LEGISLATIVE REPORT - February 27, 2019
The big news around Raleigh last week was the long-awaited State Board of Elections hearing on the controversy surrounding the election in the 9th Congressional District. After months of investigation into fraud and four days of testimony, Republican Mark Harris announced that he believed a new election should take place. The Board unanimously ordered the new election, with a timeframe to be decided later. This will not be the end of the matter though as criminal investigations are on-going and new information was released during the hearing about what the campaign and the candidate did or did not know about the absentee ballot program.
There were some fireworks at the General Assembly as well, as health care shifted to a new focus– the State Health Plan. Treasurer Folwell and the North Carolina Healthcare Association testified before the House Health Committee on Folwell’s plan to save more than $300 million annually from the State Health Plan by cutting provider reimbursement rates.
Under the plan, which would go into effect on January 1, 2020 without legislative action, the State Health Plan would reimburse providers at 177 percent of Medicare’s payment rate for the same service. The hearing, which became contentious at times, focused on Folwell’s goal to reduce rising costs and increase transparency. At the same time, hospital leadership warned that the changes would amount to significant cuts to hospitals, especially those in rural parts of the state, that are already under budget pressures. Some hospital executives suggested that the Plan should focus instead on “value-based care,” which rewards providers for keeping patients healthy. This debate is likely to stay in the forefront, and most anticipate that legislators will get involved and there will be legislation filed about the State Health Plan.
Another contentious issue brewing in the General Assembly is the potential modernization of North Carolina’s Alcohol and Beverage Control (ABC) laws. North Carolina is one of just 17 states that directly control the sale and distribution of spirits. Recent polls have shown that about half of North Carolinians support privatization of the system, and a recent study by the
Program Evaluation Division also brought attention to the issue. Several pieces of legislation have been filed dealing with the issue, with likely more to come. Possible changes include forcing local ABC boards in the same county to merge, allowing local governments the option to open ABC stores on Sunday, offering free in-store liquor tastings and allowing alcohol delivery. Rep. Chuck McGrady (R-Henderson) has signaled his intention to introduce legislation to privatize the ABC system.
Last week the Fiscal Research Division and the Office of State Budget and Management released their consensus revenue forecast and state budget outlook. The forecast predicts overall revenues for the fiscal year ending June 30 will be $151 million higher than anticipated when the current year's budget was approved, representing less than 1 percent of the state’s $24 billion budget. The forecast predicts modest growth in state revenues for the next three fiscal years and continued economic growth for the state. The forecast warned about the impact of major budget pressures in the coming years, including K-12 enrollment, higher education enrollment, the state retirement system, the State Health Plan and Medicaid.
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