- [Kelly] House and Senate Republican leaders disagree on the reasons why the state budget negotiations are stalled, and the House is moving a bill to force manufacturers to pay for cleaning forever chemicals from our state water supplies.

This is "State Lines."

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[uplifting music] ♪ - [laughing] Welcome back to "State Lines."

I'm Kelly McCullen.

Joining me today to my right, good friend, Carolina Journal's Donna King, representative Jeffrey Elmore.

He represents Alexander in Wilkes Counties.

To his right, Senator Mary Wills Bode joins us again from Granville and Wake Counties, and in seat four Cardinal & Pine's Michael McElroy.

Good, well, good day to everyone.

I hope you're having a good kickoff to the weekend.

Have a lot to talk about.

Lots of blocks here.

Last week I caught a little bit of heat from viewers saying, "I wish we'd have talked about this," but we ran out of time.

We're gonna make time for this top story.

State House speaker Tim Moore and senate leaders are now offering different reasons this week for the current budget bill stalemate.

The state's operating under a two-year budget law, so the government will not shut down, but legislation would tweak it in 2024 as historically happens.

House speaker Tim Moore says budget negotiators are hung up on adjusting teacher pay raises.

Over in the Senate, Phil Berger says the House budget is using state reserve funds to cover excessive spending beyond the 1 billion dollar surplus the state enjoys to end this coming fiscal year.

He said, he said, Donna.

- [laughing] Absolutely, sure.

So this was interesting.

So first of all, state budget is always the biggest story that most of us have, all policy wonks have throughout the season, that throughout the session this, the short session is really just tweaking the biennial budget.

They don't have to do this.

They can go home without a budget, and if they do, it just continues to roll on.

But often we will see in that short session, some changes.

Now there's some pressure on lawmakers because of a budget surplus to make those changes.

Plus you have a House speaker who's running for Congress.

We'd like to see something on the books, of course.

And so it's a little unusual.

I think we're expecting to see a budget come out next week from the House.

It's a little unusual.

Normally they're kind of on the same page.

And those decisions, big decisions have been made before that happens.

Now, but we're also seeing this reserve fund idea.

This has always been the case.

We've got lots of reserve funds that have been going on for a long time, they become these little, for lack of a better word, slush funds that pad the budget more than the 30 billion that we normally have.

And so, you know, that's where the point of contention, I think, must be between the Senate and the House.

We will be digging in deep to this budget when it comes out next week, certainly.

But you'll, you know a lot more about this than I do, of course.

- Well, you know, you set him up just perfectly.

- Thank you.

- There was a little more, there's a billion dollars in surplus, and the Senate says that the House wants to spend that surplus and dip into reserve funds.

And they're calling it pork spending and all sorts of things.

You say what?

- Well, you've got to understand there's a difference between reserve funds and the rainy day fund.

And I think the public gets the impression that we're going into the savings account of the state.

That's not what it is.

We have multiple reserve funds.

One of them, for example, is an inflationary reserve of a billion dollars.

The intent of that fund is to help offset inflationary pressures.

Those are the kind of funds that the Senate does not want to touch.

The House has taken approach because we understand there's inflationary pressures in government.

Also with our employees.

So we would like to do some additional raises for folks.

We have a childcare cliff that we're going to talk about later.

And we're very close to what they want to do.

I mean, we were within about a hundred million dollars in the negotiations.

So we're gonna present a budget next week with our vision of the tweaks, as Donna was saying, for the short session, to try to help with these needs.

- Senator Bode, if the House goes public with a version of the budget, it kind of cracks that egg when everything was gonna be done, and just this nice happy deal was gonna be reached on the budget between Republicans, not Democrats.

What do you make of the House at least putting something out there publicly so everybody can see what their plan is?

- Sure.

Well, what I think is interesting is we all know that the Republicans enjoy a super majority in the House and Senate.

And I think it's really interesting that with all of that power and opportunity we're seeing this dysfunction and lack of productivity.

We're really letting the short session language, or languish, excuse me, without meeting the needs of North Carolinians.

We talked about the childcare cliff, which we've known is coming for a really long time now.

We haven't addressed affordable housing in North Carolina.

We haven't addressed the fact that over 11% of our educators left the classroom last year.

And so I really feel like with all this power and opportunity, we have largely-committed legislative malpractice.

The people of North Carolina deserve their representatives to be productive and to get things done.

