- [Kelly] House and Senate leaders proposed mini budgets since the big budget bill negotiation seems stalled, and the Auditor offers early feedback on what's troubling our DMV.

This is "State Lines."

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

Good to see you.

I'm Kelly McCullen.

Joining me today, a lot of good friends.

One debut, Donna King of the "Carolina Journal" is here.

Donna, we've seen you a time or two and it's great to see you as always.

- Thank you for having me back.

- [Kelly] Senator Benton Sawrey of Johnston County.

Good friend of the show.

You survived.

We're out of legislative session.

You look great.

- I get to go back to work, see my kids.

This is gonna be a good week.

- [Kelly] There you go.

Representative Maria Cervania of Wake County is here.

Good to see you.

- Great to see you.

- You have a nice glow- - Thank you.

- This first weekend out of a legislative session.

- Yeah, it was amazing.

It actually gave me energy to see this week go through, so I'm happy to come, oh goodness, happy.

- [Kelly] And Scot Falmlen is here of Nexus Strategies.

Scott, good to have you.

- It's good to be here.

- We had your colleague on, Morgan Jackson.

We've gotten you out of the office too and thanks for sharing your pre-July 4th week with us.

It's really, really wonderful.

- Thank you.

Good to be here.

- Well, we have a lot to talk about.

It's a lot of woulda, coulda, shoulda.

People, I think, started the week in Raleigh thinking there might be some mini budgets, at least.

Senate leaders rolled out a mini budget aimed at operations.

They also a standalone Helene Recovery Bill where a deal was reached this week, but let's talk about the philosophy of these two budgets.

Both the House and Senate controlled by Republicans.

Not a bit of movement on a full state budget bill.

The Senate has at least laid out for the summer, you know, adding $1 billion to the rainy day fund, funding a government efficiency office within the Department of the State Auditor called Dave.

Support economic incentives, would give teachers a step increase.

Republican leaders said, Senator Sawrey, that this senate plan was way too policy-driven, reflects more of a major budget bill than a mini budget to tide the state over.

You say, talk about the position of the Senate heading into the summer 'cause at least these issues are still alive technically, even if you go home.

- Sure, yeah, I mean, we put together a larger budget package earlier session, I think, did a lot of what we want to do in the Senate.

Kept taxes low, kept spending controlled, made investments in our state employees and our infrastructure.

I was disappointed to see that we could not get some of the mini budget priorities done too because there are things that we need to do as a state, right?

We need to fund enrollment growth increases in our community college and K-12 public education.

We need to fund our Medicaid obligations.

We need to fund, I mean, can't leave the DMV things that we'll talk about a little bit later on with the physicians.

So there are must-dos.

I think what's important for the viewers to know is that the state is fortunate that we have a continuing resolution in place.

So in spite of the fact that we don't have a budget, the state government will continue to operate.

We still need to be proactive and responsible with respect to the growth things going on in the state.

I represent Johnston County, one of the fastest-growing places in North Carolina.

I got a text message from our community college president earlier this week begging me for the enrollment growth dollars because we cannot operate and we're seeing double digit increases on a day or year-to-year basis without that enrollment growth money.

- Maria Cervania, Democrats have not held a majority in the House and Senate since Republicans passed this bill that allows for continuing, I guess, continuing government operations in the absence of a state budget.

Are Democrats in the House on the outside looking in in this process and how do you weigh what to say about the idea that certain parts of the budget you really supported.

- Correct.

- [Kelly] And then nothing happens come June 30th.

- Right, so we've always been in the situation where we're on the outside looking in and I often say to our Republican colleagues, and if you just let us set the table, we might be able to get this done and be at the beach by July 1st.

It's a lost opportunity.

I mean, one of the major reasons why we're in Raleigh is to finalize a budget by June 30th.

It's a missed opportunity because we have so many people who count on this.

This is their livelihood: families, schools, educators, state employees, and we leave them hanging.

I wanna go back to actually the policy portions of this, specifically, Dave.

It's almost as if us as legislators are giving our powers to an entity in the executive branch.

Our role also is to provide oversight.

And I don't think we, either Republican Senators Senate or Republicans, Democrats, senators or house reps, should relinquish that power.

It's always been in our responsibility for oversight and I don't feel comfortable giving it to one executive branch person.

- Scott, you're tied to Governor Josh Stein, Attorney General, Josh Stein, and you're gonna work with Josh Stein for a while.

We've noticed off camera and on, he's been laying back, only a couple of vetoes here and there, been quiet and some Senate Republicans think he might be letting the Republicans fight this thing out and paint the wrong picture, is that pretty accurate?

