It's 505 and welcome in to a Thursday edition of the Carolina Journal News Hour, News Talk 1110-993 WBT. I'm Nick Craig. Good morning to you. North Carolina State Treasurer Brad Briner says that a major United States Supreme Court decision yesterday that affects a Tennessee transgender case bolsters the state's position in a similar legal battle over its state health plan. That's the SHP.
In a 6-3 ruling yesterday, the United States Supreme Court v. Skermeti, that is the Tennessee Attorney General, the court upheld Tennessee's law banning puberty blockers and hormone treatments for transgender minors. The state treasurer believes that this decision supports North Carolina's arguments in a similar case known as Falwell v. Caddell, a case challenging the state health plan's long-standing exclusion of transition-related procedures and medications. Of course, Falwell referring to former state treasurer Dale Falwell.
A federal trial court and the 4th U.S. Circuit Court of Appeals previously ruled against North Carolina, finding that the exclusion violated the Equal Protection Clause. State officials, including then Treasurer Dale Falwell, appealed to the United States Supreme Court, arguing that the plan should retain discretion over coverage decisions, especially for treatments deemed costly. Or experimental. Breiner's office now expects the Supreme Court to overturn the Fourth Circuit decision, lift the injunction, and reinstate the exclusion.
This would align the plan's policies with House Bill 808, which bans transgender procedures for minors in North Carolina. The plaintiffs argue that the exclusion unfairly targets transgender individuals, denying them care that is otherwise covered for cisgender patients. Breiner contends that the issue is about managing benefits equally for all 740 plus thousand plan members while keeping costs reasonable for everybody that takes advantage of the state health plan. A ruling in the state's favor could have a significant implication for how public health plans nationwide handle coverage for transgender-related care. And with this major decision, Out yesterday from the United States Supreme Court, again, dealing with a relatively similar law in Tennessee, does very much lay out the course for other states, including North Carolina, and how this process should unfold long term.
We've got a lot more details this morning on this story, including some additional coverage from this: quotes from Treasurer Breiner, some quotes directly from the 6-3 majority ruling at the United States Supreme Court yesterday. You can get all of those details by visiting our website this morning, CarolinaJournal.com, where it's now 508, news talk 1110-993-WBT. We have been keeping a very close eye on the North Carolina General Assembly over the last couple of weeks as budget negotiations continue between the North Carolina House and Senate to walk us through where things stand this morning. Brian Balfour with the John Locke Foundation joins us on the Carolina Journal News Hour. Brian, we were told months ago that by July 4th, the budget should be set and done.
As we sit here in mid-June, it seems like we may have hit some roadblocks. What's the latest that you're watching at the GA this morning? Yeah, yeah, it seems to be an annual rite of passage every year.
Now, we start the session out with high hopes for a budget to be in place at the beginning of July of the new fiscal year. And here we find ourselves, we're getting deep into June, and there's no budget in sight. Hearing that there's not a lot of urgency taking place in discussions between the House and Senate to iron out their differences, and more than likely that they're getting ready to take a break for about three weeks or so and come back in around mid to late July to try to resume conversations about the budget. As we look at the differences between the House and the Senate budget, they are pretty far off. At least the top line number is the same.
They both are saying they're going to spend the same amount of money, but there are some key differences in how the House and Senate want to handle the fiscal viability, I guess, of the state of North Carolina moving forward. Do you suspect that that's probably one of the major holdups that has lawmakers at odds? Yeah, I think the biggest sticking point is probably how they their different approach to taxes.
So the Senate wants to keep Keep the pre-scheduled tax reductions in place that were scheduled years ago to try to continue to roll down the tax rates for personal income and corporate income tax rates, and then even add on an additional reduction in the personal income tax rate a few years out. But meanwhile, the House, conversely, they take a pretty different approach where they They leave the tax reductions in place, but they significantly increase the threshold for revenue, the revenue triggers, to make those or to allow those tax reductions to come into fruition. And so, a fiscal research division, which had a look at those triggers, the new triggers that the House are proposing, is saying that there's a very strong likelihood that those triggers would not be met. And so, it would make it very difficult for North Carolinians to receive those tax cuts under the House budget plan. For those that are maybe new to North Carolina or maybe just starting to get involved in North Carolina politics, many of them might be scratching their heads wondering, Brian, well, we've got Republican leadership in the House.
