RALEIGH – By one measure, the to-do list for Republican legislative leaders this year at the N.C. General Assembly is very similar to what they wrote down in 2011, when they took new majorities in the House and Senate.
“We are focused on continuing a number of the things we initiated last time – making sure that North Carolina’s budget is balanced and in order, making sure that our tax situation is stable (and) trying to address the problems we have in education,” said N.C. Senate leader Phil Berger, R-Rockingham. And bills requiring voter identification, reducing business regulations and controlling Medicaid costs are again on the list.
But by another accounting, everything has changed as legislators begin filing and debating bills this Wednesday, when they reconvene the two-year session after ceremonial meetings Jan. 9 to elect leaders.
Democrat Bev Perdue is no longer in the Executive Mansion, where she wore out her veto stamp against GOP legislation the past two years. She did not seek re-election. Republican Pat McCrory replaced her, opening the door for his party to fashion state government more to its liking than any other time in memory.
Republicans haven’t controlled the legislative and executive branches simultaneously since 1870.
With expanded majorities and a friendly governor, GOP legislators say they’re ready to take on complicated issues that could anger political friends and enemies. Those issues include revamping an indebted unemployment insurance system through higher business taxes and reduced jobless benefits, and overhauling a state tax system that Democratic leaders weren’t able to complete.
“The next two years will really test our mettle,” said N.C. House Speaker Thom Tillis, R-Mecklenburg.
Republicans say they’ll get along with one another and McCrory but acknowledge they’ll likely have occasional spats, as Democrats did. The GOP majorities – now 77-43 over Democrats in the House and 33-17 in the Senate – are veto-proof.
State business leaders have high expectations. They see the $2.5 billion the state owes the federal government for paying unemployment benefits and unnecessary regulation as major obstacles to accelerating the economic recovery in a state with one of the highest jobless rates in the nation.
“There’s a common recognition that North Carolina has a job creation problem,” North Carolina Chamber chief executive Lew Ebert said, adding: “We’ve got to increase the rate and pace of change.”
Many Democrats and liberal-leaning activists are worried about efforts to scale back unemployed worker weekly benefits by as much as one-third and tax overhaul proposals they say would stick more of the financial burden on the poor.
Republicans also are sure to pass a voter identification requirement – probably photo ID – to vote in person, which critics say erodes voting rights. Perdue vetoed a photo ID bill in 2011.
“The stakes seem to be a lot higher than they have been in many years, regardless of the party in power,” said Adam Searing, a longtime General Assembly lobbyist who directs the North Carolina Health Access Coalition.
Writing a two-year budget before July 1 is the General Assembly’s primary job. With the state’s slow economic recovery expected to keep revenue growth under 4 percent – or roughly $800 million for the 2013-14 fiscal year – there will be little money for new initiatives.
Extra revenue largely will go to pay for teaching additional students in the public schools and the University of North Carolina system and for higher Medicaid costs, said Art Pope, McCrory’s top budget adviser. Legislative budget-writers want to find cost savings that can be redirected to repair and renovate aging state buildings and infrastructure.
Tillis said an unemployment insurance proposal should clear the House in early February. Senate Republicans and McCrory have largely supported the measure recommended by a study committee. Detractors say the balance between benefit cuts and higher taxes for businesses to pay down the debt and restore the state’s unemployment trust fund is skewed heavily against working families.
“It suggests that people almost begin to look at working people who’ve suffered great (from) this recession, lost their jobs, they’ve suddenly become the enemy of the people of the government of North Carolina,” said Gene Nichol with the Center on Poverty, Work and Opportunity at UNC-Chapel Hill.
Senate Republicans have floated a tax overhaul plan to eliminate corporate and individual income taxes in exchange for expanding the sales tax to include most services currently exempt from the tax, including the state’s share of the sales tax on groceries. McCrory hasn’t ruled out the idea but seems more comfortable lowering income tax rates. Tillis said he wants the corporate income tax eliminated but is preaching patience before disentangling the rest of the tax system.
“We’re talking about revising 50 years (of tax laws) in five months, and it seems like a daunting task,” Tillis said.
The Democrats who remain in the legislature – now barely one-third of the 170 members – have their own ideas for a tax overhaul and unemployment insurance changes to ensure the solvency of the trust fund, said Senate Minority Whip Josh Stein, D-Wake.
“The chance for common ground is there, but a lot of it will depend on how are (Republicans) going to govern,” Stein said. “Are they going to be open to Democratic ideas or are they just going to shut the door?”
Republicans recognize that they have a lot riding on the legislative session.
“I personally do not think that Republicans have a mandate in North Carolina,” said Pope, McCrory’s deputy budget director and a former state House member. “Republicans have an opportunity.”