Gov. Pat McCrory held a press conference Jan. 21 where he laid out his administration’s agenda for the 2014 short session.
In the State of the State address last year, McCrory promised to focus on the three E’s: economic growth, education reform and increasing government efficiency. For his second year in office, Pat McCrory said he plans to concentrate on energy, education and Medicaid reform.
McCrory praised the General Assembly’s extensive tax reforms, which included a plan to lower the income tax rate from 7.75 to 5.8 percent, and the corporate tax rate from 6.9 to 6.5 percent by 2015.
During his campaign, McCrory promised to reduce debt. In 2013, the unemployment debt peaked at $2.8 billion, but the debt is now $1.85 billion. The state is on track to have unemployment debt to the federal government paid off by 2015, which would save $400 million in interest payments.
To do so, McCrory made cuts to several state welfare programs. The governor cut unemployment benefits from $535 for 26 weeks to $350 on a sliding scale of 12 to 20 weeks.
“With collaboration of the House and Senate, we made necessary changes to the unemployment benefits aimed at paying off our debt and getting off the credit card to the federal government and getting people back to work,” McCrory said.
Energy to become innovative
McCrory, who worked at Duke Energy for over 25 years, said energy innovation should be the state’s first priority.
“We’re 10 years behind in this effort, and we need to begin that process as soon as possible,” he said.
The governor said he plans to invest in seismic testing and researching inland resources for hydraulic drilling. Though there has been controversy surrounding hydraulic fracking, McCrory says his administration plans to pave the way for natural gas companies to research fracking sites in North Carolina.
The N.C. Mining and Energy Commission set the safe drilling distance at 650 feet away from homes, buildings and water wells. Many states are set at 1000 feet.
Though fracking is not up for official debate yet, exploratory wells could be drilled as early as 2015.
The administration says his plan includes an “all-of-the-above” strategy, investing in solar, wind, biofuel, coal, natural gas and oil. Later this month, the governor will meet with U.S. Energy secretary Ernest Moniz to discuss North Carolina’s role in the department’s energy initiative.
Educating for the future
Last year, McCrory’s administration couldn’t pass a proposed one-percent pay raise to teachers. The General Assembly also stopped teacher tenure and pay raises for master’s degree holders.
“You have to have an educated work force,” said Tom Tiemann, the Jefferson Pilot professor of economics. “The low-skilled, low-wage manufacturing that drove North Carolina 40 years ago is disappearing in the U.S. If you’re competing on low wages, there’s always someone who is going to undercut you.”
On Feb. 10, McCrory announced plans to increase teacher pay from $30,800 to 35,000 by the year 2016. North Carolina currently ranks 47th in teacher pay in the nation, and teacher wages have been frozen for the past 5 years.
Alamance-Burlington Board of Education chair Tony Rose said raising teacher pay is a step in the right direction, but it might not go far enough.
“We need to extend the pay raise to all teachers, not just teachers with less than 6 years of teaching experience. These teachers haven’t received a pay raise in the past 5 years, and they are struggling to make ends meet,” Rose said.
The governor’s education reform plan, “A Passion for Education,” takes a bottom-up approach to improving the school system.
In a press release, the administration said “if we emphasize basic reading and writing skills in the early years of schooling, fewer resources would be needed later to fill in the gaps.”
North Carolina’s high school dropout rate is 20 percent. Of the students who enroll in community college, 65 percent must take remedial courses.”
Last year, the McCrory administration refused the Medicaid expansion under the Affordable Care Act. Because of this refusal, over 500,000 North Carolinians were denied Medicaid.
“We said no initially to expanding Medicaid under Obamacare because we believe we need to first fix the system to make sure children, the disabled, the women, the elderly and the poor are getting the services they need in N.C.,” McCrory said.
This year, McCrory announced his “Partnership for a Healthy North Carolina,” which includes Medicaid reform, and strives to improve customer service in the health sector.
The partnership would create several Comprehensive Care Entities statewide that would deliver care to Medicaid recipients in the most cost-effective way.
“North Carolina cannot continue to overspend on Medicaid,” said Senator Ralph Hise, co-chairman of the Senate Health Care Committee.