We've got Republican leadership in the Senate. Why can't they get together on that? What makes these two chambers so different that they're approaching something as major as taxes for not only corporations, but individuals so differently? Yeah, I think one of the things that kind of threw certainly the house for a loop is some. Updated revenue projections that were coming out showing that revenues might start to take a little bit of a dip in the second year of the biennium of this budget cycle.
And so that's, I think, what prompted the House to get much more nervous about these previously scheduled tax rate reductions coming out over the next few years. There'd be concerns that the tax rate reductions would make it more difficult to meet the spending. The spending demands of the budget, and that's that's also, I think, a little bit of a different approach as well. Where it kind of suggests to me that the House has a different viewpoint on what they want to do with spending over the next handful of years, that they want to make sure that the revenue is there to meet the different kinds of spending priorities that they have, versus the Senate, which seems to be a little more interested in trying to provide more tax relief for North Carolina taxpayers and then rein in the spending accordingly if it does impact the revenues. And one of the things that's kind of reflected in their different outlooks is you look at their different approach to teacher pay and state employee salaries.
The House is much more aggressive in terms of a percentage increase across the board for both teachers and for state employees generally, where the Senate was a bit more conservative in terms of the percentage increase, but while also kind of bolstering. That with one-time bonus payouts for the employees, but the Senate approach with those one-time bonus payouts would not commit the state to a higher level of spending for employee salaries where the House, you know, they would be ratcheting up. The overall salaries for state employees and teachers, and thus kind of increasing that baseline. for what would need to be spent moving forward. Yeah, those reoccurring funds that would, in fact, come back every year.
You talk about this report from fiscal analysis and fiscal research. Covered that a couple of weeks ago. And Brian, I've seen a lot of commentary on that. That over the last decade or so, many of these fiscal analysis and reports that have come out have been dead wrong as it relates to North Carolina revenue. Where do you fall on that?
Yeah, I've done a little digging into that and look back over the last decade, and they have consistently erred and in most years pretty significantly, they've consistently erred on the side of underestimating the actual revenues that come in.
So you look, you can go back and you look at what they were projecting for a given fiscal year and then what the actual revenues turned out to be in that fiscal year. And the actual revenues year after year, consistently, aside from the COVID year, of course, revenues consistently come in significantly higher than what they're projecting. And one of the causes, and even in their projections, they'll say, well, we're projecting that revenues are going to you know, be limited due to the scheduled tax Decreases coming in. But lo and behold, the actual revenues come in much higher than what they projected because, in no small part, because those tax reductions actually stimulated the economy and economic activity, which generates more tax revenue.
So we're kind of at this point taking those revenue projections with a bit of a grain of a salt just because we've seen the history of the last decade of where they've gone wrong. We'll continue the discussion with the ongoing debate over the North Carolina budget coming up after this with Brian Balfour. You're listening to the Carolina Journal News Hour. Bubba Wallace here from 2311 Racing. Funny thing about being fast?
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Terms and conditions apply. It's 521. Welcome back to the Carolina Journal News Hour. News Talk 1110-993-WBET. Don't forget, if you miss any portion of our show, live weekday mornings right here on WBET.
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Turning our attention back to the North Carolina General Assembly this morning. They have officially sent House Bill 251 to Governor Josh Stein's desk. This piece of legislation would prevent discrimination based on political beliefs in state-administered disaster aid by classifying violations as a Class 1 felony. The North Carolina House gave final approval of the disaster recovery bill in a 13 to 1 vote, one person voting against. The bill restricts unnecessary demographic questions for state emergency grants, limits inquiries to relevant criteria, such as verifying a farmer's status for agricultural relief.
