- The state Senate votes to stop county governments recent property revaluations and Republican leaders in the Senate say they may pass their own budget bill and hope for formal budget negotiations with the House.

This is State Lines.

- Quality public television is made possible through the financial contributions of viewers like you, who invite you to join them in supporting PBS NC.

♪ - Welcome back to State Lines.

I'm Kelly McCullen.

Come on in and joining us today.

Dawn Vaughan of the News and Observer in Seat 1.

Durham County representative Zack Hawkins to his right.

Senator Amy Galey of Alamance and Randolph counties.

Hello and Joe Stewart over in seat #4 political and analyst extraordinaire.

Sessions in full swing.

Senator Galey we want to start with you this week discussing property tax reform where the Senate has approved a moratorium bill on 2026 property tax revaluations as conducted by local governments.

This was a bipartisan vote.

It was 36 to nine.

It would halt 2026 property revaluations for nine North Carolina counties because not all counties revalued property in 2026.

Those counties would not tax at the newly revalued property value, but the bill would not stop local governments from adjusting your property tax rate up or down as they craft the new budgets for this coming year.

The bill, of course, must pass the House and earn a gubernatorial signature, not a veto.

So Senator Galey, the Senate has laid out its property tax reform bill over in the house as an amendment may be coming forward here soon.

Take us through the Senate bill moratorium for what a year.

- That's right for a year for those counties that would be doing the revals really this bill property tax reform is a long session issue.

It's something that really needs a lot of input not only from the constituents, the people that we represent, but also from the Association of County Commissioners and from the League of Municipalities to really understand well what the impact of anything that we the General Assembly might do would have on local budgets.

I just think it's super important for people to engage very directly and closely with their local governments on the impact that property taxes would have on them and educate their local elected officials about their kitchen table issues and what the citizens priorities and needs are.

- Representative Hawkins, clearly Democratic and Republican voters have both of your caucuses attention with this one, no matter what county commissioners say in the League of Municipalities.

So lobbyists versus the people.

What has this issue shaping up?

- Well, I think is, you know, I think as you mentioned, if you could go to a barbershop or you could go to a church on Sunday and people everyone would have something to say about this issue.

And I do agree that you know, I agree with the fact and I see where they're going with putting a one year moratorium.

The only thing that I'm, you know, sort of a little concerned about is making sure that you know these counties have the ability at the end of this process to meet the needs of their citizens.

Because it's one thing.

It's one thing to, you know, you know, want to lower those.

But when people start stop getting the level of service that they need, it can become again problematic.

And so you know, Department of Revenue estimated that about $18 million could be lost for some of these counties, and I think some of them are in the Helene zone as well, and so we just want to be careful.

But I do think I saw that was a bipartisan vote when they took it.

I think it was a bipartisan vote that was happening on Monday or Tuesday, and so I hope that we're all acting in full faith and not with you know for political points to make sure that we're doing what's best for the people of North Carolina.

'cause it does have their attention and the money in the property valuations are real.

- Dawn, this particular bill halfway to the finish line, which would be Josh Stein's desk.

So realistically, will the House take this bill seriously?

Or will it be sort of used for other matters for negotiation for other bills?

- I asked House speaker Destin Hall about this and I mean it's already.

It's past the Senate final reading.

It's it's over in the House now, but the House has spent months on this property tax reform study committee and they want the constitutional amendment and they want to close this tax exemption loophole.

That one particular idea.

It seems like it has a lot of support.

The amendment Senate leader Phil Berger said that he he likes the idea of the constitutional amendment.

He's not opposed to it.

The House's idea, but wants something faster and the moratorium doesn't include the whole state 'cause not everyone was on the same you know revaluation schedule.

He just wants to do something now and this is his his final session.

In the Senate, it's something that is more immediate that could happen where constitutional amendment if that goes through, it's on ballots in November and then it doesn't tell the legislature at what amount that they can cap the property tax rate so that that's more time and he wants to do something faster.

The House, I think once they're probably all three are going to end up in the same bill so it's not necessarily going to be law in mid May is initially what Berger said, but we're almost at mid May now.

- Joe, the cities and the counties are pitting.

I know I've heard from some county reps.

In Raleigh, who say wait a minute, the county governments aren't the ones giving taxes higher than property value.

It's the city governments doing it, but yet all we hear about county budgets are being blown out when they're pointing back to the cities.

Are towns doing this more than counties?

