A group of prominent North Carolina business leaders, and some big Republican donors, sent a letter Tuesday morning to all House Republicans urging them to abandon plans to muddy the budget process with legalized casinos, earmarks for NCInnovation, and expansion of Medicaid, an agreement reached with Gov. Roy Cooper earlier this year.

It comes hours after Republican General Assembly leadership filed two key pieces of legislation, splitting casinos off and pairing them with Medicaid expansion in one bill, and a separate bill containing the state budget.

“We understand the challenges you face in crafting a budget that meets the diverse needs of our state,” the letter reads. “Still, we urge you to prioritize fiscal responsibility and the principles that have contributed to North Carolina’s economic success. We encourage you to expeditiously pass a state budget that excludes funding for NC Innovation, policy changes on casinos, or funding for Medicaid Expansion.”

The letter is signed by Art Pope, budget director under former Gov. Pat McCrory and CEO of Variety Wholesalers; John Allison, Wake Forest University School of Business, retired CEO of BB&T, and retired president and CEO of the Cato Institute; Rodney Pitts, chairman of Southern Elevator; E.C. Sykes, general partner, Aslan Ventures; and Bob Luddy, CEO of CaptiveAire and founder of Thales Academy and College.

“I oppose NCInnovation, gambling, and I am extraordinarily disappointed in the General Assembly leadership for elongating the session to please lobbyists,” said Luddy in a phone interview with Carolina Journal on Monday afternoon.

Monday night’s bills emerged after Republicans took criticism last month for proposing a $1.4 billion allocation for the private NCInnovation economic development fund, which amounts to 5% of the overall state budget. In the version circulating Monday evening, NCInnovation was scaled down to an initial allocation of $250 million with eligibility for a second infusion of $250 million if certain benchmarks are met.

The prominent North Carolina Republican business leaders are united, at least on the budget process, with Senate Democrats and House Democrats sending similar messages to Republican leadership on Monday.

weekend negotiations

Over the weekend, a tumultuous back-and-forth among lawmakers reportedly flared up after leadership proposed the dual-track strategy of running competing priorities in separate legislation; one that could get Cooper’s signature for casinos and Medicaid expansion, with another that contains the state budget and expansion of Opportunity Scholarships. Enough Republicans and moderate Democrats support the school choice program and the budget’s raises for teachers, state employees, and public safety officers that they could likely override a Cooper budget veto.

Budget efforts last week to add four casinos in Nash, Anson, Rockingham, and Robeson counties sparked opposition from the House Freedom Caucus and others who wanted to see casinos vetted in committee instead.

“I appreciate leadership placing these two issues into a separate bill, allowing our members the freedom to vote according to their conscience without having to vote against the budget,” Rep. Neal Jackson, R-Randolph, told Carolina Journal.

However, Cooper has not publicly supported the strategy calling it a “backroom deal.”

2024 casts shadow over budget process

The entire North Carolina legislature is up for re-election in 2024. Some members worry that Republicans’ bare supermajorities in the Senate and House could become fragile in the waning days of the session.

However, it’s been a successful session for Republicans as they look to wrap up: restrictions on abortions after the first trimester, 14 veto overrides that put the Parents’ Bill of Rights and protection for female athletes on the books, plus bans on gender transition for minors and Second Amendment protections for some churches and other facilities.

Privately, some members say the last-minute flurry of policy threatens “political suicide” for those representing deep red parts of North Carolina. If forced to vote for a budget that had casinos and Medicaid expansion in it, many say they would likely vote “no.” Under state law, there are no government shutdowns when there is no new budget agreement. The law requires that the state budget from the previous year automatically stays in place if lawmakers cannot reach a new agreement.

North Carolina’s entire Senate Democrat Caucus sent a letter saying they will reject a Medicaid expansion bill if it is “tainted” with casino legislation that didn’t go through committee. Sen. Paul Lowe, D-Forsyth, was the last to sign on, quickly getting heat from his colleagues.

“North Carolina’s state budget was due 78 days ago,” Senate Democrats’ letter reads. “Our children’s classrooms need teachers, our busses need drivers, our workers need raises and the people of our state need healthcare. It is straining the imagination to conjure a scenario where 11 million people are held hostage for the bidding of a Maryland casino developer, but that’s where we are today.”

On the House side, Democrat Majority Leader Robert Reives, D-Chatham, had similar language in his letter signed by 29 members. It showed support for a Medicaid state budget, rather than the possibility that there is no new budget at all.

“It’s time to stop playing politics with people’s lives,” Reives’ House letter reads. “To date, the Republican leadership has not been engaged in good faith negotiations with our leadership. If that changes, we stand ready to pass a budget that meets the needs of North Carolinians.”