The bipartisan legislation comes in response to reports last November that FEMA was selectively providing aid after Hurricane Helene, culminating in the termination of a federal emergency worker. A leaked text chain revealed that Washington had instructed colleagues to avoid homes displaying Trump signs, sparking outrage and calls for reform. Representative Kelly Hastings, the Republican out of Gaston County, said, quote, this is the bill that we passed that had to do with the discrimination regarding a person's free speech when it comes to receiving aid following a natural disaster. One of the great provisions is that it restricts those type of questions from being asked to individuals. Hastings described a Senate added on provision inspired by a tragic case in Yancey County where a resident's home was looted after his wife's death in the storm.
The bill elevates looting of temporary households. During emergencies, to a Class F felony, while other looting remains a Class H felony, effective December 1st of this year, if, of course, that legislation is signed into law. The legislation also streamlines recovery in Helene-affected communities by adopting federal health service waivers for hospitals, exempting downtown commercial buildings from stricter fire-resistant window codes for two years, and allowing floodplain reconstruction under a FEMA agreement. Additionally, it waives certain permits for processing debris into mulch or compost until July 1st, 2027, and prioritizes composting over a landfill disposal when that is the more cost-effective way to get rid of some of that vegetation or debris. The bill now awaits consideration from Governor Josh Stein.
As I noted, it did receive a very strong bipartisan support in the North Carolina House in a Final vote of 113 to 1. We have not immediately heard from the governor. As to whether he will sign this legislation or not.
However, we'll keep a close eye on the details and pass them along to you as soon as we get them over on our website, CarolinaJournal.com and right here on the Carolina Journal News Hour, where it's now 525 News Talk, 1110, 993, WBT. We are learning additional details this morning about the ongoing struggle between legislative leaders in the North Carolina House and Senate as it relates to the biennium budget. We're getting details with Brian Balford from the John Locke Foundation.
So now, many folks, of course, look at Washington, D.C., and there's always the threat and discussion around Christmastime of a looming government shutdown. How does that process here work in North Carolina? If we get to July 1st coming up and we don't have a budget passed, does the state shut down? What exactly will happen here? Right, yeah.
So there's a backstop. There was a bill passed a number of years ago that would keep the state government open and functioning. There'll be no shutdown. What happens is when July 1st kicks in with the new fiscal year, that state expenditures would remain at the same level as they are in the current fiscal year until they get some sort of budget in place. And it's kind of a double-edged sword.
Of course, on one side, there's no panic in terms of a government shutdown and funding government agencies and employees. But on the other side, it also kind of decreases any sort of urgency that legislators might feel to try to get a budget in place because the funds are continuing to flow into state agencies.
So it kind of plays out in two different ways and can, and what we've seen over the last About six to eight years, we've seen prolonged budget negotiations sometimes carry out deep into the fall.
Now, of course, we're talking about these negotiations as it relates between Republicans in the Senate and Republicans in the House. I guess the elephant in the room this morning, Brian, would be no matter what they end up deciding, it's got to go to a Democrat's desk. Josh Stein would be the final say whether something like this moves forward or not. Yeah, yeah, absolutely. And Stein came out kind of somewhat surprisingly, but he seemed to take sides a bit after the House released their budget plan.
And he came out and kind of tacitly endorsed the House budget plan over the Senate budget plan, I think in large part because of the more aggressive teacher raises and state employee raises.
So that to me kind of suggested that if they were to present the House budget proposal to Stein, he may very well have signed it. But we'll have to see what elements from the House budget versus the Senate budget make it into the final budget that is actually presented to Stein's desk and then see where he takes it from there. You mentioned that the government will not shut down on July the first, and lawmakers are likely to be back probably sometime after the Fourth of July holiday and get working on this. As we head through the rest of this year, at any point, can they come to a budget agreement and get that done? Or do they have to wait for a specific time period to start that again?
They can, best of my knowledge, they can pretty much come to the agreement whenever they are able to. And they can also put into the budget, if there are certain elements within the budget, in that specific section, they can say this is effective upon such and such a date.
