- North Carolina House and Senate committees are reviewing local property tax reform measures.

And Governor Josh Stein issues executive orders to better streamline mental health services with local law enforcement.

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(upbeat music) ♪ - Hello again, welcome to State Lines.

I'm Kelly McCullen.

Joining me today, Donna King of the Carolina Journal.

Representative Alan Chesser is in seat three for Nash County and to his left is representative Zack Hawkins of Durham County.

Gentlemen, welcome back to State Lines.

- Thank you for having us.

- Thank you.

- And WUNC News is Colin Campbell is here covering all things legislative.

Colin, good to see you as always.

- Good to be here.

- Good to be seen, good to see all of you.

Even better to see you folks.

Let's kick this show off with North Carolina's House and Senate leaders.

They have announced appointments to a new or it's actually two separate new property tax reform committees.

A House select committee convened this past Wednesday to explore potential changes on how local governments are taxing property and homeowners.

Many property tax reform options appear to be on the table from changing the revaluation schedule to allowing counties to pass differing property tax rates within the county.

The House committee includes a review of helping local governments remain funded should property tax reform lower local revenues.

Alan Chesser, representative, here we go.

I thought when I heard this about a year ago, this idea, yeah, sure.

Now it's sure thing, it seems like two committees.

What's the goal?

- I mean, the goal is one, I think everybody agrees, affordability has become a major issue.

And one of those driving forces to homeownership that's preventing homeownership and long-term homeownership, right, is taxes are pricing people out of affordability.

We were talking earlier in the green room, my own mortgage has gone up 30% in four years.

And that's robbing my family of about $6,000 a year of equity and financial freedom.

And so I think what happened is the law was in place to require, for lack of a better term, re-evaluations.

And I think that's kind of being taken advantage of to fill the coffers at a county level so that they can participate in things.

And so I think all options are on the table, including re-evaluating what essential services are at a county level and a municipal level.

Like where's the line of where government should be spending taxpayer dollars versus where they should find other revenues if they wanna participate in that activity.

- Representative Hawkins in Durham County, it's, gentrification is a big, big issue, but all those new apartments I see going up, that's big money, that's more taxes.

- It is.

- So what's the deal?

- Well, one of the things, our mailbox, our Durham legislative mailboxes have been filled with requests for, hey, can someone else look at this again?

Because in Durham, the property tax evaluations have gone up considerably and people are nervous, I mean, as they should be, just because at the end of the day, it's really hard.

Affordability, as Representative Chesser mentioned, is just something that we're deeply concerned about.

And so we're open and I can imagine that every tax assessor is open, their office is open, because they're only following the law.

But I think one thing that we sort of have to look at is our own policy at the state level, meaning if we want to cut taxes, we understand that that is gonna land somewhere.

And sometimes that lands at county levels.

And then the counties, of course, as Representative Chesser was mentioning, then have to decide how to raise rates or take that money and use services that they're not getting from the state or from the federal government.

And so I think as a part of this new committee that's happening in the House and the Senate, we have to think about our own practices as well.

And so, because I agree, everyone wants affordability.

If I were to try and move tomorrow, I could not afford the same house that I live in today, because you just wouldn't get that type of size in so many people, or either finding that they can't get into a home as a young professional, or they can't move and they're stuck.

And so I think that that's just a part of this committee.

We should make sure that as we cut taxes and think about how we bring down those burdens, we can't pass it down to our counties.

- Donna, with revaluation, I always thought when a county revalued, house prices go up, they're supposed to by the rules, they say, but the revenue for the county was supposed to remain flat.

So therefore you would get a, your house is worth more, but you're paying the same amount in taxes.

That certainly didn't happen in Wake County.

So why the hard feelings?

- Right, right.

Well, I mean, I think you're looking at a golden goose, and that's one of the things that the counties need to think about.

Are they really penalizing folks who are contributing to their community by taxing them out of the neighborhoods?

Since 2015, North Carolina's average home price has grown 104% over 10 years.

That is a huge jump.

And what it's really doing is also penalizing folks who have been here for generations, who have been here for 40 or 50 years and now can't afford the taxes on the house they've always lived in.

And so what I'm thinking we're gonna see, and I'm hoping we're gonna see some discussion at the legislature about setting some limits on that.

Maybe not the limits on new construction, but certainly limits on how fast counties can raise taxes on folks who have been here for so long in our communities.

- And I'll say that too, especially when we talk about seniors and we talk about veterans.

- Exactly.

- And so I'm hoping that, again, I'm just giving suggestions to my legislative friends.

