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Nip and Tuck
Every two years during the state budget process, lawmakers tuck policy-related rules into overstuffed financial legislation. It’s a way to fast-track changes that may otherwise face a steeper climb on their own. (Democratic Rep. Deb Butler recently called the budget process a “democratic crisis,” and filed dead-on-arrival bills to reform it earlier this month.)
The Senate’s budget still needs to survive House scrutiny and will certainly undergo revisions before being adopted by both chambers. Still, policy items that made their way into the Senate’s budget could be considered as having a turbo-boost.
Some of those changes includes reforms to the state’s dentistry rules. As The Assembly reported earlier this month, the death of Wilmington cardiologist Henry Patel during a routine dental procedure in 2020 prompted demands to require dentists administering deep sedation to use a skilled anesthesia provider, as required in most other non-emergency surgeries.
Republican Sen. Michael Lee, named Senate Majority Leader this month, has championed dentistry sedation reform. The state dental board adopted some increased reporting rules in 2022 but stopped short of requiring a second anesthesia provider–a step the dental industry bucked as being reactionary, expensive, and unnecessary.
The Senate’s budget includes more enhanced reporting requirements for dentists when something goes wrong in surgeries. It also calls on a state research collaboratory to evaluate whether a second anesthesia provider is needed. The changes are entitled “Ninja’s Law,” Patel’s nickname.
The dental reforms aren’t Lee’s only cause that made its way into the budget.
In 2023, Lee filed a bill to eliminate the ability for cities across the state to regulate land uses for properties outside their limits, known as extra-territorial jurisdictions. It didn’t go anywhere, but the state appetite for curbing municipal land-use authority was growing; that summer, the legislature stripped Leland of its annexation authority, a dramatic move town leaders viewed as punitive for its explosive growth.
Then last summer, the legislature passed Republican Rep. Charlie Miller’s effort to strip Southport of its 1,911-acre extra-territorial jurisdiction (ETJ).
Altogether, the legislature’s moves fit into a larger trend of municipalities’ fear of losing local planning control. New limitations on municipalities’ local zoning control passed last year also have cities scrambling.
Whether it be through annexations or ETJs–where property owners are subject to certain municipal planning rules but don’t pay taxes or vote in elections–lawmakers and property owners have opposed the tools as a form of regulation without representation. Municipalities see them as useful for shaping town standards and boundaries.
Last month, Miller filed two deannexation bills to remove various properties from Southport and Oak Island limits. Southport leaders were incensed. “This is an avalanche hanging over our heads,” Alderman Karen Mosteller said at the city’s March 13 meeting, calling their recent ETJ removal the elephant in the room. “Our state representatives hold the power to crush us.”
Alderman Lowe Davis said the proposed deannexations were a slippery slope that would allow more property owners to “chew away” at city limits. Miller’s deannexation bills haven’t yet moved out of committee.
Southport, Boone, Asheville, Weaverville, and Maggie Valley each lost their ETJ authority through local bills over the past decade. The Senate’s new budget would strip all cities of ETJ authority.
Scott Mooneyham, spokesperson for the NC League of Municipalities, said he’s concerned about the inclusion of ETJ bans in the budget. He said ETJs are an important growth tool, particularly in tourism communities, to prevent adjoining incompatible land uses. “Of course, those incompatible uses can also damage property values for existing property owners,” he said.
In an email Tuesday, Southport spokesperson ChyAnn Ketchum said the city is sympathetic to other municipalities whose ETJ authority now appears on the chopping block. “As a municipality that was stripped of their ETJ last year, Southport has seen the adverse effects of that action and hopes that fellow municipalities are able to avoid that fate,” she said.
–Johanna F. Still
Revenge of the Binder
[Note: This column has been updated from the original that appeared in the newsletter.]
At Monday’s budget meeting, Republican New Hanover County Commissioner Dane Scalise voiced frustration in his attempts to trim spending.
“I don’t feel like I’ve got the tools at present to do that, and I’d like some assistance,” Scalise said.