So they can. You know, make tweaks specifically for when they want certain things to go into effect within the budget. And then When they do pass the budget, if there's spending increases or salary increases, those will become retroactive to July 1st as well. How about this term? I've seen it thrown around on social media over the last couple of days, this idea of mini-budgets.
Is that something that North Carolina's had in the past? And is it something that you see is maybe likely going forward? Of course, Hurricane Helene continues to be a major discussion out in the western half of the state, more money flowing out there. What exactly does that mean? Yeah, yeah, that's a great question and a great point.
And that is something we've seen in recent years in North Carolina, these kind of mini budgets, where instead of one huge, you know, five, six hundred page budget bill, they'll address specific items within the budget and pass them in separate smaller bills. Like, for example, there'll be one bill that addresses teacher pay and state employee salary changes. And then there'll be a separate bill addressing specifically Hurricane Helene recovery funding. And then maybe another bill addressing needs for Medicaid spending. And then they'll just kind of piecemeal together the priorities that they want to try to accomplish.
We will be keeping a close eye as the negotiations continue. A great update this morning. Brian Balfour of the John Locke Foundation joins us on the Carolina Journal News Hour. It's 5:36. Welcome back to the Carolina Journal News Hour, News Talk 1110-99-3 WBT.
I'm Nick Craig. Good morning to you. The Audit Committee for North Carolina and Innovation, or NC Innovation, the state-funded nonprofit at the center of recent legislative and financial scrutiny, has delayed approval of its latest IRS Form 990 following a detailed review revealing compliance issues, disclosure gaps, and unresolved questions about past filings. The decision came during a lengthy audit committee meeting this week, where external auditors from BDO and staff walked members through the draft of NC Innovation's fiscal year 2023 IRS tax return. While the organization reported a dramatic increase in revenue from $10 million to $259 million, driven by The state's appropriation and endowment funds, committee members raised concerns about how those funds were documented and disclosed.
Among the most significant revelations was a failure to update key government disclosure forms and documents in the tax filings. The draft Form 990 incorrectly stated that no changes had been made to the organization's governing documents.
However, board members pointed out that substantial amendments had in fact been made to NC Innovation's bylaws and articles of incorporation in the latter parts of 2023. NCI Board of Director member Art Pope said during the meeting, quote, I think this needs to be checked yes, and then we need to include a Schedule O disclosure that we amended our bylaws and articles of incorporation. These amendments were made within the reporting period and failing to disclose them would be inaccurate. Pope also highlighted problems with how actions taken by the Executive Committee, particularly a bonus awarded to CEO Bennett Waters, were documented. He pointed out that the decision was not immediately reported to the full board, a lapse that Pope is concerned could violate internal government policies as well as IRS expectations for transparency.
The committee also scrutinized NC Innovation's reported lobbying expenditures totaling over $460,000, with nearly $21,000 of that being attributed to staff time. Under the 501H election, NC Innovation is required to maintain a comprehensive record to document lobbying activity. Members questioned whether those standards had been met, with Art Pope once again noting, we discussed this last year and emphasized the importance of record keeping when he was probing staff on estimates into how that data was made available and whether it was tracked in real time or not. Staff responded to those that the allocations were based on calendars and meeting logs using the same methodology as previous years.
However, they acknowledged that some records had in fact been reconstructed. The CFO, Linda Hall, of NC Innovation, said, We went back and we brought all of those dates and all of the times then allocated essentially the same way that we did in fiscal year 23. We referred back to those again in determining what those allocations look like. Members also expressed some additional frustrations over how previous returns had been handled, particularly the amended Form nine hundred ninety for the fiscal year ending June of twenty twenty three. The amended form, which was filed in April of twenty twenty five, was submitted without review by the audit committee despite including statements that it had, with Art Pope noting, it said it had been reviewed.
It has not. This is a material misstatement. The board then agreed to revisit that return and work with an independent firm to conduct a full analysis and recommend any necessary amendments to the IRS reporting. The meeting also underscored ongoing tension between Art Pope and the organization's auditors. Pope reiterated a standing request for a private meeting with BDO to raise unresolved questions from the last audit cycle, a request that, according to him, to this point, has still not yet been granted.