Luckily I'm not on another committee.

But I would love for them to ensure, because we hear that a lot from people who have been in Durham for a lifetime, for generations, but especially veterans who wanna stay in urban areas because we're close to the VA and other services.

- You're a veteran and I'm growing every day closer to being in a senior status.

However, when you start cutting taxes for special interest groups, and that's what this is at the end of the day, somebody's gonna pay that freight.

So why does it go immediately to that?

You have to be a certain type of servant.

You have to be a certain age.

The problem's working families is what I just heard.

The solution is to give retirees a tax break.

How does that work?

- Well, I would say that that becomes a low-hanging fruit because they're readily available, commonplace, fixed-income households.

And so that's why you hear them come up so easily is 'cause everyone understands that those are fixed income.

And when you talk about retirees, those are incomes that are fixed by the state.

And then this burden's getting passed down.

I think the big part is, to your point, the long-term home ownership.

That is how you build quality communities is by getting people to invest in community by staying there.

We've talked about this from the development standpoint.

If all you build are starter homes, then all you're gonna get are starter families before people pick up and move to a more permanent location.

You don't get the community investment.

And so what we have to do is, what we always have to do at the General Assembly is that balancing act of trying to thread that needle where we're not favoring one over the other.

- All right, Colin, you're gonna follow this debate this spring on these two committees with legislation, they say possible by the summer of this year.

If you're Democrats, how do you pull in the Republicans who will create interest groups, property tax breaks, cross the board and all this?

But if you're a Democrat, how do you go against that when Republicans and Democratic voters say we're being taxed a lot to own a home?

- I think the debate is gonna probably be less on a partisan basis and more sort of state versus local.

This is inherently, if you put restrictions on how local governments, counties and cities do their taxes, you're gonna see a pushback of, hey, we're closer to the people, we should be able to do what we want if our citizens have elected us to set these budgets.

I think one of the challenges with that though is people just don't necessarily know when these tax increases, property tax increases or changes in policy are happening 'cause there's less local news, there's fewer people at newspapers.

So a lot of times homeowners are realizing this when they get the bill, but it's already a done deal.

And so there's, I think, some sort of notice issues here with who gets to weigh in and at what stage of the process do they know that this debate is happening and how to be a part of it and weigh in on whether a property tax increase is gonna be worth it in terms of the services you get at that local level.

- You gentlemen are at the county political dinners and events and all that.

What do you tell on these county commissioners?

- Well, I mean, we always tell them to stay close to the people first, to listen to what the homeowners are saying because of course, and I actually hosted one of these tax appraisal seminars with the local faith-based organizations so that people could be educated about the process.

And so we ask them to do the same and to also think about the ways that they are spending those resources that they're getting.

But the thing that they come back to is because of the lack of a state budget or the lack of spending that generally will be the state, that they're having to pick up the bill.

And so we have to think through, again, I'll go back to our obligation, so that we're not squeezing them and so that they can think about better ways to spend those dollars and less ways to tax local folks.

- So I think to Colin's point and to yours, you mentioned the revenue neutral rate.

I think transparency and honest communication comes into play here.

What we hear right now, we've got primaries going on for county commissioners right now in my district, probably in yours as well.

And the incumbents will always say the same thing.

I've never voted for a tax rate increase.

Well, when you don't stick to the revenue neutral rate and property values go up by about 147% in two years, like they did in my county, if you're raising that revenue neutral rate, that's a tax increase.

We need to look at it as a tax burden instead of focusing on the tax rate.

What is the burden that we're placing on our citizens?

Is that greater than it was before we took the vote or not?

And we need to have that open, honest conversation with our constituents.

- Is the answer tax relief going forward or that trick where they tax defer, so when I die, my daughter inherits a huge tax bill from the county?

- I'm not sure what the answer is.

And I think that's why we have the committees so that we can put a bunch of heads in the room and differing opinions.

We don't want a bunch of people that think the same way in the same room, otherwise we get no better result.

- And just like that, Colin, it's not boring anymore heading into the spring in Raleigh.

This will be a big deal.

- Yeah, this is gonna be a big fight to look at in the short session.

And it's one that, you know, the solutions are not easy, but certainly there's a lot of ideas that are gonna be circulating around both in the House and the Senate.

- What are the odds the House and Senate leadership both have ideas for reforming property taxes, Donna, and they can't reach a deal and for the good of the people, they do nothing?

(laughing) - I think we've seen it happen before, so we have pretty good chance.

- Yeah, and what's interesting about the two committee formations was the House formed a bipartisan committee, as they do with a lot of study committees.