It’s not a new struggle. Last year, we wrote about Scalise and Democratic Commissioner Rob Zapple’s attempt to tackle the “binder,” a more granular look at what makes up each county department's spending. It's usually distributed to commissioners after a proposed budget is assembled, but Scalise and Zapple wanted to take a deep dive before that proposed budget was presented.
I got my own copy, and found the pages of budget codes to be largely inscrutable. In an interview earlier this year, Scalise admitted it wasn’t what he’d hoped for.
“It made my efforts to pinpoint some areas where savings might be had more difficult,” he said.
This year, Scalise told me he was pivoting to a third-party audit or review–an idea he’s raised repeatedly during this year’s county budget meetings. Fellow conservative Commissioner LeAnn Pierce agreed it might be a good idea, but voiced concern there wasn’t enough time this budget cycle for a third party to generate usable results.
Pierce and Scalise agree, though, on trying to whittle the county budget down. While both acknowledge inflation has increased costs, they want to keep things as close to revenue neutral as possible–meaning next year’s tax bills will be as close as possible to last year’s, irrespective of the significant increases in property values from the recent revaluation. For his part, Zapple argued that paring the budget down that far wouldn't be advisable, because the county had essentially been tightening its belt for years waiting for the revaluation to provide more funding for important investments in the county. (Whether Zapple and his recently-elected fellow Democrat Stephanie Walker will be able to sway anyone else on the board is yet to be seen.)
But while Scalise and Pierce could likely win over Republican Chairman Bill Rivenbark’s vote for a lean budget, figuring out what exactly to cut is tricky. In part, that’s the nature of the budget process, where commissioners mainly see high-level categories of funding, not the line-item level, where Scalise and Pierce–echoing comments they made last year–suggested that a lot of small tweaks could aggregate to big savings. Cheaper office furniture, combining overlapping or redundant positions, things like that. “Pennies make pounds,” as Scalise said Monday.
County Manager Chris Coudriet has countered that, noting that those cuts wouldn’t add up to the multi-million dollar savings the county would need to significantly decrease the proposed tax rate. His current proposed budget is based on a new tax rate of 35 cents per $100 dollars of property value. Getting closer to 29 or 30 cents, which is where Scalise and Pierce have said they want to go, would require deep cuts — over $8 million in spending for each cent of tax rate.
But Coudriet, who is always quick to defer to the “will of the board,” also said he’d be happy to give commissioners more budget details. He also offered them access to a “dynamic spreadsheet” that shows some of the inner workings of his budget; it includes a range of "levers" — like cutting funding for affordable housing, non-profits, pre-K support, and keeping education spending level with last year. Throwing all the levers, so to speak, reduces the budget by around $38 million, lowering the tax rate to just over 30 cents.
Notably, this is apparently the first time many of the commissioners have seen the manager’s sausage-making machine up close. It doesn't provide anything close to the granular details about equipment, staffing, or other line items that Pierce asked about on Monday, but it does represent more transparency than I've seen in past budget cycles.
However, that’s about as far as county staff are willing to go. While acknowledging some things were “left on the cutting room floor,” in his budget, Coudriet avoided Pierce when she pushed him to further prioritize in a way that would let commissioners make easier cuts. Coudriet noted that his staff rejected over $5 million in "enhancement" requests for county departments, but that what remains in the budget is consistent with the board's existing policy as he understands it.
Basically, while Coudriet and his staff have made recommended cuts to budget requests from other county-funded agencies–like the sheriff’s office, school board, board of elections, and nonprofits–they’re hesitant to do it for their own internal operations beyond the current budget.
A county manager, now retired, once told me, “it’s easy to train a dog to bite someone. It’s very hard to train a dog to bite itself.”
If conservatives want to reduce the budget, they could essentially order Coudriet to rework it with a lower tax rate — something the county manager would do, even if he didn't think it was advisable policy. Those cuts would likely involve major high-level cuts, which could risk the blowback of reducing popular services.
Alternatively, they could get very granular to find those pennies. And they’ll have to be quick, because the recommended budget is due out next month, and must be finalized by the end of June.
–Benjamin Schachtman
