July 9, 2019
The Governor vetoed the budget with concerns that it did not include Medicaid expansion. It is unclear whether the House has the votes to override the veto. If the veto remains in place, their will need to be budget revision. As of July 1, the state is running on the current budget until the new budget can be approved. The Governor is working on a Medicaid expansion counter offer and in the meantime, Republicans are bringing back the Carolina Cares bill.
Bills that are on the move:
H656: Medicaid Changes for Transformation (see S548), passed third House reading, ratified, presented, and signed by the governor on 7/4/19 as Ch. SL 2019-81.
H966: 2019 Appropriations Act, vetoed on 6/28/19, received by the House, and placed on the calendar for 7/9/19. (ANN
In addition, there are two budget items that stand out for health and human services including a substantial cut in recurring administrative dollars for NC DHHS and the proposal to move the offices of NC DHHS to Granville County.
In recent years, the General Assembly has handed NC DHHS “Management Flexibility Reductions” that were non-recurring (one-time) cuts. The General Assembly required NC DHHS to find $15 million non-recurring for each State Fiscal Year (SFY) 2017 and 2018 but also gave DHHS some leeway to determine where the reductions were taken. The difference this year is: 1) it is a larger cut focused on their administration and oversight; and, 2) it is a recurring cut that will leave a hole in the budget. The 2019 budget calls for a $30.66 million recurring reduction in this fiscal year that increases to a $42.7 million recurring reduction in SFY2021. Investopedia defines recurring costs as, “recurring general and administrative operating expenses are the normal, ongoing expenses required for operating a company in the company’s chosen line of business.” Investopedia further defines non-recurring as “extraordinary or one-time” expenses.
The General Assembly coupled this budget proposal with language requiring NC DHHS to move its central functions to Granville County. “SECTION 39.2.(m) The Department of Administration shall select land located in Granville County suitable for the relocation of the Department of Health and Human Services facilities at the Dix Campus in Raleigh.” This one-sentence budget provision, included in the Capital Improvement and Repairs and Renovations Appropriations portion of the budget, would call for moving many of the thousands of staff that NC DHHS employees from the offices on the Dorothea Dix campus in Raleigh to Granville County. Legislators are saying that this would stimulate the economy in a rural area of the state. The NC DHHS Secretary has expressed concern that the move would make it difficult to retain and recruit staff and for staff to travel back and forth for meetings with other State departments. The agreement around the sale of the Dorothea Dix property does require that DHHS eventually move from the grounds.