The Senate appointed a number of top Republican lawmakers to look at this, but it's not gonna be the committee structure where Democrats get to weigh in and have open meetings, as best I can tell.

- Well, we'll see what happens in a few weeks when the meetings are, meetings already started over on the House side.

The Senate was appointed this week.

Will be an interesting topic, a lot of interest in it.

A lot of interest in this topic.

Governor Josh Stein issued some executive orders this week in hopes of streamlining involuntary commitments for criminal suspects believed to need a mental health evaluation when they are arrested.

The governor can change some work duties inside our state agencies, but legislators would need to step up, fund any changes that would need additional financial support.

The executive orders appear to allow law enforcement officers to more quickly delegate a case off to a mental health worker and then return to patrol for law enforcement duties.

Social workers could ride along with officers.

The governor says 97 of our state's 100 counties face a mental health access shortage.

Interesting approach to the communication on this because in other cities, the bluer states, if you will, people accuse the police of coming off the streets to put social workers in their place.

This seems clear.

We'll add social workers or mental health professionals alongside a police officer.

And if you don't need to arrest them and charge them, get them some help and get them off the streets nonetheless.

- That's exactly right.

And I was proud, Durham, we have the HEART program that works alongside our law enforcement.

So that if someone is having a mental health crisis, it can be dealt with appropriately.

Because we can't deny, and especially since the pandemic, we see the issues of mental health with adolescents and adults, they've skyrocketed.

And so we can't see a crisis, we can't look at a crisis in the face and not respond.

And so we have done the reactionary thing.

And so now I think this is a real opportunity, a bipartisan opportunity for us to prevent crime before it happens.

We can always argue about how to punish someone once a crime has occurred.

But if you polled Democrats and Republicans and others, most of them would say, I'd rather you prevent that crime before someone gets hurt.

And so this is what the executive order sort of really hopes to get around.

And criminalizing mental health is just not the way forward for North Carolina.

And the polls will say it, but also people in law enforcement will say I'd rather make sure that we invest in long-term care opportunities and ways that we can work together as a community, because that's just the best way forward.

- Donna, about this issue, politically speaking, when they say we wanna add social workers to the police beat, it only goes right to that, you're soft on crime if you do that.

- Right, and I think that that's the challenge, right?

- And so how do we get to a point where mental health can be hard on crime and it's actually correcting an issue and helping people?

- Right, and I think that making that point that we're going to add this service, not replace existing law enforcement and not be soft on crime.

And I think that that's the big challenge.

The state legislature already started some committees working toward this.

And one of the things that I thought I took away from that meeting that was particularly interesting, there was a Duke professor, a Duke researcher who said that this really shifted and changed in 2001 when we started relying more on MCOs, managed care organizations to step in and do that follow-up care, and they just didn't do it.

So we're talking about adding bed space when needed so people don't end up in emergency rooms.

And we're talking about accountability for folks who are not doing that outpatient care, maybe creating a vehicle where you have compliance requirements to take medicine if you're going to be an outpatient.

So there's a lot of steps that have fallen by the wayside in the last 20 years that we need to catch up so we can prevent the crime before it happens.

- Colin, I know the county sheriffs do not want people who need mental health services locked up in their jails.

Why do you want those cells available for people of sounder minds who are making more deliberate decisions about the crimes they commit?

- Yeah, I mean, that's the challenge, and I think one of the things that Governor Stein's executive order points out, can't really do anything about it because that's the legislative issue with the budget, is the vacant positions at a lot of the state's psychiatric hospitals.

So basically the state has beds, there is space in the building of these psychiatric hospitals to put a lot of these folks, but they don't have the staff to be able to adequately provide the care 'cause the salaries are too low, they're having trouble filling the positions, and so you're ultimately gonna come back to the state budget stalemate, and at what point are you able to get raises for those positions, higher salaries, better recruitment to fill these positions, make sure those psychiatric hospitals are fully staffed, and you can provide an adequate level of care for the sheer number of people who need it and might otherwise show up at those county jails.

- Representative Chesser, we have a state budget.

They always say there's no state budget.

There's an old state budget, but there's a state budget.

- It's not that old.

- A couple of years.

- '23.

- You guys have run for re-election a couple times since that.

- Yeah, yeah, yeah.

- So, but that said, you can fund things with a special, they don't call it continuation legislation.

That's Congress.

- Mini-budget of just two.

- Mini-budget.

Is there an appetite between the House and Senate leadership to, this is a new executive order, but the idea of blending mental health and law enforcement?