- Yeah, I think there's probably enough blame to be passed along about both cities and counties in some instances.

Fast growing parts of the state.

There is a need for the additional revenue that they collect through these taxes to meet the necessary infrastructure improvements just to satisfy what's necessary as a result of their growth.

It would be great in political discourse if we could replace the word tax with the expression the minimum amount of revenue necessary to make sure we're guaranteeing the economic prosperity of this part of the state.

But that's kind of a long way to describe what this process is actually about.

There's probably behind this some more substantive conversation that's needed for what the relationship needs to be between the big fast growing parts of the state and the legislature in terms of what investments are needed to make sure we maintain this desirability as a state that we have infrastructure in place to meet the needs of a growing population.

We have a long history of North Carolina's legislature setting the tone.

It's a Dillon state, so local governments can't do anything.

It's not authorized by the General Assembly, but we're also not historically a state of big cities.

And now that's starting to happen.

And so in some ways, relationships like taxation issues probably need to be addressed.

- You know, former House Republican leader Skip Stam writes articles and he sends them to me, published them in papers, but he brought up a good point, I thought.

And Senator Galey, I'll give this to you.

If Republicans cap property taxes, he says, watch for local governments to just start adding fees on garbage, water, oxygen, if you need to, to offset the loss of property tax revenue.

And then that point, whether you make ten dollars a year, ten million, you're going to pay a higher tax.

Is there something to be said for that?

Has that even been discussed?

- I think that that is a very salient point that he made.

Yes, I think we could see fees coming like the stormwater fee, the rains, we pay a fee.

I think one of the most important things to remember and thinking about the property tax discussion is that people don't experience that in isolation.

This is part of the kitchen table issues that people are dealing with with the rising costs of many different things, including groceries and including health insurance and other things.

And so our residents aren't only feeling the pinch of property taxes, it's it's the whole whole bag of it.

And this is one piece of it.

And it's very important to remember the the person who's paying the the fee or the tax and their perspective and how it how it fits into their total household budget.

- Representative Hawkins, final topic on this, I want to raise the point when it gets down to the nitty gritty of passing a moratorium and the rules around it and these exemptions that Dawn has referenced and Dawn, you can jump in here too, do you believe the House and the Senate can keep hospital interest out of the way?

The veterans are certainly saying we need a tax break or more of one older Americans.

Politicians are saying help the working person and their families, but they're earning income.

Can you keep it clean?

Because Republicans tried that for tax reform to get that flat tax.

And they were big about remove all that and you can lower rates and generate revenue.

- Yeah, I don't think so, especially if we plan to continue to call ourselves the most veteran friendly state of the country.

You have to take care of veterans.

Those who are on fixed incomes after retirement, people who've given their lives, especially to the state of North Carolina or other industries, we have to take care of them.

And so I don't think so.

And I'll go back to one piece that Senator Galey mentioned is and you did as well with the fees.

If with the House version of the constitutional amendment, there's no other place really for them to raise revenue if we don't have to go to fees.

And cities and counties are very worried about this issue.

I just I've of course, once it moved, I got a lot of emails because everyday residents are worried about the ability to make sure that they can meet the growing needs of a place like Durham and of course, the state of North Carolina.

We're going to go from number nine to number seven in the U.S.

population in about 15 years.

And so this is a very, very big issue.

- They can also look at what they spend their money on, too.

Right.

So when I moved to North Carolina from Virginia 20 years ago, I thought, oh, my goodness, these fees.

Like I noticed that for a long time.

So North Carolina already already has a lot of that on the hospitals, I think that is going to be a long session issue, the way Senator Gailey said.

And I think the hospital exemptions are going to be like much discussed.

Senator, President Phil Berger told reporters this week Senate Republicans may just proceed with passing their own version of a budget bill.

It seems the House and Senate have been working on a joint budget bill.

We hear about it for months.

They could release release together, but there's been no bill so far.

Senator Berger says the Senate may pass that budget, have the House pass its budget, then negotiate a compromise.

Get these words out of my mouth.

Stumbling over that story.

OK, so do it old school.

Senate passes a budget.

House passes a budget.

Sit in closed session.

You're not going to be in the room, but is that the way they should do it?

Or is it better to work on a compromise and then pop out a deal and everybody vote on it and go home?

- June 30th is when people in the state of North Carolina are expecting a budget by.