And this lack of productivity is really owned and operated by the Republican super majorities.

- Mike, the Democrats were teed up this week.

Gridlock with a super majority into legislature.

However, not many North Carolinians statistically follow state politics.

So if no budget deal is reached, are the voter's gonna rise up in anger or they'll say, "Huh, that was the story on what used to be page two of the news paper?"

- Well, North Carolinians may not follow the ins and outs of the budget negotiations, but they most certainly follow their own budgets.

And the inflationary pressures that you talked about, they're feeling that day after day after day after day.

Especially for teachers who, as the raises given by the previous budget, which was also, came much later than people thought, the agreements between them, they do not keep up.

For most of the teachers, do not keep up with inflation.

Budgets are, as has been said often, documents of priorities, but they are also documents of urgency, and the lack of urgency to get some of these very real-time problems solved, I think people are going to care about it.

- Alright, Governor Roy Cooper's signature will reinstate most of the ban on public mask wearing.

The compromised legislation will increase penalties for wearing a mask if you should commit a crime while wearing it.

It restores exemptions for public mask wearing for safety or health reasons.

The Hill legislation would criminalize blocking traffic as a form of protest.

The bill does retain a campaign finance provision unrelated to any masks that will allow political parties to collect donations from out-of-state groups, but it practically eliminates limits on the Republican Governors Association's ability to contribute to the North Carolina GOP.

Senator Bode, Democrats once again have made hay with this, but Republicans say they're going to raise money the same way the Democratic Party in North Carolina has raised money, and it's all an accounting adjustment issue and this legalizes and does level the playing field.

Is that accurate?

'Cause it's one thing to be angry they're gonna get money, but it's another to say this is a leveling of the playing field.

- Well again, I think we, we mentioned before, I really feel like in this legislative session in particular, we're majoring in minor things.

You know, opening the floodgates for unaccountable amounts of big money to flow into the states is not making it easier for North Carolinians to thrive.

You know, we have seen a continuation of this lack of transparency by the Republican super majorities in the last biennium; whether it's, you know, inability to be subject to freedom of information requests, and now we're seeing it with campaign contributions in this legislation.

And so I think it's really important.

You mentioned, or you stated that, you know, do people in North Carolina follow this stuff day by day, minute by minute?

Stuff like this, allowing more unaccountable money flowing into the state, coupled with what I saw was a large policy swing and a miss with this, the public health exception for mask, I think the uproar we have seen from Republicans and Democrats really speaks to the fact that this was a policy miss.

I think people understand that the world has changed since Covid and that immunocompromised people should be able to go out in public without being harassed for trying to keep themselves or their family safe.

- All right, Representative Elmore, which part of this do you wanna tackle?

The mask, the deal seems to be settled.

Should Governor Cooper sign it?

And if he should veto it, I guess you have well over the super majority you need to override.

- Sure.

- Talk about that and we'll talk about the campaign from there.

- Sure, I do think it's a public safety issue.

I mean, when you're seeing attacks, I just saw one on the news last night in New York State where masked folks were involved in anti-Semitic attacks and subways.

It is a safety issue for the public with that piece of it.

I think the clarification does make it clear that if you are health-compromised, that there's no problem with you wearing a mask for your own health reasons.

Now, on the other issue, it's an issue of fairness.

She speaks of dark money coming in.

Basically the philosophy or the talking points on that side is, as long as it's our dark money, it's fine, but it's not for you.

This is just equaling the playing field of how our campaign finances work from the outside coming in.

And we want fair elections, we want them to be competitive, and money does make a difference with that.

So it does truly just, almost in a technical nature, level the playing field.

- Donna, are some campaign donations more noble than others, whether it comes from a billionaire or a millionaire or just a good middle-class family?

I don't how to interpret this.

You know how it goes.

It's been two parties knocking heads over- - I mean, I think at the end we're really talking about what are the policy goals of the candidate and whether he or she can really convince supporters to support them.

I mean, in this case, this particular measure isn't really a sweetheart, the current law isn't really a sweetheart deal for Democrats.

And this idea that it is really changing how money flows from national organizations, primarily they're the governors associations for the parties and the attorney generals associations from the parties, how, through a group, a process called the 527, it's really complicated, but- - Many charts.

- Right, it really- - A lot of, yeah.

- Exactly, it really adjusts how money flows from these national groups into the state parties so that both can do it.