- I think the House has signaled that there's interest here.

We have a standing committee on involuntary committals right now.

We've recognized that this is an issue, and I'm glad to see that the governor's coming out and kind of staking his claim in this area, too.

I'd appreciate him to work directly with us on that issue.

But I think some of them, I mean, it's just signaling, and other ones are good ideas, right?

Some of the behind-the-scenes stuff, I don't think putting social workers in vehicles is a good idea from a law enforcement standpoint.

As a former law enforcement officer, that's just another body that has to be protected if things go sideways.

We have CIT officers in the field already that are highly trained.

I think we need that support staff off of the street, that where officers can bring someone into custody, for lack of a better term, and if it's determined that they need healthcare rather than incarceration, we can turn them over, which goes to your point and your point, and get that officer back on the road to enforce the laws and have the healthcare providers available.

And so I think we're looking at that, how to let law enforcement do their job and then have the infrastructure in place where it's not a police officer that has to sit with them in the hospital anymore, because you lose that law enforcement officer for all those hours that they have to sit with that patient at the hospital for security reasons, where we need to increase the work on that side and the availability of staffing on that side so that we can get the law enforcement officers back on the street.

- So just so we're clear, you don't want mental health officers on the streets, but only because if something violent or potentially violent happens, the police officer's attention is divided at that point.

You would protect the mental health worker as well.

Okay.

- Yeah, and I think that's what I said, is I think that's, you know, sometimes that's going to come down to the issue at hand, the call, and that's going to happen on a local level, right?

And I think what the governor is saying is that there will be times, clearly, where there's a mental health call, you know it's a mental health call when you're going, and that you should have the appropriate staff there, right?

They can, you know, law enforcement can be backup, right, at that point, but there are many times, as I think as he's outlining, that you don't know, right?

You don't know, that could, I understand his sentiment, but we have to make sure that we're doing what's best across, you know, I think the state, because at the end of the day, public safety and compassion can go hand in hand, right?

Because that's what, really, what he is trying to get away from, is this hard on crime versus soft on crime.

It is about preventing crime and keeping people safe.

- But don't forget, people like to vote on hard on crime, soft on crime.

- I understand, I understand.

- And you know, all this, like, the way it works.

- Everything can't be political, and safety and keeping people safe can't be political.

- Everything can't be political.

- That's right.

- We can only dream.

- In an ideal world, maybe.

(laughing) - How about state lawmakers renewing discussions about North Carolina's future energy needs?

Some Republican lawmakers say plans to fully phase out fossil fuel-based power plants might need a delay of several years as these AI data centers come online.

They have some very heavy electricity needs.

Nuclear power options are gaining popularity as small-scale modular nuclear power plants are planned.

Henderson County Senator Tim Moffitt says, "Previous clean energy policies were created out of fear, "when courage is now needed to meet our future energy needs."

I have to say, I don't, the issue is, I'm just the moderator.

I like the quote because I do remember, all this environmental policy was based on the world was going to end if we didn't do this.

The world didn't end, and now we want AI, and we've gotta have power.

- And that's where we're at now.

I think what's interesting about this discussion this week, and it seems to sort of signal, with some discussions like this, we're moving back towards nuclear as sort of one of the key solutions to this extreme demand for power, and that has a lot of issues with it.

There's certainly smaller nuclear reactor technology that's out there now, so Duke Energy and other utilities are exploring that, but there's still a lot of unknowns about how much does it cost.

We've had nuclear plants that got built in the last decade or so, or were planned to be built, and the cost overruns got pretty dramatic.

There's always the safety issues that point about fear.

I mean, you think about Three Mile Island or Chernobyl and you think nuclear, and so that's something that nuclear power has to overcome as the technology gets better, is the fears of that kind of environmental catastrophe.

If you go that route, it would certainly seem to be moving away from pushing towards wind, towards solar, and some of that is that wind and solar can help the power needs, but maybe not create quite the level of power that you're gonna need with these data centers if you continue to build these sort of power-sucking data centers, AI-type things.

- Representative Chesser, I understand solar, the wind power might be coming off the table as really an option in favor of more nuclear, and I don't, with AI coming on, they say one power plant can be consumed by one data center, so nuclear's the way to go.

Can you sell the rule, folks, on having a small-scale nuclear power plant in their neighborhood?

- Yeah, I think what we're really looking at is production versus consumption versus storage.

I sit on the governor's energy council, which is an interesting debate every time you get on there 'cause you've got all sides of the coin arguing their point, but simply put, we just saw it in this last snowstorm.