- Well, I think I heard this morning he has 75 bills headed to his desk, so he's gonna have plenty.

- He's a fooling pin.

- Plenty of bills to look at and review and see what happens.

But listen, I think everybody has addressed what the pressing needs are.

Teachers need raises, our law enforcement officers need raises, we need to fix DMV and all of those problems can't be fixed without a budget.

So while I'm glad the legislature has decided to go home for at least a month, hopefully that month will provide some clarity to, between both the House and the Senate, and then get something done, because the needs of the state aren't going away, they just need a budget passed by the legislature to move things forward.

- Donna I see house and Senate leader, I mean, they see there's a lot of opportunities to pass a compromise bill.

There's a lot of issues out there, maybe too many to tackle in a mini budget.

So what's the vibe in Raleigh?

What happens in Raleigh when two leaders just can't come together and they just walk away?

- Sure, and I would not say that they're walking away, truthfully.

I think that one, the important thing is that we still have, the budget operates on the past budget when we can't reach a conclusion.

I want the budget process to be difficult, I mean they're already spending too much money, and I think that what we really need to be seeing is that our priorities are met, that the taxes continue to go down the way they have been over the last decade.

Democrats controlled it for a century, Republicans have controlled it, the last, what, 12, 11, 12 years.

We've seen a marked improvement in North Carolina's economy during that time.

But that's because there's healthy debate that they're in there and their goal is to keep spending low and taxes low.

- All right, representative, I wanna talk about the House Republican budget.

There are a mini budget, which still's out there as a proposal would proceed with, appears to be 2.5% pay increases for state employees, six plus percent raises for educators.

Retirees, you'd get a 1% raise in your pension.

The house plan would eliminate those 20% of all vacant state jobs.

It would also hire some new staff for the state auditor that you're referencing and the State Board of Elections.

And then the big projects like the Planned State Children's Hospital would remain in limbo.

So just a little pivot towards the house position, different priorities, but I think there are issues that even Democrats say we need to address.

- Right, and you're mentioning 2.5%, that doesn't even equate to inflation.

It's just way too little to provide for our families and the people who are already not working for a respectable salary, I would say when it comes to state employees and the dedication, the passion that they put in for North Carolinians.

There's other things that are on here too, in that there's a cutting of 20% of vacant positions and they're saying that, well, these have been going on even in perpetuity, almost but we need to ask the question.

Why have they been open?

Why have they been been vacant?

And it's because again, going back, these positions have not been assessed to have respectable wages that actually a state employee can live on.

A couple more things on this, is that, like you mentioned, the child health issue, particularly with a hospital.

It's discussed that it potentially can be in my district and, you know, we've been having great debates not only between Republicans and Democrats, but in the community when it comes to what benefit this will be.

And it goes back to economy.

That hospital will increase the ecosystem of pharma and everything else.

- I was gonna say, with these issues, I mean, everyone lines up 50 issues.

Why can't house and senate budget negotiators just take what's important to each and just put it together?

I know you're arguing over triggers for future tax increases.

An entire state budget seems to be held up on that.

Or is that too simplistic of a view?

- I think that's one big issue.

- [Host] But why stop everything else because of that?

- Well be because I mean, on, on the tax triggers piece, I mean, it impacts the revenue and the revenue going forward.

You know, one of the first things that occurs when we have the budget negotiations determining how much money we're going to spend, you know, I think people recall what happened in 2008, 2009 and 2010 with furloughs and major deep cuts and not wanting to be in that position again.

So the Senate mini budget that came out this week, you see us prioritizing replenishing our savings accounts.

And I'm glad to hear Representative Cervania endorse the Children's Hospital, which I think is one of the biggest economic development projects in the state of North Carolina.

It'll have a huge impact on health and the state of North Carolina.

You also see us taking proactive measures with healthcare in North Carolina.

You know, we are facing a $1.4 billion shortfall obligation with Medicaid.

If the budget is not passed soon, we're going to see a major healthcare priority program that's gonna collapse that's proven to save thousands of dollars per person across the state.

This goes back to the core function, but to what Donna said a second ago, we're talking about tens of billions of dollars that have accumulated.

I mean, we are passing and building up on what we've done in prior years.

Both the Senate and the House this past time looked at what we're spending money on.

We made adjustments to certain programs and things, making sure that we preserve core services, but really evaluated whether programs are effective, whether money's being effectively spent, because again, we're looking at leaner times and we need to get it right.

- Donna, at what point does just sheer physical exhaustion impede the ability to make budget deals?

