Notable Activity
Rumored General Assembly Return
The General Assembly is still on summer recess, but it is increasingly likely that legislators will return in the last week of July to vote on outstanding business. The length of their stay depends on how much momentum leadership can build around specific votes and policy initiatives, so their return may last a few days or could stretch longer if compromises come together. Several agenda items are likely on the docket for legislators to address: Governor Stein has vetoed 14 bills so far this session, and majority leadership may be interested in overriding some if they can garner enough support. Legislators also have yet to release a biennium budget, and if negotiators between the two chambers feel they are close to a compromise, they may keep legislators around to complete that major task. Should a full budget compromise seem unlikely, leaders may release a series of mini-budgets (as they’ve done in years past) to modify current state spending levels to better reflect updated economic information and policy priorities. Beyond vetoes and the budget, there are still plenty of unfinished bills eligible to move forward. If sponsors can convince their colleagues they’re worth the effort, we may see several advance.
House Resolution 1 Impacts
Two weeks after House Resolution 1 (HR1) passed Congress, we are learning more about the impacts it will have on North Carlina’s counties.
Medicaid expansion beneficiaries will have to meet new work requirements, which will create new administrative costs, mostly for the creation of new reporting software and the hiring and training of staff to handle the increased workload. Other states have spent between $100 million and $250 million to implement similar work requirements. To fund those work requirements and corresponding administrative burden, the state will either need to authorize existing provider tax formulas to cover the cost, appropriate new funds to the program, or create a new financing mechanism.
The Healthcare Access and Stabilization Program (HASP), which reimburses hospitals for Medicaid-covered care and is largely credited with the financial solvency of many rural healthcare systems, will be reduced by lowering and capping the fees that hospitals voluntarily pay into the system in exchange for higher Medicaid reimbursement rates. Reductions or elimination of the program will raise questions about the financial viability of many rural hospital systems and corresponding services, something Medicaid expansion was credited with stabilizing. HR1 does include a one-time, nationwide $50 billion fund to offset some of these cuts, but considering HASP is currently valued at $6 billion and program cuts won’t begin until 2028, questions remain about how rural health systems will be supported over the long term.
SNAP funding is also shifting. Post-HR1, the state will be responsible for covering up to $420 million in benefit costs beginning in fiscal year 2027-2028. Because SNAP is a federally directed program, the state has limited ability to reduce the number of people who qualify for benefits or the size of those benefits. As such, the state has little choice but to fully pay for the program or withdraw from it altogether. Additionally, beyond benefit costs, the cost share for administering the program is rising — $14 million for the state and $65 million for counties. NCACC is working to find out more about the county share of the administrative fee and what mechanisms counties could use to cover it. Should the state be unwilling or unable to pay the combined benefit and administrative costs, it risks losing $2.8 billion in federal food assistance funds.
NCACC remains concerned that HR1 shifts significant financial and reporting requirements to counties that are already dealing with staffing shortages and highly restricted revenue sources. NCACC continues to work with state and federal lawmakers to educate them about counties’ needs to meet HR1’s requirements.