The Department of Health and Human Services plans to meet with lawmakers this month to plan out the details of this partnership. The governor hopes they will come up with a program that measures the health outcomes for recipients, improves customer care, addresses mental health and substance abuse and eliminates high costs and unnecessary paperwork.
In a statement to the press, the CEO of the North Carolina Medical Society, Robert Seligson, said “Health care is vitally important for all North Carolinians and we’re interested in learning more about the details of the governor’s proposal. However, if the administration’s idea of reform is bringing in out-of-state corporations so they can profit by limiting North Carolina patients’ access to health care and cutting critical medical services to our state’s most vulnerable citizens, that is not change we can support.”
Building business, building the future
“Every extra hoop that governments make a business jump through because of rules and regulations is an added expense for the business, leaving fewer resources for hiring and other expansion,” said McCrory in a press release about “the North Carolina Comeback.”
McCrory said small business owners see North Carolina as one of the worst regulatory climates in the nation. He says his administration hopes to eliminate “redundant” oversight committees and streamline the permitting process.
Tiemann said the governor should focus less on cutting regulation and invest more money in education and infrastructure.
“The regulations in North Carolina are not particularly onerous. It’s not the easiest place to set up shop, but it’s not the most difficult. There are a multitude of reasons businesses choose one state over another, including roads and an educated workforce,” said Tiemann.
When the governor was inaugurated, the Charlotte Chamber of Commerce told McCrory to build new roads and invest in education, but McCrory’s cuts to both of those departments seem out of line with the pro-business groups’ demands.
“We need a balance in our regulatory agencies, and I don’t think North Carolina’s balance has been that far off in the past 30 years. McCrory could focus his efforts elsewhere,” Tiemann said.
McCrory also stressed the importance of having private-sector members within the government bureaucracy.
“Pat McCrory realizes that individuals who understand an economic climate that cultivates job creation must run North Carolina’s regulatory agencies,” a statement released by the McCrory administration said.
McCrory’s 2014 cabinet includes several members with experience in the private sector. Sharon Decker, secretary of commerce, spent 17 years at Duke Energy and has over 30 years of combined business and commerce experience. William Daughtridge, secretary of administration, is the president of an oil distribution company. Lyons Gray, secretary of revenue, was CEO of the Downtown Winston-Salem partnership and is owner and operator of Salem Systems, Inc. and Triangle Campers, Inc.
The governor pledged to fight against federal taxes and regulations placed on businesses. He made special note of federal healthcare mandates, saying these would harm businesses trying to expand and hire new workers.
Fixing infrastructure, renewing transportation
Tony Tata, the new secretary of transportation, plans to restore North Carolina’s infrastructure to boost tourism, commerce and travel.
North Carolina’s transportation infrastructure is the seventh worst in the nation. The McCrory administration promised to take steps to improve the safety and efficiency of roads, bridges and railroads.
In addition to rebuilding the existing transportation infrastructure, the administration plans to expand the road system in order to tie rural and urban areas together in a way that minimizes congestion, improves safety and mitigates environmental impacts.
The 25-year plan includes a beautification project called “Art That Moves You” headed by Susan Kluttz, secretary of cultural resources. Though plans for the project are still in the works, McCrory said adding art to major highways in North Carolina would increase tourism and boost the economy.
A Public Policy Polling study conducted in January found just 37 percent of voters approve of Gov. McCrory, down from 42 percent in December.
On Saturday Feb. 8, tens of thousands of protestors turned out for the Moral March on Raleigh to protest McCrory’s policies.
When asked about the Moral Monday protests that took off in response to his administration’s policies, McCrory said, “I’m happy to meet with them if they have viable solutions to some very complex problems in North Carolina. I’m a big advocate of dialogue, both with people I agree with and people I disagree with, but I’m more an advocate of solutions.”
The NAACP announced plans to continue the Moral Monday rallies, and McCrory’s stance on hydraulic fracking, curriculum changes, Medicaid and tax reform are prime targets for criticism.
In his closing remarks, McCrory said, “This is a team effort. It’s going to take a team, including all the citizens of North Carolina to continue the next chapter of the Carolina comeback.”