The committee will reconvene once for the fiscal year 24 of Form 990 when that is updated to include corrections related to the board governance changes, executive committee activity, and improved narrative descriptions of the organization's grant making, particularly its $13 million worth of pilot grants, which has not been adequately reflected in some of those draft documents. The delay in approval marks another challenge for NC Innovation, which earlier this year saw lawmakers file legislation to claw back more than $500 million worth of taxpayer funding amid mounting questions about oversight and fiscal transparency. The organization created to support commercialization of university-affiliated research and technology through grants and partnerships has faced growing skepticism from some in the General Assembly. With a September the 15th deadline to file the final IRS Form 990, the clock is ticking, and with legislative attention still fixed on the group's stewardship of public dollars, the stakes do remain rather high. NC Innovation, we have covered that a lot over the last six months or so.
Some very interesting details out of this board of directors meeting, which happened earlier this week. It was rather interesting to watch. Watch unfold. You can check out more of those details and read some additional quotes by visiting our website this morning, CarolinaJournal.com. Turning our attention to some national news this morning that could have an impact here in North Carolina.
State Treasurer Brad Breiner says that a recent United States Supreme Court decision out yesterday as it relates to a Tennessee transgender care law bolsters North Carolina's position in a similar legal battle over the state health plan. In a 6-3 ruling in the United States v. Skermeti, that is the Tennessee Attorney General, the court upheld Tennessee's law banning puberty blockers and hormone treatments for transgender minors. State Treasurer Brad Breiner believes that this decision will support North Carolina's argument in a current legal challenge that's ongoing, Falwell v. Caddell.
That's challenging the state health plan's long-standing exclusion of transition-related procedures and medications. A federal trial court, as well as the Fourth U.S. Circuit Court of Appeals, had previously ruled against the state of North Carolina, finding that the exclusion violated the Equal Protection Clause. State officials, including then-Treasurer Dale Falwell, who of course is named in that case, appealed to the United States Supreme Court, arguing that the plan should retain discretion over coverage decisions, especially for treatments deemed costly or experimental. Dale Falwell, no longer the state treasurer, now Brad Briner's office expects the Supreme Court to overturn that Fourth Circuit decision, lifting the injunction and reinstating the exclusion within the state health plan.
This would align the plan's policies with House Bill 808, which bans trans uh gender transition procedures for minors in North Carolina. The plaintiffs argue that the exclusions unfairly target transgender individuals, denying them care that is otherwise covered for cisgender patients. Breiner contends that the issue is about managing benefits equally for all 740,000-plus plan members while keeping costs reasonable. A ruling in the state's favor could have significant implications for how public health plans nationwide handle coverage for transgender-related care. care.
You've seen many states over the last couple of years move to try and restrict this through state health plans. And the state treasurer Brad Breiner saying in a press release, quote, the court's ruling in Tennessee's equal protection case upholds our arguments in this long-running case here in North Carolina. In its simplest form, this case has always been about ensuring that the state health plan can conduct its business in a manner that best serves the members of the state health plan. We are thankful that the Supreme Court has affirmed the ability for plans to do just that. We will continue to watch some of this fallout and track the details here in North Carolina.
Again, this decision coming down yesterday from the land's highest court, the United States Supreme Court ruling 6-3 in that case, dealing with the Tennessee Attorney General and some legislation there. We'll continue to track the details. We've got a lengthy write-up this morning over on our website, CarolinaJournal.com, where it's now 5:45, News Talk 11:10, 99.3 WBT. We'll Hello, it is Ryan, and I was on a flight the other day playing one of my favorite social spin slot games on chumbacasino.com. I looked over at the person sitting next to me, and you know what they were doing?