Because what we're seeing is that there's been a dramatic increase in the last four years, four or five years, even a little bit back, in national money going into the Democrat party.

I think in most recently, State Board of Elections is reporting about 40% of that is coming from out of state into the Democratic party, where the Republican party hasn't really topped 12% in a decade.

So we may see an increase in out-of-state money coming in to Republicans because of this.

Now, why Republicans didn't create a similar vehicle?

You know, I don't know.

But right now what we're seeing is Democrats do have an advantage in out-of-state fundraising because of the vehicles they're using and that's what this does.

- I would just say this, I think leveling the playing field is a really important thing.

And to your point, I think we all believe in fair elections, but it's really hard for me to scrutinize this idea that we want to make elections more fair by funneling more money into North Carolina when North Carolina has been the victim of extreme partisan gerrymandering and so many other efforts to make the playing field uneven and stack the deck for one party over the other.

- All right, well the House is moving legislation that could see manufacturers of PFAS or what they call forever chemicals, pay the tab for cleaning them up out of our waterways.

The Environmental Protection Agency says about two and a half million North Carolinians drink water contaminated by PFAS.

The chemical isn't banned and dumping it has been unregulated, but new federal rules could require those chemicals be removed from our water in the near future.

PFAS maker, Kim Moores Mike says the legislation targets them specifically and the company has been moving to remove or diminish the chemicals presence in our environment in North Carolina since 2017.

- Sure.

I'll say this.

Kim Moores isn't obviously mentioned in the bill, but if they were targeting Kim Moores specifically, it'd be probably because they're the biggest source of the contaminant that we're talking about.

So PFAS is forever, as we were talking about it, it's in everything.

It's what keeps our pots from sticking when you're cooking, it's what keeps our raincoats nice and dry.

It's our boots, it's in our carpets, it's in everything and it's in all of us.

99% of population has some trace amounts of PFAS in them.

So it's a really serious problem.

And this legislation, which is bipartisan, one of the few very big bipartisan things, is saying that the people who put, or the companies rather that manufactured and put the chemicals should be the ones who pay for it.

I wrote a story about Maysville, North Carolina near the coast.

They had a huge PFAS problem that they couldn't, they didn't know where the source was, and they were able to shut down their water, switch to the next county and they were able to eventually put in a thing that costs $1.5 million of filtration.

There's 1,000 people in Maysville, little under.

So if you are going to spread that cost among those 1,000 people, that's money that they cannot afford.

So should it be the people who are affected by the chemicals that pay for it, or should it be the companies that knew it was dangerous and either put it in deliberately or didn't take the care to prevent it from seeping into the water supply?

- Representative Elmore, we've been consuming PFAS chemicals gleefully in pizza boxes and wearing it in raincoats to Senator Bode's off camera discussion and in non-stick frying pans.

But there's something about knowing a factory's pour get in the river changes the political dynamic, right?

- Sure, sure.

And you know, the Biden administration changed the regulations on these chemicals and it seems like 10 years ago it wasn't as big of a deal as it was now under that administration.

But going to his point, we want to ensure that there's clean drinking water all over North Carolina.

And the biggest issue with this is how do you upgrade public water systems and not going back in a circle, that's what makes this budget process so important.

Monies that filter down to help these water systems that are so tiny that they never would have the capacity to be able to buy that filtration system.

So it all ties together, but the piece of legislation is, the goal is to make sure that our water systems are equipped to be able to filter the chemical.

- Senator Bode, why punish any private enterprise that was engaging in legal behavior until someone decided that it was improper and their behavior should be regulated?

- Sure.

Well, I mean, I think that, you know, this is kind of kindergarten 101.

If you make a mess, you gotta clean it up, right?

And to Representative Elmore's point we're seeing across North Carolina, a lot of these small towns, they just don't have the money to make up for the fact and really remediate what has been done to them.

So, you know, it really is about making sure that North Carolinians have that clean drinking water.

We can't survive without clean water.

And so someone's gotta, someone has to pay for it.

And I think the people of North Carolina expect that the folks that cause the problem need to pick up the bill.

- Kelly, if I may add just one thing quickly, 10 years ago or a few years ago, it wasn't illegal, but the companies that were doing the dumping knew it was dangerous.

Their scientists came back and said, this is a problem.

It can cause health problems.

And they did the dumping, they did the leaching, they did the not protecting the water supply while knowing it was dangerous.

- And I think one other thing is that sometimes we do know where the PFAS came from.

