The NC General Assembly concluded their daily morning appropriations subcommittee meetings this week, meaning the substantive discussions about the next state budget will likely soon begin. Wednesday, Governor Cooper released his proposed budget, and Thursday his State Budget Director Charlie Perusse presented the budget recommendations to the Joint Appropriations Committee.

Fortunately, the state is continuing on a positive trajectory with combating the coronavirus. The seven-day rolling average of positive cases has continued to drop, and the total number of hospitalizations was lower last week. Secretary of the Department of Health and Human Services (DHHS) Dr. Mandy Cohen said this week that the data shows all of the state's trend lines are continuing downward.

As of Thursday morning, in the state of North Carolina, there were 2,112 confirmed cases of the coronavirus, 945 individuals hospitalized, and sadly, 11,987 confirmed deaths. There have been 3,700,579 doses of the vaccine distributed in NC, which is nearly 500,000 more doses administered than last Thursday.

As we all continue to feel the effects of the global pandemic and adjust to a new normal, we want to highlight a few ways our clients across North Carolina have worked to support residents and make this time a little easier for those throughout the state. Read more about what our clients are doing to help by clicking here.

For more information on COVID-19 in North Carolina, click here to visit the Department of Health and Human Services website, and be sure to stay up to date on the latest federal guidelines issued by the Centers for Disease Control and Prevention (CDC) by clicking here.

Governor Cooper's Budget Proposal

North Carolina State Budget Director Charlie Perusse began his remarks at the Joint Legislative Appropriations Committee meeting on Thursday morning by declaring that MLB Spring training has begun, the Sweet Sixteen starts this weekend, warm weather is here, and budget season is upon us. Indeed, Governor Roy Cooper (D) kicked off the budget season on Wednesday with a press conference to unveil his recommended budget for the 2021-23 biennium. “With the right priorities, we will not only beat this pandemic, but build lasting success for North Carolina,” said Cooper. “The most important recommendations today will invest in North Carolina’s people so they can learn, get healthier, and get the right kind of training for great jobs.”

Governor Cooper’s recommended budget has a common theme of significant investments in education, infrastructure and economic opportunities in response to critical needs accentuated by the coronavirus pandemic. The budget would spend $27.4 billion in 2021-22, and $28.5 billion in 2022-23, and according to Perusse, it would do so without raising taxes.

The Governor is asking for $2.4 billion for public education. His budget would allocate $708.2 million over the biennium to provide public school K-12 teachers, and principals and assistant principals, with a raise of 10% on average, and provide a minimum $15 minimum wage for all non-certified school personnel. Additionally, because educators did not receive a raise in the last fiscal year due to the budget impasse, the Governor is proposing a $2,000 bonus in May 2021, and $1,000 bonuses to be paid in October 2021 and 2022. The budget would also invest over $78 million in early education and child development and provide $80 million to school districts to hire more nurses, counselors, psychologists and social workers.

State employees are also supported by Governor Cooper’s proposed budget. Within the $2.4 billion allocated for salaries is a 5% raise for state employees over the biennium, including community college and university employees, in addition to the same bonuses offered for teachers. The Governor also wants to maintain and strengthen state benefits, including $109 million in recurring funds to fully fund the state’s retirement systems, and nearly $200 million over the biennium to support the state health plan for active employees.

Using the coronavirus pandemic as a backdrop, Governor Cooper recommended significant capital investments to vulnerable communities who were impacted the hardest, saying, “their road to recovery is the most precarious.” These improvements include $2.5 billion to public schools; $783 million to the UNC System; $500 million for the Community College system; $430 million for health and safety projects, including the relocation of DHHS from Dorothea Dix Park; and $460 million for parks, museums, historic sites, and the zoo. The bond would also provide funding for the construction of a new medical school at East Carolina University and the renovation of the School of Nursing at UNC Chapel Hill. These projects would be funded by a $4.7 billion General Obligation Bond, which would have to be approved by voters in November. If that sounds familiar, that is because in 2019, Governor Cooper proposed a $3.9 billion General Obligation Bond to address many of the same needs. For more information on the proposed GO bond, click here.

As he did in 2019, the Governor recommends expanding Medicaid this year, but he said there were three compelling reasons to do so now: first, the global pandemic has cost thousands of North Carolinians their employer-sponsored healthcare; second, the American Rescue Plan (ARP) signed by President Biden on March 11 provides billions to encourage states who have not expanded Medicaid to expand now; and third, the state is moving to a managed care Medicaid system to better spend tax dollars. Cooper also noted that “red states across the country are already making moves, and I’m ready to work with both political parties to find a way forward.” Perusse claimed that expanding Medicaid will “inject over $5 billion in direct investment into the state,” not including the additional $1.7 billion in federal funds that would be provided by the ARP.

