Last September, Gov. Pat McCrory started talking about his grand vision to remake drab downtown Raleigh government buildings into vibrant swaths of apartments, stores and offices, calling it Project Phoenix.
By February, that had become the title of a proposed statewide drive to restore or replace buildings to be paid for with voter-approved bonds, which the governor touted in his State of the State address. But in April, just a week after publicly reiterating the need for a Project Phoenix makeover in Raleigh, McCrory released a wish list from state agencies of 100 projects in 64 counties with one thing missing – any mention of the capital city redesign.
The administration had decided that it was unwise to ask North Carolina voters to pay for new offices for state government workers in Raleigh and instead will work with the private sector to come up with options for building, leasing and short-term flexible use of office space.
The retrenchment is an example of how the governor is having to finesse his agenda when faced with political or economic hurdles, and it underlines the challenges ahead.
At the midpoint of the legislature’s long session, it’s unclear how some of the projects most crucial to his administration’s plans will fare. Before the session even began in January, McCrory insisted lawmakers had to approve his incentives plan so he could land major employers – a key component of his “Carolina Comeback.” The request cleared the House but has languished in the Senate.
He and Cabinet secretaries have traveled the state to make that case, as well as to promote restoring tax credits to preserve historic sites, saying the credits pumped billions of private dollars into the state’s economy before they were eliminated two years ago. A tax credits bill cleared the House but met with the same reception in the Senate as the incentives request.
McCrory’s hopes are not dead yet: Competing interests will shape the budget and other legislation until the session ends months from now.
Publicly, McCrory receives good marks from lawmakers in both parties for working with them. But there have also been open hostilities that indicate an underlying tension, particularly over what the governor sees as the legislature’s overreach in making appointments. How well McCrory navigates the General Assembly will dictate how much of his agenda he can accomplish – and position himself for re-election in 2016.
“The governor has staked much of his administration’s re-election chances on the $2.8 billion bond referendum to upgrade state roads and facilities,” said David McLennan, a political science professor at Meredith College. “The governor may have to do some horse-trading with his skeptics in the General Assembly to get them on board and then have to campaign hard to sell the public on the idea.”
No guarantees on bonds
In brief remarks to the Wake County Republican Party in March, McCrory invoked President Dwight D. Eisenhower’s name half a dozen times, as he often has since taking office.
“What Eisenhower did was connect the East with the West, the North with the South, cities with towns, the coast with the mountains,” McCrory said. “I’m an Eisenhower Republican when it comes to infrastructure, so when we do invest your tax dollars, it will last for generations to come.”
McLennan says it will be an uphill battle to convince voters that borrowing money will have short- and long-term benefits, considering the public’s reluctance to burden future generations with debt. Persuading lawmakers to put a referendum on the ballot will also require good relations with a legislature whose members have criticized some of his Cabinet members and shown indifference toward his goals.
“Some members of the Republican leadership are openly dismissive of the governor’s ideas, and even Lt. Gov. Dan Forest continues campaigning for the religious freedom bill” that the GOP-led legislature has declined to take action on this year, McLennan said. “These reflect a lack of respect and lack of fear of the governor, both things that past governors have used to retain control over their policy agenda.”
Senate President Pro Tem Phil Berger had sharp words for the governor after he sued to preserve executive branch authority to make the majority of appointments to independent boards and commissions. At one point last year, Berger accused him of wanting to control the new Coal Ash Management Commission rather than making it an “independent barrier between his administration and former employer,” Duke Energy.
In March, a three-judge panel ruled in McCrory’s favor, and legislative leaders reacted by halting appointments for a time. They appealed but also offered an olive branch by passing a bill that clarified some of the concerns the governor had raised in his lawsuit.
Berger and House Speaker Tim Moore last week both downplayed any conflict with McCrory.
“I think the governor is doing fine,” Berger said in an interview last week. “He has made it clear what his priorities are. He’s been accessible. He’s been somebody that we’ve had an opportunity to talk with. We feel pretty good about where we are in terms of understanding what he wants, and in getting the information we need to make decisions.”
But Berger said he has told the governor that there’s no guarantee that the legislature will agree to put the bond measure on the ballot, and no indication of in what form. It’s possible that putting money into roads will be more popular than other projects, he said.
“There is some reluctance of a number of members to borrow at all,” Berger said. “And to borrow the amount of money we’re talking about, it’s going to take some education. It’s going to take some convincing of a number of members. But it’s hard to say right now what the final result is going to be.”
Thomas Mills, a Democratic political consultant, says McCrory might end up with less than he wants from the bond issues yet still declare victory to save political face.
“I don’t see any significant accomplishment unless the bonds go through,” Mills said of McCrory’s tenure so far.
Mills does give McCrory credit for learning how to deal with the legislature.
“I think the best way to assess the governor is how is he doing compared to 2013, his first long session,” Mills said. “Compared to that session, he looks great. He stumbled through 2013, looked bad, didn’t get much done. The Senate basically rolled him throughout the session.”
Mills and McLennan both say McCrory is struggling to distance himself from socially conservative issues championed in the legislature, such as the religious freedom bill that critics say would allow businesses to discriminate against gays. The governor got lucky, Mills said, when Moore announced the House wouldn’t take up the bill, sparing him from a veto showdown with the General Assembly.
But Republican consultant Chris Sinclair says it was leadership, not luck, pointing out that McCrory had visited the House Republican caucus two days before Moore’s announcement. Sinclair said he was told the governor made a case against the bill in that meeting. Moore, citing caucus confidentiality, declined to discuss what happened behind closed doors.
“I give him big marks on that,” Sinclair said. “He’s really found his sea legs in leading with the legislature.”
Sinclair also called the Senate’s sudden withdrawal of opposition to McCrory’s deal to sell the Dorothea Dix property to Raleigh a victory for the governor. Senators who had filed a bill to revoke the sale unexpectedly announced last week that their “concerns had been addressed,” and they were glad proceeds from the sale will be used for mental health services.
The governor’s biggest challenge, Sinclair said, is coming up with a viable way to overhaul Medicaid and its persistent cost overruns. Conquering that test will practically ensure his re-election, the consultant said.
“If the bonds get on the ballot, if he can get Medicaid reform done, then, boy yes, he will be positioned extremely well,” Sinclair said.
Jobs incentives: Gov. Pat McCrory’s plan for jobs incentives, dubbed N.C. Competes, would double to $45 million the cap on grants to lure major employers and provide additional grants, tax breaks and tax credits. The House approved it, but it is languishing in the Senate, which has two of its own jobs incentives bills. Some variation of all them is likely to emerge.
Historic tax credits: The governor has campaigned heavily to reinstate tax credits to preserve historic property, which were eliminated two years ago. The House approved a bill to do that, but the Senate relegated it to a committee that seldom meets. The Senate came up with its own bill, which would allow counties and cities to issue grants or loans from property taxes to restore historic buildings. It went to the House last week.
Infrastructure and roads bonds: McCrory is asking the General Assembly to put a bond measure before voters in November to pay for $1.45 billion in infrastructure improvements and $1.4 billion on roads.
State offices: The administration has hired a real estate appraisal firm to conduct a comprehensive review of state property to see whether it is being put to its best use. Another appraisal management company is reviewing state-owned assets to speed up the process. State Budget Director Lee Roberts says the administration also wants to identify “swing space” that can be used temporarily when state agencies relocate into new or refurbished offices; that would avoid the state having to sign long-term leases.