These are human beings up here.

They're not talking too far off base, a Democrat and a Republican, but they're sick of each other right now.

- Well, yeah, I mean, I don't know if it's as much personality as it is the difficulty it is to be a state lawmaker.

They make very little money.

They are a part-time legislature, but not really.

I mean, how many people could really give up their job, their regular job for this many days in session, plus it's on the taxpayer.

Every single day they're in session, costs the taxpayer $65,000.

And that's every single day that they're in.

So I think that's something we gotta talk about.

You know, if we were to do session limits, that might be something that we could talk about.

But I do think healthcare is an important point.

North Carolina has the most expensive healthcare in the country, and there we have this big elephant in the room of the Medicaid program.

If they change it at the federal level, it's gonna have to happen, we're gonna have to make changes at the state level.

So there is a lot going on.

Things like certificate of need or tied up in the budget and that would ease the burden on the cost of healthcare.

You know, there are so many moving parts to this, it's just not an easy process.

- Scott, I saw Governor Stein has, the public, one of the nice tweets with the full screen graphic of just saying, "Hey, don't forget healthcare in this state.

There's a lot of challenges out there."

We don't talk enough about the federal impact of the Big Beautiful Bill.

If it passes, you're gonna need... Would you need a special session?

What would Governor Stein do?

- Well, I think the devil's gonna be in the details of what Congress finally passes if they pass something, and I assume they will, and we'll just have to see what the real impact is and make adjustments, but here again, one more reason why we need a budget that can begin to deal with some of these issues.

- So we can see it keeps pop back up anytime, you're waiting for a phone call, right?

The deal comes through, you'll come vote.

- And what you've said about healthcare is very important.

I mean, the healthcare expenditures that we make at the state level are significant with the Medicaid program.

What could happen in Washington, I mean, it's a very real possibility that it would have a trickle down effect to the tune of tens of billions of dollars in the state of North Carolina.

There's been some that have made the argument that it would be irresponsible for us to make a state budget before we have certainty as to what's coming out of Congress.

- Fair enough.

Well, the State House and Senate did reach one deal, a last deal on Hurricane Helene recovery funding this week.

$700 million was now approved with 500 million of that being available immediately, or as immediately as a government can roll it out.

There's private road and bridge repairs on there, tourism dollars, crop loss payments to farmers, a plan to offer widespread grants to local businesses.

Senator Sawrey, not part of that deal.

The Senate didn't like the idea of handing grants to small businesses.

The Democrats out west say you're just doing that to punish the actual business owner who won't vote Republican for the most part?

- Well, I think that's not entirely true.

So I mean, let's frame the dollars of what we've done.

So the North Carolina General Assembly has now appropriated $2.1 billion to relief in the western part of the state.

To frame that we have funded $855 million for Hurricane Matthew and $353 million for Hurricane Florence, storms that devastated East and North Carolina.

We have committed significant resources that are unprecedented in the history of North Carolina towards making sure that we rebuild our local governments, our economy, and our core infrastructure.

If we fund these grants, then we are setting a precedent for the future.

Those were not funded in prior storms.

My community was devastated during some of these.

I know down east in places like Robeson County saw similar or just widespread destruction.

North Carolina does not have the power of the printing press.

The SBA and other nonprofits receive funding from the federal government can step in and do that, but the state's responsibility is with respect to our roads, to our local governments, to our municipal governments, to our education institutions, to our water and sewer systems, and making sure that those things are back in place and repaired so that the businesses can operate and get people back on their feet.

- I don't wanna dwell on the business grants because it's not part of the bill, but what is coming is $700 million.

In some way, Republicans say they've exceeded even Governor Stein's expectations.

And didn't everyone vote for this bill?

- Yes, begrudgingly.

- Begrudgingly?

- Well, of course we have to support this bill, but it is nearly not enough of the $60 billion that was estimated for full relief in that area.

And we had to go backwards in comparing it to the other devastation events that happened prior, this is five times more than the last hurricane that we had.

It's unprecedented, true, but we need to address it in an unprecedented way too.

Small businesses are the backbone of North Carolina.

The income is 80, 90% of our businesses here.

For us to completely not support them at this time, we could potentially just not have anyone come back to that area, and that area of Western North Carolina could be not in existent anymore if we don't keep investing and bringing our businesses back, which will bring more people back, be it living back there again and tourism, which is a huge part of the economics.

- Scott, great question.

I bring this topic up on this show, and it becomes both the best recovery we've ever seen, but the most expensive, or we're struggling, the state may never come back.