If you were on Duke Progress, not to throw anybody under the bus, but I got a text message saying, hey, we need you guys to conserve energy to avoid brownouts and blackouts, so between the hours of four and five a.m., if you can shut stuff off, shut stuff off, and you don't think of production issues, but what we found in a lot of the green energy is production is limited because it's either dependent on open skies and clear skies or windy days, and storage becomes an issue.

Long-term storage becomes a significant issue, and transmission becomes an issue, and so what we're looking at now are different avenues that, one, the production is there to meet the demand, and you don't have to rely on storage as much when you have the production available.

- Representative Hawkins, is there a rural-urban debate here about power and power generation?

'Cause that's why I said the rural folks, they tolerate a nuclear power plant.

It seems like an urban issue.

- Well, no, I mean-- - But it's not.

- Yeah, it's a shared responsibility, I think.

And I think the thing that we have to think about is that we, just because there's more open space, we can't just go to the rural areas to put these data centers or these other areas, right, these other options, and one thing that Representative Chesser said that, so this part when he said, we have to keep all options on the table, right?

So we have to keep the green options, but we also have to include nuclear.

I sit on the AI Leadership Council, and so this is a debate, right?

Because we are probably one of the states that will benefit from this AI revolution across America.

But we have to think about how we can spread it across all the power options across the state, both urban and rural.

We have to make sure that we are being responsible with the way that we use power, and also responsible in making sure that we're not taking anything off the table, because if you take wind off the table, then that hurts, you know, I think certain areas, if we add nuclear, I think that's a real move forward, and I think that Representative Moffitt, you know, will disagree that it wasn't necessarily done for fear purposes, but it was done because we realized that, you know, trying to, again, play politics, people were saying, you know, one is a Democrat option, one is a Republican option, and they're not.

People just care about making sure that we can power the state, and that we can, you know, add things to North Carolina as we grow past 11 million.

- That's a good point.

There are options that do feel Republican, options that do feel Democrat.

So, can I give you a last word on this?

We have about two minutes left.

I would like to ask you about vouchers, but talk about this power thing just for a sec.

- Yeah, of course.

Well, I think a lot of the reason it became politicized is because this green energy future, green energy policy was a big part of the Cooper administration in North Carolina.

House Bill 910, I believe, said, no, look, we'll move forward, but it better be most efficient, least cost.

And we gotta think about gas, too, as a bridge fuel.

That's important, and we have to talk about these data centers.

If they're lights out, they're not producing a ton of jobs.

And so, we have to think about how we're gonna power them, and moving toward nuclear is certainly going to help North Carolina keep up.

- We're gonna do a rapid fire on this one.

With North Carolina State Board of Education, they want lawmakers to halt the expansion of school voucher funding, opportunity scholarships, if you will.

They want those funding increases, should they be considered, and should they be diverted towards traditional public education systems.

State public education leaders are also asking for higher pay, Donna, extra funding for equipment purchases, and new school construction funding.

State House Speaker's Office says state school leaders should focus on common ground, like teacher pay, instead of dead-end policies like questioning, restricting, or doing anything with opportunity scholarships.

I have about 90 seconds to go around the table.

We've heard this is a laundry list of schools coming up with every year.

- Sure, sure, sure.

Opportunity scholarships are very popular, demographic, regardless of party, 65%.

And what I think this really shows is how popular it is, truly, if they're thinking that they need to limit its growth.

Even if a kid gets the most they possibly could, which is about $7,000, the state is still spending less, because we spend $13,000 per student in the first place.

So maybe everything should be like an opportunity scholarship.

- Less than a minute.

Durham parents take advantage of moving around schools.

- They absolutely do.

The state board, best thing I've heard today, and the reason I'll say this is we put this thing on steroids.

At one point, in the last session, the budget before last, we were only spending about $12.5 million, and we should do this based on, not marketing, but the actual appetite for parents and families to want to do this.

- Last word, 30 seconds, max.

- He said it, we put it on steroids and still can't keep up with the demand for it.

So I think we need to be looking at options to increase availability of choice to looking to inter-district open enrollment as well.

- Very quickly, deregulation of traditional public schools.

Could it happen, Colin?

- Potentially, but I don't see any sort of appetite to repeal the opportunity scholarships the way the state board of education's recommending here.

- Maybe after we solve the energy crisis and property tax reform.

Hey, email your thoughts at statelines@pbsnc.org.

I'll read that email.

Thank you for watching.

I'm Kelly McCullen.

See you next time.

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