And then sometimes to your point, or to your point about Maysville, we have Phantom PFAS and we don't know.

And so, you know, maybe that's where government steps in and can pay for it.

But when we know someone did something wrong, we gotta make sure that they make it right.

- Donna, but it wasn't wrong.

- And a politician somewhere or a regulator somewhere said, oh, all of a sudden Kim Moores, you're now causing a lot of problems.

Now we are none the wiser where I grew up in Eastern North Carolina, so I'm sure I've got PFAS chemicals from there in me.

But what do you make of this?

- Well, I think that there are...

I think this isn't the end of the story.

I think we're gonna see it go through courts.

Fourth Circuit rejected some environmental groups' efforts to sue the EPA over the testing and the percentage parts per million.

So I think we're still going to see this fluctuation of, you know, at what level does this need to be present before that responsibility, that payment, that regulatory environment kicks in?

So I think we still have a ways to go.

This is a big, particularly for Republican Representative Ted Davis, who represents the Wilmington area, is spearheading this effort.

So we are seeing certainly a bipartisan thing, but I think we are going to see more and more of it, is where is that line, what's the parts per million?

Because we do have a lot of phantom sources.

When do those regulatory environments kick in and when do you decide, you know, who did it and who should pay for it?

- Representative Elmore, this is a major infrastructure issue and there's been fights with the Biden or the Inflation Reduction Act and things, where people go, "You overspend on highways, roads, rail, water filtration systems."

At what point does the bipartisanship kick in to where even Republicans, the most conservative folks, say, "We should come together as a society and correct something that could be a potential problem for our citizens"?

- Sure, I mean, that's just good government.

Water systems are a joint effort.

They are governmental.

I mean, that's just the nature of the beast.

And being able to help small communities, especially rural communities that just will never have the financial capacity to resolve it themselves, I mean, many times, the budgetary process can take care of that.

- We'll stay with you.

Federal COVID relief funding was approved earlier this decade to help our working families secure childcare.

Well that federal money is ending July 1st, what, two weeks from now?

And that money was largely used to help daycare centers hold prices steady or drop them.

It's called the childcare cliff.

You'll probably be hearing about it.

It's a $300 million funding gap in this state that will happen on July 1st.

State legislators and the state's Chamber of Commerce are raising this issue.

Representative Elmore, here we go again.

Federal money borrowed, given to our state, creates a market.

Now market forces come back in.

There's no subsidy, and prices, they don't have to go up, but they will in childcare, I would imagine.

- Sure, and COVID created such a disruption in this industry and it's also created a disruption in how people work.

So the Monday through Friday, eight to five job that many people are going to is now a hybrid model where they may need childcare two days a week, but not the other three.

So it's created a totally different environment for these childcare providers.

Our goal with the budget that we're going to be presenting next week is to put in some relief, but also some regulatory reforms to how we rate the daycare centers, how they function, to create some relief to where, as these market factors keep changing, that they can react as best they can.

- Senator Bode, why not have Congress fix the problem since this is a federally funded challenge due to federal funds ending?

- Sure, well, I think one thing that we have learned, I know that I've learned a lot about childcare over the last two years, and really what has been going on in North Carolina since the pandemic, and one thing that is a North Carolina issue is really the way that the statute is written in North Carolina.

We reimburse based off attendance and not enrollment.

And so for many of these small businesses, for any of you who have ever had a small business or had to, you know, make payroll, when you have to plan for enrollment, so you say you have 20 kiddos in your class, but only 10 come, you know, that makes it really hard to rely on that funding mechanism based off of that reimbursement uncertainty.

And so I think that is one step here in North Carolina, and hopefully we'll see that happen in this legislative session.

That is one thing that we can do to really help these daycare centers stay afloat and be better prepared and more financially secure.

- Donna, I saw a map somewhere online, and I hope, I presume it's true.

You could pay up to $16,000 in Wake County.

Even in the most rural, we consider low income counties, putting a kid in a daycare could be 5, 6, $7,000 per kid.

And if you're clearing $20,000 in a check, and a lot of that money off childcare is not tax-free for you, this sounds like a real challenge.

- Oh, it's a huge challenge, absolutely.

Childcare expenses are exorbitant.

I spent more on childcare when my kids were under five than I do literally on their college tuition right now.

It is.

But there's lots of reasons why that money is why it is, and a lot of it is because of the regulatory environment that we have.

