which is imposed on the net value or worth of a business. The bill would also make some minor adjustments to eligibility requirements for the state film grants, but not increase funding for the program.

Two bills (HB 74 and SB 105) were drafted to send a sizeable revenue surplus back to the people. HB 74 returns roughly $680 million of the more than $800 million revenue surplus to North Carolina taxpayers. Married filers would have received a maximum $250 refund and single filers up to $125. Different versions of HB 74 passed the House and Senate, but lawmakers couldn’t agree on a concurrence vote. SB 105 included the same refund and passed the Senate, but the bill stalled in the House when additional amendments were added to the legislation.

2019 Session Recap: Education 

Funding levels, aside from those impacted by “mini-budget” bills, will continue at last year’s levels.

As mentioned previously, however, HB 111 sets base funding levels for state agencies at a slightly higher level. The bill is awaiting Gov. Cooper’s signature. The legislation provides: $9.586 billion for K-12 public schools; $1.168 billion for community colleges, and $3.09 billion for UNC System.

Significant education legislation, passed by the legislature and signed by the governor, includes:

• S 399 – Allows retired teachers to return to work in high-need schools and still receive full retirement benefits. Under the bill, teachers would no longer have retirement earnings penalized for earning additional income
• H 362 – Makes permanent the 15-point grading scale for assignment of A-F school performance grades. I oppose extending the fifteen-point grading scales, largely because it lowers the bar for grades. The law also requires the State Board of Education to study the weighting of school performance grades.
• H 75 – School Safety Funds. Legislation appropriates $39 million and $30 million in funds over the next two years, respectively, for school safety. Legislation establishes school safety grant programs and requires the Department of Public Instruction to report school threat assessments to the State Bureau of Investigation.
• S -621 – Testing Reduction. The bill eliminates North Carolina Final Exams (NCFEs). NCFEs were required to meet completion for courses that did not have End-of-Grade or End-of-Course assessment. NCFEs were developed to help teachers with assessments, however they are not required by state or federal law. Legislation also requires a review of the third grade end-of-grade reading test to ensure it is aligned with Read-to-Achieve alternative assessment measures.

Significant legislation passed by legislature awaiting Gov. Cooper’s signature:

• HB 377 – Legislation ensures that teachers and other support personnel receive salary increases based on years of experience and to authorize salary supplements.

Vetoed bills

• SB 354 –Appropriated funds for a 3.9% pay raise for teachers and raises for other educational personnel. Included a provision stating that if Cooper approves the state budget, larger teacher raises would go into effect.
• SB 392 – Legislation allowed state superintendent to approve bonds to finance or refinance charter schools,. Cooper vetoed the bill saying decisions on adding more students should remain with the State Board of Education.
• SB 438 – Excellent Public Schools Act, a signature education reform legislation. Provided additional funds to improve Read to Achieve program. Gov. Cooper vetoed the legislation saying the program was “ineffective and costly.”

2019 Legislative Recap: Voting and Elections 

While the biggest election-related news in North Carolina in 2019 concerned the redo election in the 9th Congressional District and several court cases on alleged gerrymandering, the General Assembly has considered and, in some cases, passed several election-related bills during the long session this year.

• H646. One of the last acts that the General Assembly took in 2018 was to override Roy Cooper’s veto of voter ID enabling legislation. That ID bill was a relatively liberal ID measure that allowed a wide variety of IDs to be used. However, officials from several universities complained about requirements in the bill, prompting legislators to pass a much weaker version.  Passed in April, the bill further watered-down North Carolina’s voter ID law.
• SB 683. One issue that has been at the center of our election-related work is absentee ballot fraud, specifically the act of political operatives illegally taking possession of absentee ballots (known as ballot harvesting). After coming out against several absentee ballot reform bills as inadequate or counterproductive, a modified version of Senate Bill 683 passed both chambers of the General Assembly on Oct. 31. Civitas has written on how provisions in this bill would combat absentee ballot fraud. The bill is now awaiting the governor’s signature.
• SB 250. Removed foreign citizens from voter rolls and requires jurors to be United States citizens. Legislation is awaiting Cooper’s signature
• HB 700. Digital Campaign Finance Disclosure is a bill designed to limit online political speech, and at one point looked likely to advance in the House. It had sponsors from both parties, including the chair of the House Committee on Elections and Ethics Law. Civitas made a concerted effort to write about how the bill limits freedom.. Fortunately, the bill eventually died in committee.