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21 plus, terms and conditions apply. 552, welcome back to the Carolina Journal News Hour, News Talk 1110-993 WBT. And we were chatting earlier this morning with Brian Balfour of the John Locke Foundation about ongoing struggles between the North Carolina House and Senate as it relates to getting a comprised budget put together, or a compromise budget is probably a more accurate term, put together and sent off to Governor Josh Stein's desk. This is, of course, driving many questions, particularly about additional funding for Hurricane Helene relief. We are getting details out of the GA this morning.
Another $450 million round of aid for Hurricane Helene recovery will apparently move forward soon, according to Senate leader Phil Berger. He told reporters that in a press gaggle Tuesday afternoon, decoupling the relief bill from what he described as continued impasses over state budget talks. The state Has already approved about $1.6 billion in Hellene aid. The most recent package was $524 million that was signed into law in March by Governor Josh Stein. But federal aid continues to be slow to arrive, and recovery officials and local leaders say that more state aid is needed.
The House passed a stand alone relief bill, House Bill ten twelve, back on may the twenty third in a unanimous vote. House leaders said that they separated it from their budget proposal because budgets can get tied up for months in negotiations between the House, the Senate and the governor, which is exactly where we stand this morning. The Senate so far has refused to give the bill a hearing, insisting that it should be part of budget negotiations because it involves hundreds of millions of dollars in state spending. Senate Leader Phil Berger said that he understands that the funding is urgently needed. He told reporters, quote, that may argue for us to actually include it in the budget because I think everybody wants it to go forward.
That position, however, has changed as of late when Phil Berger told reporters that budget talks have stalled. He said, quote, it's pretty clear that we're not reaching agreements on various provisions.
So I just don't think we should continue to give folks the impression that we're working towards getting a budget done when it's pretty clear that we are not going to do so. The House relief bill was moved to the Senate Budget Committee Monday after Senate Democrats said that they would file a discharge petition to attempt to force it out of the Senate Rules Committee where it has been sitting since May. Berger denied that the Democrats' petition was the impetus behind the move, noting, quote, we have indicated all along that we intended to take action on things that are needed for Helene recovery when it has been when it becomes apparent that we are not going to be able to finish with a traditional budget by the end of this month. The Senate budget had proposed spending about $700 million for Helene relief, substantially higher than the House proposal, and their sources for funding were different as well.
However, Senate leader Phil Berger says that the differences have not yet been worked out, but noted that they intend to send the Helene bill to the House before they leave the General Assembly at the end of this month for the July the 4th holiday.
So, what again looked very promising at the beginning of the year, hearing from both House Speaker Destin Hall, the leader of the North Carolina Senate, and Phil Berger, that they were on track and they were going to have a budget done by the end of June, in effect for July 1st. Unfortunately, it does not appear to be the case right now.
Some major impasses between the two legislative chambers.
However, it looks like maybe Hurricane Helene relief, whether that number be $450 million or $700 million, will be kicked out of the budget and will be handled separately. We'll continue to track some of those details. Right here on the Carolina Journal NewsHour. Also, keeping an eye this morning on House Bill 251, that legislation is now sitting on Governor Josh Stein's desk. The legislation would prevent discrimination based on political beliefs in state-administered disaster aid by classifying violations as a class one felony.
According to details out of the legislation, this bill restricts unnecessary demographic questions for state emergency grants, limits inquiries to relevant criteria as well.
So, as there's major discussions at the federal level over the future of FEMA, the Federal Emergency Management Agency, and discussions from President Donald Trump to move FEMA and hurricane and natural disaster relief directly to the states, this legislation could become incredibly important in the years to come. This, of course, was all sparked last November when a whistleblowed. Blower reported information out of FEMA that there was political discrimination. A leak to a text chain showed that the workers for FEMA were instructed to avoid homes displaying Trump signs, flags, or other sort of paraphernalia featuring the president's name. It sparked a lot of national outrage and kicked this legislation off here in North Carolina.
That's going to do it for a Thursday edition of the Carolina Journal News Hour. WBT News is next. Followed by Good Morning, BT. We're back with you tomorrow morning, 5 to 6, right here on News Talk 1110 and 99.3, WBT. Step into the world of power, loyalty, and luck.
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