This is something that Representative Elmore just mentioned.

But this really goes back to the American Rescue Plan in 2021.

North Carolina got $24 billion in one-time money through the American Rescue Plan in what they called stabilization grants to stabilize that industry.

This was one-time money.

A lot of them increased their staff to adhere to the distancing requirements, bought PPE, you know, cleaning supplies, that kind of thing.

Part of that grant money was that, one, it was one time and you had to have a plan on what you were gonna do when it stopped.

And I think what we're seeing is another example of one-time money being used for recurring expenses as COVID went away and as pandemic requirements and pandemic restrictions changed and now it's hard to put the toothpaste back in the tube.

I mean, we see this with a lot of government programs.

We polled it.

About 57% of North Carolina voters say that we're better off with the tax credit and changing the regulatory environment than we are in subsidies because ECON 101 is that subsidies raise prices.

And that's true whether you're in childcare, farming, whatever it is.

- Mike, if you own a business and you got one time money to Donna's point and you hired permanent staff with one time money, this is what happens.

Is that not right?

But it still doesn't affect, it still affects families now because it's gonna get a lot more expensive for folks with small children.

- Yeah, well it's a lot more expensive for the daycare centers too because they're trying to hire and retain qualified staff.

Speaking of someone, I think, a lot of us have kids and we don't want an unqualified person, especially in those early years.

So it's very much like with public schools where you have to, you're competitive and you have to keep the people in and pay them for their expertise.

But I think that something like 30% of childcare centers are in danger of closing if this cliff goes away.

Almost surely not immediately, but very soon after, if the cliff, that's 90,000 kids about who will be without childcare.

That's 90,000 kids whose parents have to adjust now who are working.

And even if you have a hybrid working from home thing, like I get so less work done when my kid is home.

So it's an issue of productivity, it's an issue of fairness.

An issue of very much like PFAS.

My kid is in a childcare center.

That childcare center closed.

What am I going to do now?

And the reason Congress hasn't done anything about it is because Republicans in Congress haven't picked up the legislation that people have said, well let's do something about it.

And I get that there's a disagreement about how to do something, I do.

Good faith disagreement about what to do, but that nothing has been done is going to have a huge effect.

- Alright, let's talk about some older kids still in school.

Legislators are discussing school suspension rules and whether to reform them.

A Central Davison high school student was suspended for asking his English teacher if her use of the word alien meant a space alien or an illegal alien who needs a green card?

Or illegal aliens who need a green card.

Some term like that.

The choice of phrase earned that student three days outta school suspension, legislation would allow suspended students to have their short term suspensions expunged should they stay out of trouble.

Boy, that's fodder for cable news and surely it was.

I got about two minutes Donna, let's keep this moving.

What do you think?

- Actually, I had a great conversation in this case, this student's parent yesterday.

And while this bill would not help her child moving forward, it certainly she believes will help others and that's why she's staying on top of it.

In this case, he was clarifying a spelling test question, saying, okay, the words alien, do you mean like an illegal alien that needs a green card or do you mean a space alien?

And he got suspended for three days and because of the way the state laws are written, they couldn't appeal this and they couldn't have it expunged even if they had.

And then she had major conflict with the local school board.

So what this really is an example of waking up a mama bear and within a month we've got legislation.

- Representative Elmore, 30 seconds.

- A little bit of concern with the legislation.

I've taught school for 23 years and there's over 200,000 short term suspensions that deal with children fighting, doing violent things.

Reading the legislation I have a little bit of concern.

Are we keeping kids that are, have violent outbursts in the schools while they go through appeals process in reaction to this that happened with the child.

Which I believe he's going into a lawsuit now.

So it's going to redeem itself through the court.

- Central Davison could pay money.

Ms.

Bode, 30 seconds to you and I gotta go.

- Sure, I think that any chance we give kids to learn from their mistakes and express remorse and move on and not letting it define their future or what college they're gonna get into, I'm on board, you know, these kids are in school, they're learning.

This is a part about learning how to be an adult and making mistakes and moving forward productively.

- Alright, thank you panel for being on.

Appreciate you so much for participating.

Mike, I got you on P five's.

We're gonna have to move on and get to the email address.

Email your thoughts and opinions to statelines@pbsnc.org.

I'll read every email, forward 'em to whoever you want me to contact on your behalf.

I'm Kelly McCullen, thanks for watching.

I'll see you next time on State Lines.

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