Dec 17, 2020
North Carolina 2021 Legislative Preview
The North Carolina General Assembly will convene January 13, 2021 for the start of the long session. Republicans will head into the new session maintaining their majorities in both chambers. Democrats will seek to continue to push their legislative agenda while working with Republican leadership on consensus bills. Without a veto-proof majority in either chamber, both House and Senate Republicans and Democrats will be forced to work together. The General Assembly will look a little different due to the pandemic. As of now, it is expected that legislators will hold in-person sessions, committees, and meetings with enhanced COVID-19 protocols. Both parties seem eager to get back to legislative business as the state continues to grapple with the pandemic. Legislators will immediately begin to address issues related to the pandemic, economic relief, and healthcare. Below are a few topics that will be front of mind when the General Assembly returns to Raleigh in the new year.
The COVID-19 pandemic has affected both state and local government’s revenues over the last nine months. Local governments across the state continue to feel the impacts of cuts in nearly every source of their revenue from shuttered businesses, utility payments, and declines in sales tax. Despite the loss of revenue, cities still had to figure out how to provide and pay for essential services while facing historic financial shortfalls. In May, the state estimated that it would face a $2 billion fiscal shortfall heading into 2021. The Republican-led General Assembly and Gov. Roy Cooper (D) have not agreed on a complete budget since 2018. Instead, opting to pass a number of mini-budgets providing funding to immediate issues. Despite the projected decrease in revenue, the state finds itself with $4 billon in unspent revenue surplus. The $4 billion comes from increased tax revenue collections, unappropriated funds, and monies that have sat in the “rainy day” fund. Now legislative leaders will have to decide on how to spend the money. Democrats have called for immediate use of the money toward a COVID-19 economic recovery package, while Republican leadership has signaled they would rather see the funds go towards a comprehensive two-year budget bill.
Broadband expansion has been a hotly contested issue in the General Assembly for years. Legislators have agreed that there is a need to address the growing rural-urban divide by investing in equitable broadband access across the state. The pandemic has only highlighted the continued need for investment as thousands of students across the state continue to learn remotely without reliable internet access. The legislature and governor battled over the use of CARES Act funds that are set to expire December 30. The allocation of the funds was stalled as the state awaited additional guidance from the federal government on how the money could be spent. Gov. Cooper and legislative leaders have now agreed on $30 million in broadband expansion funding to be appropriated when the legislature returns in January. Expect to see this issue remain up for debate as increased demand for telehealth services, remote learning, and video conferencing arise across the state.
Expect the General Assembly to resist cuts to education, hoping for additional federal relief and the passage of a new state budget. Teacher salary increases remain a top priority as Superintendent of Public Instruction Elect Catherine Truitt takes office. With a budget surplus and consensus around the teacher pay issue, the legislature could appropriate additional funding. Controversy over in-person versus virtual learning will continue as coronavirus cases surge in the state. Legislators will continue to look funding for additional school needs including supplies and broadband expansion. With Republican backing, expect continued support for public charter schools, opportunity scholarships, and other school choice initiatives.
The transition to Medicaid managed care, called Medicaid Transformation, will continue to move ahead, with an expected start date of July 1, 2021 for initial enrollment in the five managed care companies who won the bids. Governor Cooper, along with legislative Democrats, has signaled that they will continue to push for Medicaid expansion. Expect Republican legislative leadership to continue to resist these efforts. Telemedicine will be a hot topic as it was so widely used and beneficial during the pandemic, likely causing the debate on parity reimbursement to re-emerge. Legislators will continue to look for ways to improve access to healthcare in rural communities while providing accessible, low-cost, and innovative solutions for citizens. The state saw a shortage of available healthcare workers during the pandemic which will likely lead to conversations on reforming scope of practice and out of state licensing procedures for health care professionals. You can also expect reforms to the state’s Certificate of Need laws and a renewed effort with Association Health Plans. The plans, which would offer businesses the chance to explore health insurance as a larger group is currently held up in court.
Legislators will come together at some point next year to redraw both state House and Senate districts and congressional districts based on new census data. Republicans maintain their majority in both the House and the Senate but do not have veto-proof majorities. Republican leadership praised the transparent and bipartisan manner in which maps were drawn last year. Democrats had high hopes that they would take back the majority this year and create an independent map-making process but failed. Now with court battles behind them legislative Republicans have a chance to influence political power in the state for years to come.
The debate will continue about the Department of Transportation’s (DOT) funding issues, inside and outside the budget discussion. DOT continues to explore new revenue streams and take recommendations from both the public and recently formed transportation commissions.
The legislature has closely monitored the DOT after passing a series of funding and oversight bills, including House Bill 77, which expanded the size and responsibilities of the Board of Transportation. DOT currently finds itself in a stable financial position but, due to economic volatility caused by the pandemic, has switched to a more fiscally conservative spend plan. Expect to see bipartisan legislation putting additional oversight on DOT spending abilities as well as legislation looking at potential alternative revenue sources, such as a shift from the gas tax to new taxes on delivery services, and a mileage based tax.