And I think if both electorally, it is a people's interest to have a budget by then and for the goodness of the people, making sure that they actually can again, you know, have their have their needs met.

And so the House remains pretty dedicated to making sure that we move forward with a budget which they can vote on at any time.

We just need six Republicans to join the opportunity for us to make sure that they come to the table and think about the things that are important, making sure that we take care of state employees, that we get teacher salaries to the, you know, to the top in the Southeast, making sure that working families actually have affordability.

Those are the things that we want common ground on in the Senate.

And so I think it's a little bit of a waste of time for the Senate to start a process through their own budget process when they could just use the House version as their template and they could add what they want to and then come together by June 30th and make a budget.

- Said like a House member, Senator Galey.

Just I have never seen the Senate just well, I've never seen either chamber just grab the other's budget and hug it and love it and pass it.

So how will this go?

That's the old school way.

Senator Berger says everyone passed their own respective budget, negotiate.

How about that?

- Yeah, I mean, let's get started.

I think all of us are ready to get to work on the budget.

There's a lot of energy pent up and we're ready to make some decisions.

I think that Senator Berger and Speaker Hall are working very diligently to come to an agreement on the big ticket items.

And I look forward to getting to work on it myself.

- It's 300 days, 300 days without a state budget.

- We have a state budget.

We don't have a new one.

- We don't have a new state, a comprehensive state budget.

- And also the House could have taken up the Senate since it's past that last year.

And then we wouldn't have had all these.

- There you go.

Just pick up the Senate budget, do what they want.

That's all you got to do.

Join forces with the governor, pass, have a big ceremony.

- Well, the governor, the governor actually liked the House budget.

Continue.

- Joe, it is interesting that Senator Berger pops out with what really is the traditional way people expect civics to work in Raleigh instead of this.

We're going to work on a joint budget before actually going public with a budget.

I have.

Am I wrong or did they teach me incorrectly?

- You know, I think at this point there are healthy conversations taking place between Senate and House negotiators agreeing on the big numbers, like what the availability overall is and what the numbers are in terms of pay raises.

Those sorts of things are significantly important for the two chambers to agree, even before the rest of the finer details get worked out.

It feels like there's momentum in that regard.

At this point, I think the leaders of both chambers say and do things that are an attempt to sort of flavor the negotiations that are taking place.

And so I would take everything that's said at this point with a grain of salt.

But that haven't been said, just the conversations I've had with legislators, there does seem to be a fierce desire to get this done by June 30th.

Legislators of both parties tell me they've heard a lot from constituents about frustration that there's not a new existing budget in place, that the old budget is being utilized still.

And so I just am optimistic, given all of those factors, that something will be worked out, whether it's a compromise between two separate versions or a conference report that's been worked out in advance and is voted on by both chambers.

I think we're going to get it.

We're going to get a budget by June 30th.

- Dawn, I think I saw one headline at least say that the budget is moving, but it's really slow.

- It's my headline.

[ Laughter ] - It's moving, but it's dragging.

- It's only May.

And we have until June 30th, and we're not half through the spring session.

So, I mean, is it time to call it slowed down or stalled?

- It's not stalled out yet.

There is runway, as Berger likes to use the word "runway."

But what Berger was saying to us the other day after Senate session is that they still don't have an agreement on the raises and the taxes, so the Senate was ready to run its own agenda, its own bill.

And I asked Speaker Hall about that, and he said -- he made the reference that, "Well, the Senate can send us stuff, and we don't have to take it up," which is what -- you know, just this inner-chamber fight.

So, Hall would still prefer a compromise budget based on last year's budget documents.

But it's not -- we're not panicking yet.

There's still optimism.

June 30th, I feel like, is excessively optimistic.

Hall himself put the calendar out for House members saying July 2nd would be the last voting day.

So, I don't think it's going to be the -- well, I don't think it's going to be no budget at all, dragged out till fall.

But things are still moving, but it's not as fast.

- Turbulence than a soft landing?

Do you expect a hard landing or an emergency landing?

- You know... - Will they take off at all?

I don't know.

- We're in descent on approach.

- Go around again.

- Well, let's talk about going around again.

Raleigh's Wake Med Health approached Wake County commissioners this week in proposing a merger with Charlotte's Atrium Health.

Wake Med's board leadership said a two-year feasibility study shows them "the pure beauty of merging with Atrium."

Local and state leaders jumped into this debate this week, very publicly, leading Wake County commissioners to delay voting on the merger for 90 days, I believe.

