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Another standoff between the General Assembly leadership and the Cooper administration means the state starts it new fiscal year with spending on autopilot.
Gov. Roy Cooper stamped a veto on the state budget plan passed last week by the state House and Senate shortly before 2 p.m. Friday.
Although leaders in both chambers talked up the possibility that they could muster enough votes for an override, the margins for final votes fell far short of the necessary three-fifths needed to do so.
On Thursday, the House voted 64-49 and the Senate voted 33-15 to pass the $24 billion spending plan. Since the budget is a House bill, any override attempt would have to start there.
In dueling press conferences Friday morning, both sides set down markers for next steps in the process.
Speaking at the Executive Mansion surrounded by legislators, teachers and health care advocates, Cooper said he will continue to emphasize that Medicaid expansion should be on the table as the two sides work out a final deal.
The budget and health care
North Carolina is one of 14 states that has not expanded Medicaid eligibility under the Affordable Care Act. An updated analysis by the Kate B. Reynolds Charitable Trust and Cone Health Foundation released last week found that about 634,000 would be added to the program by 2022 under expansion and add 37,200 new jobs.
The state would see a $4.7 billion increase in federal spending, and state and county tax revenue would grow by $500 million and $100 million, respectively.
Cooper cited those figures Friday and emphasized that the plan would shore up struggling rural hospitals and medical centers.
“All we have to do is say yes to Medicaid expansion, but this budget says no,” he said.
Cooper said his objections were not limited to Medicaid expansion, criticizing the legislature’s teacher pay plan and refusal to include a bond referendum for school construction and water infrastructure projects.
He said he and his staff will work on a counterproposal this week to present to legislators when they return from a July Fourth break.
“I hope everyone will return back in earnest, but this budget won’t do,” Cooper said.
“Teachers, working people without health care, safe drinking water, responsible funding of government, corporate tax breaks — all deserve more discussion and negotiation. We have to find the middle ground with honest give-and-take, and I’m ready to go.”
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In response, Senate leader Phil Berger, R-Rockingham, chastised the governor for failing to negotiate, saying he never provided a counteroffer to the legislature’s proposals.
“It’s clear that he never provided one because he always intended to veto the budget over Medicaid expansion,” Berger said.
“The idea that the governor will spend next week crafting a compromise proposal is frankly difficult to take seriously.”
Berger said Cooper’s veto was done to satisfy his “far left base.” Berger reiterated his objections to Medicaid expansion, saying the program could “blow a hole in the budget down the road,” should the federal government decide to reduce its 90 percent share of the program. He said plans to make hospitals cover the state’s 10 percent share of expansion would just shift that costs to consumers.
“I think it’s a bad policy for the state of North Carolina,” Berger said. He said expansion was being oversold as a solution for the state’s opioid crisis and problems in the state’s rural health systems.
The General Assembly’s budget does include a provision encouraging the governor to call a special session “to consider access to health care across North Carolina, including issues pertaining to health insurance, association health plans, Medicaid and Medicaid expansion.”
Berger said that provision fulfills the governor’s request for a “two-track process” to consider both the biennial budget and Medicaid expansion.
At his press conference, Cooper said with the General Assembly already in session, it doesn’t make sense to wait until a special session to start the conversation.
Berger said since a Medicaid expansion proposal was already voted down this year, it would be difficult under Senate rules to get enough votes to bring it back up in the current session.
He did, however, acknowledge that legislative rules would allow for a concurrent session to take up the matter.
Last year, however, both the House and Senate rejected a call by Cooper for a special session on redistricting by a party line vote, saying it was unconstitutional because it did not meet all the necessary criteria.
The section of the state constitution on special sessions reads: “The Governor may, on extraordinary occasions, by and with the advice of the Council of State, convene the General Assembly in extra session by his proclamation, stating therein the purpose or purposes for which they are thus convened.”
Without budget, spending on autopilot
Meanwhile, departments and agencies have been preparing for the beginning of a new fiscal year without a new budget.
Budget standoffs are not uncommon in North Carolina, even when the governor and legislature are controlled by the same party. But a 2016 law, inspired by a lengthy 2015 standoff between legislative leaders and then-Gov. Pat McCrory created an automatic continuation budget in such circumstances that sets spending at current levels.
While that process kicks in whenever a new fiscal year starts with no budget deal in place, it only provides for recurring spending, meaning that nonrecurring items such as one-time grants or boosts to agencies and programs as well as increases for enrollment in public schools, universities and community colleges are not funded.
State Budget Director Charles Perusse said Friday that, for now, that won’t have a huge impact since spending for schools is greatly reduced in the summer, but the impact of the impasse will start to increase as school systems begin to gear up for opening day.
The law gives the budget director leeway to move some funds in order to keep departments operating, but it also freezes salaries at current levels, puts a hold on step increases and bonuses, and doesn’t allow departments to fill certain vacant positions.
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