Sept. 11, 2015
House, Senate inching towards budget deal
Public legislative activity was limited this week, with almost all work focused on the state budget and related items. Neither chamber held committee meetings. The House held no floor votes, and the Senate considered only two bills all week.
The chairs of House and Senate budget committees and leadership of both chambers have been negotiating budget differences in non-public meetings. As budget chairs reached agreement on various items, the remaining differences moved up the chain of command from area-specific appropriations committees to the full appropriations committee chairs, then to the Speaker of the House and the Senate President Pro Tem. Based on news reports and conversations we’ve had around the legislature, several items remain in negotiation. This information is fluid until a final deal is announced. The legislature’s self-imposed budget deadline is next Friday, and a compromise document would have to be released by Monday to meet this date.
The legislature has agreed on the amount of funding for teachers assistants and drivers education, but not on policy of how school systems are allowed to spend the money. They’ve also reached agreement to increase the film grant program to $30 million; however, other potential tax changes, such as the rate of income tax and historic preservation tax credits, are still in flux, as is whether to address these in or out of the budget. Other items that have slowed final agreement include mental health funding increases and changes to grow lottery revenue. Funding is provided in the budget bill for Medicaid reform changes that are still under discussion in separate legislation.
While the Senate budget included a nonrecurring $185 million cut to LME/MCOs, the final budget will likely include a smaller nonrecurring reduction with an accompanying provision directing cuts to entities with larger reserves. Alongside budget negotiations, the House and Senate appear close to an agreement on Medicaid reform, something that has eluded the legislature for multiple sessions. If adopted, the hybrid model will transition the state to a capitated Medicaid service delivery model with some statewide managed care contracts and some provider-led contracts. Based on the most recent versions of the Senate plan, provider-led or statewide managed care entities will contract with existing LME/MCOs at the current capitated rate for behavioral health service delivery during the transition. After this initial contract expires, it is unclear whether the current model will continue for behavioral health services.
Legislative leadership is still negotiating both the amount and eligible projects of a bond referendum. The total debt will be between $1.5 and $2 billion, less than the $3 billion Governor Pat McCrory wanted. The House had included $500 million for public school construction, but the Senate is not supportive of using the bonds for these projects. There is still opportunity to contact your legislators to encourage inclusion of school construction as an allowed use. The bond referendum would be on the ballot of the spring primary in either March or May.