Lastly, the Governor’s budget recommends the reenactment of the Earned Income Tax Credit (EITC) to provide the estimated 880,000 North Carolina families who earn less than $50,000 with an average tax refund of $130. The fiscal impact would be $267.7 million over the biennium. Governor Cooper also recommended building on the recent ARP to enact a Child and Dependent Care Tax Credit (CDCTC) which would provide a refundable tax credit to low-income families paying out-of-pocket childcare expenses. The fiscal impact of the state CDCTC would be $306.1 million over the biennium. For more information on the proposed tax cuts, click here.

Governor Cooper appeared more optimistic about getting pieces of his proposed budget passed this year, unlike in 2019 when a stalemate with the legislature crippled negotiations. When asked what leverage he possesses this year to get meaningful elements of his budget passed, Cooper responded by saying he has had numerous conversations with Republican and Democratic leadership in the legislature, and that they agree that everything is on the table and up for negotiation this year. Cooper mentioned the school reopening bill that passed earlier this month as a sign of bipartisanship and cooperation. However, he did note that he differed with the legislature on the issues of taxes and level of educational investment, but said he looked forward to the discussions.

Speaker Tim Moore (R-Cleveland) released a statement responding to Governor Cooper’s budget proposal.

Moore said Republicans share many of the priorities outlined in Cooper's budget, but indicated that they think his budget overspends and does not line up with the fiscal responsibility the GOP-led legislature has championed over the last decade. He did, however, share the same sentiments around looking for compromise and bipartisan solutions. "I look forward to reaching consensus on a state budget that works for all North Carolinians to avoid further vetoes by the Governor of valuable funds that taxpayers earned and communities deserve.”

State Elections Chief Testifies

As part of an ongoing chronicle of conflict, the Senate Redistricting and Elections Committee invited NC Board of Elections (NCBOE) Executive Director Karen Brinson Bell to testify Wednesday about her handling of the 2020 election. Committee Chair Sen. Paul Newton (R-Cabarrus) began the meeting by telling Bell that while the hearing would get contentious at times, it was nothing personal. Then Senate Republicans proceeded to question Bell with pointed and direct concerns they had with her oversight of last year’s election, and at times the discussion grew heated.

At issue was a settlement reached last September by the NCBOE over a lawsuit filed by the North Carolina Alliance for Retired Americans who sued to get rid of witness requirements for mail-in absentee ballots, extend the deadline for counties to receive ballots, and provide voters a way to fix potential problems with their mail in ballots (a process that would come to be known as “curing” a ballot). In September, the bipartisan NCBOE unanimously voted to give Bell and attorneys the power to settle the suit, and as a result, they reached a settlement that allowed voters to cure their ballots if there was an issue with a witness signature. This led to an avalanche of controversy, causing two Republican NCBOE members to resign.

In 2020, legislators passed H1169: Bipartisan Elections Act of 2020, which, among many other things, provided a requirement for two witness signatures on an absentee ballot and a fixed time period for accepting returned ballots. Wednesday, Republican Senators accused Bell and Democratic Party lawyers of circumventing statute and essentially rewriting that law. “In my heart, you broke the law,” said Sen. Bill Rabon (R-Brunswick). Sen. Carl Ford (R-Rowan) asked why the committee should not ask for Bell’s resignation. Democratic Senators took a different tone, thanking Bell for carrying out the election with the largest voter turnout in state history.

COVID Restrictions Lifted

North Carolina is reaching new milestones in the fight against the coronavirus pandemic. Trends have continued to show improvement, and Thursday, DHHS announced that one in five North Carolinians was fully vaccinated. In response to the promising news, Governor Cooper and Sec. Cohen announced a relaxation in state social distancing restrictions. “We are in a promising place. With North Carolina’s COVID-19 key metrics improving and vaccinations increasing, we can responsibly use our dimmer switch approach to easing restrictions guided by science and data,” said Cohen.

Cooper's website states the following regarding Executive Order 204

• Indoor gathering limits will increase from 25 to 50
• Outdoor gathering limits will increase from 50 to 100
• The 11PM curfew on alcohol sales is fully lifted
• Occupancy is returned to 100% indoors and outdoors for places like museums, retail businesses, salons, and personal care shops
• Occupancy is returned to 75% indoors and 100% outdoors for restaurants, breweries, wineries, amusement parks, gyms, pools, and other places of recreation
• Occupancy is returned to 50% indoors and outdoors for bars, conference centers, reception venues, sports arenas, and live performance venues.

Upcoming Legislative Meetings

Monday, March 29

4:00PM House: Session Convenes
7:00PM Senate: Session Convenes

Tuesday, March 30

10:00AM House: Transportation
10:00AM Senate: Agriculture, Energy and Environment
10:00AM House: Health
1:00PM House: Local Government
2:00PM House: Marine Resources and Aqua Culture
2:00PM House: Judiciary 2
2:00PM House: Commerce

Wednesday, March 31

8:30AM House: Appropriations
11:00AM House: Judiciary 3
12:00PM House: Families, Children and Aging Policy
1:00PM House: Alcoholic Beverage Control
2:00PM Senate: State and Local Government