Six redistricting bills were submitted to the General Assembly in 2019. Three of those bills have at least some bipartisan support and were discussed in a meeting of the House Redistricting Committee on October 24. A redistricting bill will likely pass the House during the short session in 2020 but its fate in the Senate is uncertain. Civitas has been actively critiquing redistricting commission bills and will be engaged in the process as the General Assembly crafts a bill next year.

Legislative Recap: Healthcare 

Gov. Cooper has pushed healthcare policy to the forefront of state policy discussions this legislative session by making expansion of the state’s Medicaid program his top policy priority. Civitas acknowledges that our healthcare system can work better. Medicaid expansion, however, does not address the root causes of our healthcare problems, and in many circumstances makes them worse. “Medicaid expansion is a bad deal for North Carolina” details the main issues with expansion and the problems that persist despite the major healthcare reform passed only a decade ago under the Obama administration known as the Affordable Care Act.

At the beginning of the legislative session, Civitas Executive Vice President Brian Balfour detailed some concrete steps that could be taken to improve healthcare in the state. After nine months, the 2019 legislative session finally came to an end. Now we can reflect on the healthcare accomplishments of the legislature and identify persisting opportunities that they could pursue in the 2020 short session.

Legislative Accomplishments 

Avoid Medicaid expansion – in any form. 

Although not an affirmative accomplishment, it is worth noting that stopping bad legislation is often more important than passing good bills. Because expansion would distort a program that is intended to help the most vulnerable among us by providing taxpayer-funded health insurance to able bodied, working age adults, the legislature is wise to avoid any version of Medicaid expansion. 

Passage of Association Health Plans

• S 86– Passed by legislature and became law despite Gov. Cooper’s refusal to sign or veto the bill. The legislation provides that Association Health Plans (AHP) allow small businesses to pool their buying power in the insurance marketplace in order to get the lower health insurance costs available to bigger businesses. Critics of AHPs claim that they provide inadequate coverage because they are exempt from the strict coverage requirements of the Affordable Care Act. However, this flexibility is a huge cost-saving benefit of AHPs. Freedom from the over-burdensome regulations allows AHPs to keep costs low. Although the measure is currently held up in court, passing the enabling legislation is a good step for North Carolina.

Other Significant Legislation 

• HB 656– Legislation offers changes to the Medicaid and Health Choice appeals statutes to make them compliant with Federal law and so that Medicaid transformation can be implemented and that prepaid health contract plans can commence November 1, 2019. Signed into law July 4, 2019.
• HB 555– The legislation provides funding for the operation of the Medicaid program and the transition toward managed care. Cooper vetoed the bill on August 30, 2019, saying, “Healthcare is an area where North Carolina needs to do more and do it more comprehensively.”

Missed Opportunities

Certificate of Need

As has been the case for many years now, a certificate of need (CON) repeal was not able to get off the ground this session. Certificates of need are government-issued permission slips that healthcare providers must possess to open their doors or obtain certain equipment in North Carolina. Nothing about this practice is founded in marketplace realities, but the providers that currently hold CONs have a vested interest in preventing the market from opening up to competition. CONs are holding back healthcare access and innovation in North Carolina, and a full CON repeal should be a top healthcare policy priority in North Carolina in 2020.

Insurance Regulation Easements

North Carolina imposes the second-most insurance coverage mandates in the Southeast. These mandates drive up the cost of insurance and prohibit people from choosing a plan that best meets their needs.

Scope of Practice

Expanding scope of practice for registered nurses and physicians’ assistants is a no-brainer when it comes to helping solve problems of access in rural areas of the state. By allowing medical professionals to practice within the full scope of their training, the state can reap the benefits of lower healthcare costs and better access.

Summary

The 2019 legislative session was memorable for many reasons. One reason was its length. The session extended over nine months, several months past the usual departure time in July. The session will also be remembered for what didn’t happen; Medicaid was not expanded, and state government survived -without a formal budget. Because lawmakers saw that expansion did not address the long-term problems of healthcare and contributed to rising costs, advocates of Medicaid expansion had an uphill climb While the battle may be over for now, it’s one that will likely return next year, when lawmakers will once again need to correctly define the healthcare problem and its root causes. It’s a lesson we would do well to remember for now and for years to come.