June 5, 2020
“Because it is such a tight fiscal year, we’re going to have to be very fiscally prudent, and any dollars we spend, we spend on absolutely necessary expenses,” is a quote from NC Rep. Donny Lambeth in a May 26, 2020 article in the News & Observer (https://www.newsobserver.com/news/politics-government/article243008661.html).
His comment was made at a joint Appropriations meeting where legislators heard that there is an approximately $4.3 billion shortfall in the budget due to not meeting budgeted amounts in revenue and other impacts from the pandemic. House Speaker Moore has indicated in a recent press conference that they will be working on separate spending bills in specific areas of the budget rather than on one large appropriations bill. President Pro Tempore Berger had already indicated that the Senate will not seek to override the budget veto. Several bills have already been introduced that appropriate funds in very targeted areas of the budget.
In addition to the typical budget items, the General Assembly continues to look at proposals to spend the approximately $1.9 billion in federal funding still available to address COVID-19. Two pieces of legislation have already been signed into law and several bills have been introduced to allocate the additional federal funding in areas such as remote learning and access to education, broadband access to the internet for rural communities, law enforcement and teacher protection, housing assistance, health care assistance and even funding directed to particular cities.
To shore up the State budget, legislators are discussing a $1.5 billion general obligation bond proposal. $800 million of the bond would be designated to build new K-12 schools. Another focus of the bond would be to address a shortfall in the Department of Transportation budget.
The House Speaker indicated that they intend to finish their business before July 4th.
Medicaid Transformation Still on the Table
The Senate Appropriations Co-Chairs introduced S808, Medicaid Transformation Necessities. This could be a strategic move on the part of the Senate to separate this item from the rest of the budget and perhaps ease the path to a budget being ratified and signed into law. It may also send a message to the five Prepaid Health Plans (PHPs) not to give up on Medicaid Transformation. The bill itself generally includes the Medicaid Transformation provisions that are in the biennium budget bill that was never signed into law. That budget impasse led to NC DHHS being under a continuing resolution budget that was set at SFY18-19 levels.
One glaring difference between the Medicaid Transformation provisions of S808 and the previous budget provision is that no dollar amount is specified to be transferred to DHHS to cover start-up costs such as the claims lag and initial capitation payments to the PHPs. The original budget provision authorized approximately $300 million to be transferred to DHHS. S808 simply states that “sufficient sum” will be transferred. Other provisions include:
To date the House has not introduced a companion bill and the Senate has not taken any action beyond referring S808 to the Senate Appropriations Committee.