I saw the governor go on Colbert.

We did a whole 30 minute show.

Tourism is open for business.

How do we balance the idea of keeping the need out there without scaring off tourists and out-of-state travelers?

It's a big deal.

- Well, I think, we obviously have to do the marketing that Western North Carolina is open for business, but I would also say going back to the small-business grants, when the legislature wants to do something, they can typically find a way to do it.

And the legislature makes grants to small businesses all the time in the agriculture field, in these incentives that are going to businesses that are creating all these jobs.

While it may not be a direct payment to those businesses, it's a reverse grant because the business is not having to pay taxes that they would otherwise have to pay.

So it's a little bit spurious to say, well, it's unconstitutional because of the Emoluments Clause or whatever to say we're not gonna be making grants to small businesses.

- What is the Emoluments Clause?

Is that where a state government just can't pay a business owner or a private citizen?

- That's right.

- Okay.

I wanna make sure people understand.

- Yes, that's right.

So when there's a will, there's a way, and these small businesses are employing people.

They're paying taxes, and they're critical to the economic wellbeing of this area, and so it's unfortunate that that was not included, but hopefully for another day.

- Would it be dangerous to pay business owners directly in the aftermath of a storm?

I mean, just one time for the mountains can become four times for the beach, you know?

- I dunno about dangers.

I mean, I'm not sure- - Fiscally dangerous not physically.

- Sure, sure.

Well, I mean, I think one that this is the fifth package and no one's under any misconception that this is gonna be the last.

I mean, I think that this is gonna be an ongoing process.

More than half or the single largest chunk of this 700 million is for the DOT.

I mean, we're at the point of roads and bridges and infrastructure and all of those things.

So I don't think that there's any sort of thought that this isn't gonna continue, that we're not gonna continue supporting these communities, schools, firehouses; all of those things still need funding.

But I point to exactly what you're saying about the incentive programs.

You know, the JDIG program has had problems considerably, and they've been putting money toward that and all of those.

But there are vehicles, the SBA, that money is available and it will be available moving forward; it may not come through a budget or a hurricane relief package, but it's going to be there for the people.

- Think about this state: find $700 million, $2 billion.

You folks have dug deep, in Democrats and Republicans, to help with the coming recovery.

I don't know if the state can generate $60 billion, Scott, we might need some help with that.

State Auditor Dave Boliek has released early findings of his recent audit into the Division of Motor Vehicles' operations and staffing.

The early audit reports that DMV is, how about this, understaffed.

Given North Carolina's population, 68% of temporary driver's license examiner jobs remain unfilled; those are 10 full-time jobs.

You get a 40-hour week.

You don't get benefits and stability of being a permanent state employee, so the auditor's recommending to allow the DMV Commissioner to hire more permanent staff.

The audit confirms that if nothing is done to help the DMV, nothing will change in terms of customer service.

Very clean early reports.

- Sure.

Sure.

I mean, you know, that's the thing with the DMV, right?

It's most people's most direct impact or direct relationship with the state government.

So as goes the DMV goes public opinion about how the state government operates.

And that's one of the things that the state auditor is saying, that there's clearly a problem.

There's been a problem for a very long time.

They need to hire more people.

The house budget has included a plan to launch a pilot program to privatize some functions of the DMV.

You know, and I'm never sure that throwing money at a problem is really the solution to everything.

But we're really talking about a management and structural problem in the DMV, and it's been brewing for quite a long time.

- Senator, sorry there was a time when the DMV was the enemy of the people.

You know, always just belly ached about the DMV, but it seems like people are feeling somewhat empathetic or sympathetic for the plight now the stats are coming out.

DMV hasn't grown.

The states really grown and become a destination for people wanting to live here, so it's a mix.

It's a blessing and a curse, I would say.

- Sure, well, so, the Senate's mini budget this week addressed the auditor's concerns.

I mean, we provided funding for additional positions in addressing the matter with the temporary employment forces.

But I mean, we have made investments in the past, and I do think there is a management issue that I'm hopeful the new commissioner will address.

We've appropriated tens of millions of dollars for technology upgrades.

We have made appropriations for, you know, additional facilities and people in the past.

But, you know, the auditor's report is clear.

We're gonna follow those recommendations, see what we need to do with that because, again, as Donna said, it's the forward-facing entity of the state of North Carolina.

We need to get it right.

- Representative Cervania, how much would an auditor's report given back to legislators, Democrats and Republicans especially?

Would it be followed, or is that him telling them what to do, and that doesn't go over very well?

- I think we need to take it out of partisan politics.

