Nelson Mullins Riley & Scarborough

The first month of 2012 has been quite an eventful one for North Carolina politics, beginning with the legislative override of a gubernatorial veto, followed by a cabinet secretary's resignation notice mid-month, and most recently, first-term Governor Bev Perdue's announcement that she will not seek reelection in November.

Elections

Many would-be candidates have already put speculation to rest by making their intentions to run for office clear prior to the opening of the official campaign filing period February 13.  Statewide races on the North Carolina ballot in 2012 include the office of the President, US House of Representatives, Governor, Lieutenant Governor, Council of State, State House of Representatives and State Senate.  In a largely unexpected announcement on January 26, less than three weeks prior to the opening of campaign filing, incumbent Governor Bev Perdue revealed she would not seek a second term in office.  In her official announcement, she said she would instead focus on promoting her initiative to raise the state sales tax to fund education. Just days later on January 31, Pat McCrory, former mayor of Charlotte and 2008 GOP gubernatorial candidate, made his long-expected announcement that he will again seek the office of the Governor. 

In the wake of this news, Democrats are mobilizing to find a formidable opponent to take on McCrory in November.  Democrat incumbents Lieutenant Governor Walter Dalton and NC Rep. Bill Faison have both officially announced their candidacy, but speculation around other possible entrants continues.

Charlotte Mayor Anthony Foxx, US Sen. Kay Hagan and US Rep. Health Shuler have confirmed they will not seek the office of the governor. 

Those still considering entering the race include Erskine Bowles, former NC Treasurer Richard Moore, US Rep. Brad Miller, NC Sen. Dan Blue, former US Rep. Bob Ethridge, and US Rep. Mike McIntyre. 

Many other statewide races face similar flux and candidate uncertainty including Lieutenant Governor, Superintendant of Public Instruction, and numerous US and NC House and Senate seats impacted by the new districts passed by the legislature in 2011.

Click here to see the latest news on the "2012 Election Tracker" (maintained by the NC FreeEnterprise Foundation)

Veto Override

The GOP-majority North Carolina General Assembly began 2012 by briefly reconvening on January 4 and 5 to consider the override of Senate Bill 9, which Democratic Governor Bev Perdue issued her official objection to in mid-December.  While the Senate secured the three-fifths majority of votes necessary to successfully override, the measure did not come to a vote in the House.  Instead, the bill was re-referred to a committee for future consideration. Senate Bill 9 would change the appeal process for death row inmates. 

Although the House chose not to vote on the SB 9 override during this particular session, they did successfully vote to override another piece of vetoed legislation.  Senate Bill 727 had been awaiting House action since the Senate overrode the veto last summer.  With the House's override vote, the bill, which prohibits the state from collecting membership dues via payroll deduction from public school employees, now becomes law notwithstanding the objection of the governor.

General Assembly

Legislative leaders plan to reconvene for the "short session" on May 16, where the bulk of attention will be on balancing the budget prior to the beginning of the 2011-2012 fiscal year on July 1.  There are plans to briefly reconvene in February and April in the event that legislative action may be necessary on a limited number of matters. 

With over 100 meetings of various legislative committees, subcommittees and study commissions scheduled prior to the beginning of the short session (see legislative calendar here), the General Assembly plans to complete most of the work on the budget and other short session legislation in the interim.  Legislative leaders have indicated their intention complete the session and adjourn sine die for the biennium before the beginning of the next fiscal year on July 1, 2012.

Several committees have already met in 2012 and discussed substantive matters of note summarized below:

Revenue Forecast

The latest NC revenue data released mid-January show higher-than-expected tax collections.  Through the first half of the 2011-12 fiscal year, the state collected approximately $150 million more in revenue than was expected, according to the Office of State Budget and Management. While positive news, appropriators should proceed with cautious optimism, according to the Fiscal Research Division.  Many volatile revenue sources including April payments from corporations, s-corps and LLCs, have a history of producing large swings in collections.

Medicaid Budget

Several legislative and public bodies received updates on the Medicaid budget in January from NC Department of Health and Human Services Secretary Lanier Cansler* and other DHHS staff.  The Department projects their actual reductions will not meet the numbers set forth in the legislatively approved budget for FY 2011-12 and FY 2012-13 for a variety of reasons.   The total shortfall for FY 11-12 is about $149 million (this has increased by about $9 million since December 2011 because of a recent judicial decision regarding personal care services, explained here).  DHHS is projecting a $242 million cash shortfall in 2012-13. 

The Department's guiding principles for future cuts are 1) targeted rate reductions and 2) avoidance of optional service eliminations.  At this point, neither are an option for the current shortfall because of the state plan amendment CMS submission timeline and the likelihood of CMS approval.  The state cannot constitutionally end the fiscal year in a deficit the Department currently does not have a plan to address the shortfall.   DHHS staff has emphasized that the issue should not be solving a one-time shortfall problem, but system-wide reform.

*Governor Perdue announced on January 13 that DHHS Secretary Lanier Cansler will step down as effective January 31 (see announcement here).  Top Perdue advisor Al Delia was appointed interim Secretary.

LME Governance

The Joint Legislative Oversight Commission on Health and Human Services recently appointed a subcommittee to address the statutory limitations and recommend solutions for a successful transition in the way the state manages and delivers services for mental health, substance abuse and developmental disability Medicaid patients.  The LME (Local Management Entity) Governance Subcommittee, comprised of elected officials and public stakeholders, met on January 24th in their first of four total meetings.  Chaired by Rep. Nelson Dollar, this subcommittee will focus on narrowly tailored recommendations for the short session that are most critical to having a successful transfer of LMEs to Managed Care Organizations (MCOs).  Click here to see further details about this subcommittee including membership, agendas, handouts and minutes.