Politics & Government

The budget fight in North Carolina is over for 2019 as legislators adjourn

The North Carolina legislature is done trying to override Democratic Gov. Roy Cooper’s vetoes on the budget and a few other hot-button issues — until at least next year.

The N.C. Senate and House of Representatives both adjourned Thursday evening, putting a temporary end to one of the longest legislative sessions in recent years that was dominated by redistricting lawsuits and a fight over the budget and Medicaid expansion.

The House voted to override Cooper’s budget veto in a controversial vote Sept. 11, when nearly every Democrat was absent. But in the Senate, Democrats were able to keep Cooper’s veto alive. They hold 21 of the 50 seats, which is the minimum number of votes needed to stop a veto override.

“The votes were not ready to be taken so we’ve now moved that as well as a couple other overrides,” Republican Senate leader Phil Berger said Thursday in a press conference after the session ended.

Lawmakers plan to return in mid-November to work on more redistricting plans after a three-judge panel issued an injunction last week warning the legislature that the state’s maps for the 13 U.S. House of Representatives seats appear to be unconstitutional and should be redrawn.

But on other issues, such as the budget fight, lawmakers don’t plan to discuss those for the rest of 2019. They’ll be back in Raleigh starting Jan. 14, however, and could bring up the budget and other debates then.

Despite not being able to override Cooper’s budget veto, Republicans still have been able to pass much of what they wanted in the $24 billion budget over the past few weeks by using piecemeal spending bills.

Those mini budgets include money for disaster relief, raises for state workers, funding for the “Raise The Age” juvenile justice reform bill and to cut down on a backlog of untested evidence in sexual assault cases.

But Thursday, as lawmakers rushed to finish up their business, some issues got left behind. Numerous Democrats voted against adjourning, saying they should stay in Raleigh until passing a Medicaid expansion bill.

“We have not provided healthcare for the working poor or those who are unable to work due to curable illnesses but alas have no healthcare,” tweeted Rep. Allison Dahle, a Cary Democrat.

A Republican plan to give most adults in the state $125 as a tax rebate — paid for by an unexpected state budget surplus — also failed to pass. It got drawn into an unrelated political fight involving money for a struggling theater in Roanoke Rapids, off of Interstate 95, about 20 miles from the Virginia border.

Taxpayer Refund Act fails

In August, Republican leaders in the General Assembly announced plans to use most of the $900 million state budget surplus to give taxpayers refunds.

Their plan would have given roughly $680 million in tax refunds: $125 to taxpayers who filed singly or $250 to couples who filed jointly. That represents 3.6 million tax returns for 5.1 million taxpayers, The News & Observer previously reported. The taxpayers would only get the $125 or $250 if they paid at least that much in taxes, and the refunds would be capped at those amounts.

The Senate quickly passed the bill, but it has not made progress on the House side the past few months.

Wednesday, House Speaker Tim Moore told a News & Observer reporter: “Of course that’s still an option.”

And on Thursday, as some lawmakers joked about vampires reviving bills, the refund act saw new life in a House committee and then later on the floor. However, before making it to the floor, the bill was combined with a more controversial item regarding Roanoke Rapids Theatre late in the day. Both items then died, to maybe be brought up again next year.

“I don’t understand why the House has not taken that as a clean measure and prioritized giving money to taxpayers, as opposed to giving money to municipalities that may have made mistakes in the past,” Berger said Thursday night.

Franchise tax reduced

The House passed the latest version of a bill, 67-49, that would reduce the franchise tax.

Republicans in the General Assembly want to eventually eliminate the franchise tax, which they describe as a double property tax on businesses in North Carolina. Republicans have said reducing the franchise tax is good for business and jobs. But Democrats are worried about the loss of tax revenue, which would be about $1 billion over five years.

The Senate passed the franchise tax reduction bill earlier in October, but needed to vote on the new version Thursday before it could be sent to the governor.

The North Carolina Chamber of Commerce celebrated the vote to reduce a tax they describe as “burdensome and regressive.”

“When our state has a climate that encourages businesses to invest not just in their operations, but also in their people and the communities they serve, we all win,” NC Chamber of Commerce President and CEO Gary Salamido said in an emailed statement to The News & Observer. Reducing the franchise tax “will allow business leaders to create jobs, keeping our state competitive and expanding economic opportunity for all North Carolinians,” Salamido said.

Salamido encouraged the governor to sign it into law.

Sen. Paul Newton, a Mount Pleasant Republican, has called the franchise tax, which would be reduced by a third over the next five years, a “job killer.”

Republicans expect Cooper to veto the franchise tax bill.

For more North Carolina government and politics news, listen to the Domecast politics podcast from The News & Observer and the NC Insider. You can find it on Megaphone, Apple Podcasts, iHeartRadio, Stitcher or wherever you get your podcasts.

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