The deal allegedly calls -- I would say it calls for Atrium to invest $2 billion in Wake Med.

Now, Wake Med says they need consolidation.

They're in head-to-head competition with both UNC Healthcare and Duke.

Those are two powerhouses.

Wake Med is certainly no slouch, Joe.

But from the insurance industry and the medical field, if you will, will a merger make it cheaper for people to get healthcare and more accessible healthcare for people in the Wake Med ecosystem and sphere of influence?

- You know, one of the things I say that's delightful about politics is it's the only enterprise I'm aware of where multiple disparate things can be true all at the same time.

It is probably true that a very large healthcare system like Wake Med does need an infusion of capital to modernize its facilities to make sure it's providing state-of-the-art care.

And in some instances, healthcare systems now need that money to build hospital spaces that utilize technology that lessen the need for personnel.

It's a longer-term strategy to try to curb the expense of healthcare by having smart rooms where a patient's blood pressure and other factors can be monitored electronically, not needing a physical presence of a nurse or someone to monitor that patient.

But in this instance, I think the thing that was most surprising was that Wake Med, having studied this issue for two years apparently, tried to make the announcement and get it all done in short order, sort of the classic example of a press release on Friday in the hopes that nobody was paying attention in a vote by the Wake County commissioners on Monday that would effectively start this partnership without a lot of input from not only local officials but legislators who are legitimately concerned about consolidation in the healthcare system, particularly very large hospital systems.

Theoretically, it makes the possibility for care to be a lot more efficient.

But with fewer providers out there, the lack of competition is a real concern in terms of pricing.

And so I think the desire to have this deal done, and I think that's what's been the concern among legislators and local officials, including folks like the state auditor and the attorney general.

They want to understand what this deal is all about.

Atrium and Wake Med are both nonprofits, but they are trying to operate in a way that guarantees the revenue sufficient to provide the indigent care, which is sometimes a number they can't anticipate, the number of people that can't pay for the care that they get.

But we'll have to see if this is good.

But again, as you stated, these are 2 very large enterprises We've got to figure out if this is good for the health care system in North Carolina.

- Very quickly, the insurance industry as a whole, do they like mergers of hospitals?

- I think anything that can prompt competition in health care, it's very difficult.

The health insurance marketplace is irrational because people want the quality care.

They don't want to have to shop around and try to find the best brain surgeon.

They want to trust that they're getting the surgery that they need by someone who's really proficient and able to do it.

But the challenge any time you consolidate is the greater the number of providers, the greater the risk.

And we've realized the fact that fewer providers make it easier for any enterprise to charge a fee that they feel is appropriate because they're not being forced into competition with other providers.

- Senator Galey, you're from Alamance and Randolph, but this seems to hit Atrium Charlotte and Raleigh.

How does it affect out in the triad area?

And are legislators in a position to just watch what Wake County Commission does with changing the bylaws to allow a merger?

- Well, I think that we have a lot of people who commute to Wake County to go to work.

We may have employees.

I'm not sure that we have a lot of people who rely on Wake County hospitals for their own care because we go to Duke or Chapel Hill or Cone.

- It's a competition, yes.

- Yeah.

So we live -- we're fortunate in Alamance County to be nestled in an area that's very rich in health-care options.

Randolph County, less so.

They have -- and this is the thing -- I thought that was very well said by you, Joe, the analysis of the transaction.

But one of the things we talk about a lot is rural health care in North Carolina.

Randolph County has a rural hospital.

We have -- Martin County, I think, has no hospital right now, and they're working hard to generate the energy behind that.

I really question why is it that people in Wake County are desperate for this merger to go through when we have other parts in the state that's not in the state that's in the state that has a real and significant demonstratable need in the rural parts of our state.

- Fair question, Representative Hawkins, but you're in Duke country for Duke Hospital, and Duke cared for my mother in her cancer battle.

I actually love all three hospitals.

I will need them one day.

Actually, one had my daughter and one kept care of my mom.

So before we throw out and say a merger is bad, how should we look at an issue like this?

How will you look at it with Duke in your district?

- Well, in an instance like this, they probably should have already reached out to the state auditor and to the attorney general.

- Asking for it by not doing that.

- That's right.

They're asking for it by not doing that and not consulting at least the corner offices.