We all, I believe, agree that we need to have solutions at the DMV.

I wanna also provide some preface.

We have a law in place in our statute that the DMV's only allowed to hire 560-plus people.

This was a law made decades ago.

And also we haven't created any new DMV building since 2003.

We are considerably a bigger state right now, and we've been using the DMV as some political fodder.

I think now, hopefully, no matter where this information's from, we can all gather together, put solutions in place, help our people.

As Donna has said, it's one of our first lines of customer service to our people, and really serve them the right way.

- Scott, is the DMV's issues all these years, is it an executive branch problem for mismanagement, or is it a legislative problem to fund?

Because if the DMV gets fixed, somebody's gonna want credit for it in 2028. Who should get it?

- Well, it's primarily a funding issue, and I think the auditor's report was a validation of many of the requests that former Commissioner Wayne Goodwin said the DMV needed to get things back on track.

And so hopefully with the fresh start with Commissioner Tine and the seemingly added confident or increased confidence that the legislature has in him, the funding and these structural changes will happen because it's important to get this right and to get it right quick, which is another reason why we need to stay in budget.

- And we can watch the process unfold.

Final topic tonight, all 100 North Carolina counties, Scott, have new Republican majorities at the local elections board level.

Thought you might know about that.

Panel of state appeals court judges cleared that way for auditor Dave Bullock to make elections board changes as appointment power shifted to the auditor from the governor's office.

The Board of Elections also says it will attempt to reach nearly 200,000 voters whose registrations are incomplete.

That's to attempt to comply with a Trump administration lawsuit to clean up voter rolls.

The politics of this, strong.

It's deep.

It's weedy.

It's a Raleigh thing.

But what does it mean to have new majorities of Republicans on all 100 county boards, first time what, since 2016?

- Well, I think I personally am kind of waiting and watching warily this move of the elections process directly to the state auditor's office.

No other state auditor in the country is in charge of elections.

If it's not an independent board, it's usually the secretary of state.

The legislature chose not to give it to the secretary of state, I'm assuming because she's a Democrat.

And they gave it to the auditor because he's a Republican.

The first action of the new State Board of Elections was to elect a chairman of the board who was a 2020 election denier and to fire the nonpartisan director of the Board of Elections, who led a staff who had won national awards in election administration.

And in her place, they hired a political operative.

So, you know, I think it's unfortunate that it's come to this, but the Supreme Court has upheld it for whatever reason, and I'm watching very wearily and concerned that we're just gonna see a continuation over the next two and four years of the move to exclude voters much like happened in the Allison Riggs-Jefferson Griffin case, trying to exclude voters and curtail who can vote and that's unfortunate.

- Got about 90 seconds left to you on this issue.

The elections boards, all the politics of elections.

Still the victor go the spoils by the way, if you lose, you can fire the people and replace them apparently.

- And now that we're going to not have them exempt, the board is going to hire people of their party.

It is unfortunate 'cause we have a beautifully evenly distributed party affiliation here in North Carolina.

And why jeopardize that?

We are the model here in North Carolina.

Have people vote for who they represent.

We have representatives, Republican, Democrat, let's continue with that.

- Sawrey do you agree with that, with the model?

But were we the model under the old system of election?

- I don't think the model.

I mean it's been under Democrat control for decades.

it seems like the Republicans have never had a seat at the table except for a brief period of time during the Macquarie administration.

I think it's unfair to call Sam Hayes a political operative.

He's a well-respected, you know, attorney.

He's gonna do a great job at the head of the State Board of elections.

I'm excited.

I think the changes being implemented at the state level are important and I think we'll have more confidence in our election results going forward, - Donna, about 20 seconds.

We're gonna see a difference out there if we're a local voter across the state that they've changed elections, board majorities and we have new leadership at the state level.

- Sure, sure.

So I think what we're gonna see first, one, is an effort to comply with federal have a law, help Americans vote again.

Help America Voting Act.

So we're gonna see a lot more of that.

Trying to make sure that every single ballot, every single voter registration has all the information that it's required to have by law, by federal law.

So that'll be the first effort we see.

But I think when we get down to it, folks in their community are going to see people that are from their community on their local board.

And I think that's always a good thing.

- Alright, we'll close with that.

Scott, thanks for being on the show this week.

Hope you'll come back and see us.

Representative, Senator Donna, always good to see you.

More importantly, it is great to see you each and every week here on "State Lines."

If you have a thought about what you've heard, an opinion, email me statelines@pbsnnc.org.

I'm Kelly McCullen.

Thank you for watching and I'll see you next time.

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