And so the ability for us to wait, because I think to Senator Galey's point, we are a rich place for health care in North Carolina, and so we have to make sure that not only are we asking for potential better deals, but also looking across the state, especially in rural North Carolina.

- Dawn, the media coverage, Brad Briner doing Facebook videos and others going out there very quickly about this merger, skeptical of it.

Is it fair to jump to the negative in a merger idea between two major health care systems?

- Well, I think what Joe mentioned about putting something out last minute, it like just sets alarms off for a lot of people, and then everyone wanted to say, you know, hold up here, like let's wait.

And that's what we have now is that there's more scrutiny of it.

I don't know if it will be negative or positive.

But when you try to rush through anything, you know, people, like, they're worried about it.

- All right.

Well, we'll keep watching.

That was more of a is a local yet regional yet statewide issue.

I don't know how to define the idea of a hospital merger.

We can say Roy Cooper and Michael Whatley's campaigns are working this state, in some ways, America.

That campaign's heating up this week.

We have a group out there now has created a website, lets you search for former inmates who were released from prison under the Cooper administration.

Pro-Cooper groups launched a parents group this week.

These parents have been out there waiting to highlight what it believes are decisions made by Michael Whatley that place children at risk.

Whatley campaigns raising awareness to Mr.

Cooper's leasing of family land to a solar energy company, and Cooper's campaign challenges Michael Whatley on Republican plans to address affordability at all.

So, Dawn, just great high-level policy discussions between two U.S.

Senate candidates.

Go to the website.

It's starting to turn into this -- is it -- what do you call it?

Is it astroturf, grassroots?

Is it organic?

- I think the campaigns are looking for issues that can be the most prominent, like what's going to work best for them.

Obviously, public safety is an issue in every election, ever, you know?

So, if you're scrutinizing the other candidate and saying that, you know, your actions have caused this or not.

So, I think that's why we're seeing that.

A lot of -- and the Cooper -- the inmate release from, you know, COVID era, I think, is going to be something that the Whatley campaign and others are going to talk about all year.

And I feel like just because we're in that ramping-up time, like, that could become the dominant only, you know, like, primary issue of the campaign.

But that's certainly what both, especially Whatley with the Cooper and the release, are going to be talking about for a while.

- Are these issues, the big ones, inmate releases and all that, are there other issues on the table, Representative Hawkins?

I know you're going to root for Cooper as a Democrat, but people looking for a policy debate, so far it's two candidates only doing national media.

- Sure.

You know, and with Whatley being down in the polls, he's going to start to try and soften Cooper up on issues that he thinks are relevant.

But, you know, I think, you know, the thing that we really need to focus on when it comes to Michael Whatley is his associations with Donald Trump.

You know, Harvey West and the associations with him and putting children at risk, and going back to Trump with affordability.

If Michael Whatley is in office, he is going to be a rubber stamp for Donald Trump, which means he will be a rubber stamp for what's happening in Iran, the Strait of Hormuz, gas prices.

I mean, he is not the type of North Carolinian that we need in the U.S.

Senate.

And so, yes, he's going to try and find issues like public safety, that is a historical issue, to try and soften Cooper up.

But I think it's a nothing burgle.

- Senator Galey, back to policy versus we're already starting to soften each other up in that U.S.

Senate race, the two candidates are at least.

- Roy Cooper will be a rubber stamp for the most liberal Democrats in the nation.

He deserves to be held accountable for the decisions that were made by his administration during COVID.

And the release of the prisoners is shocking, honestly.

I was a freshman in 2021, and Secretary Ishii came to our committee.

He said that there was a settlement.

He assured the committee, and I was present, that no violent offenders were going to be released under this settlement.

There was a young man who was released.

He went on to murder somebody in Alamance County and was tried and convicted for murder.

So these are important policy issues that need to be thoroughly -- - On our way to spending a billion.

Last word, last 20 seconds, Joe.

- I used to think campaign season didn't really start until two candidates got in a fist fight about yard signs, but I think now it's the creation of ancillary groups and the attack of each other on digital platforms is really the hallmark of the start of campaign season.

- The most beautiful sidestep I've seen in six months.

Thanks to our panelists for joining us.

Email your thoughts and opinions.

I know you have them.

Our email address is statelines@pbsnc.org.

We'll read those emails and share them.

I'm Kelly McCullen.

Thanks for watching.

I'll see you next time.

♪ - Quality public television is made possible through the financial contributions of viewers like you, who invite you to join them in supporting PBS NC.