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Morning Memo: The recasting of Gov. McCrory? Unraveling his shifts

PAT McCRORY LINKS MEDICAID REFORMS TO TEACHER PAY HIKES -- Governor pledges big announcement in coming months: Speaking at the Cary Chamber of Commerce's annual banquet Wednesday evening, Gov. Pat McCrory promised "controversial" proposals to change the state's Medicaid system. Overruns in Medicaid costs are a huge burden on the state and have drained funding for education, he said.

Citing issues with federal regulations, "a lack of waivers from the feds, and frankly, some of the politics within Raleigh here," McCrory said he wanted to change the state's implementation of the federal health program for people with low income.

"I'm going to have to bring up some fairly controversial proposals to change Medicaid, or we're going to continue to have some very, very serious issues here in North Carolina," McCrory told the crowd. "That's coming in the next three, four months. I'll probably introduce them while the legislature's out of town, between now and May," he said, drawing laughs. Changes to Medicaid, he said are " the way we're going to get raises to the teachers."

***McCrory appears to be charting a new course, but the administration is backtracking on a different education announcement. Read it all below in today's Dome Morning Memo***

Gov. Pat McCrory signs tax bill into law

Gov. Pat McCrory signed a major tax cut bill into law Tuesday, saying it will help ease the state's economic pain.

The measure cuts personal and corporate income taxes to the lowest levels of neighboring states and limits future states spending. McCrory and Republican leaders say it will give a break to every taxpayer but legislative analysis suggest some families, retirees and small business owners may see a tax hike.

Morning Memo: Is the Senate's tax plan a tax hike for many?

TAX PLAN COULD MEAN TAX HIKE IN LONG TERM: The majority of taxpayers likely would see a tax increase after the plan is fully implemented, according to early long-term projections from legislative fiscal researchers who analyzed the potential legislation – not a tax break as Senate Republican leaders suggested when announcing the plan this week.

A taxpayer with a federal adjusted gross income below $51,000 could pay an average $100 to $200 more in the 2017 tax year. Based on current tax brackets, 2.3 million taxpayers would fit that category, according to the analysis, while 1.8 million taxpayers could expect an average $300 to $3,000 tax cut that year. In announcing the plan Tuesday, Senate leader Phil Berger, an Eden Republican, emphasized that the legislation was not yet finalized, but said the “vast majority,” or roughly two-thirds of taxpayers, would initially get a tax cut as a result of the legislation. (More below.)

***This is the Dome Morning Memo -- the source for North Carolina political news and analysis. Send tips to dome@newsobserver.com. And read more new details about the tax plan below.***

Morning Memo: Senate rolls out tax plan; ALEC keeps clout in North Carolina

SENATE LEADERS TO PITCH TAX PLAN: The long-awaited plan to overhaul the state's tax system will debut Tuesday. Senate Republicans want to slash the personal income tax from the highest 7.75 percent rate to 4.5 percent over three years and drop the corporate income tax from 6.9 percent to 6 percent.

In a video previewing a 12:30 p.m. announcement, Senate leader Phil Berger called it a $1 billion tax cut -- the largest in state history. The question is how to pay for it and the details are less clear, but Berger said it will involved taxing a range of services from haircuts to auto mechanics. (More details below.)

TODAY AT THE STATEHOUSE: Taxes won't take all the air from the N.C. General Assembly today. In committees, the governor's transportation plan gets a final hearing before going to the full House; a health committee considers a measure to limit what a doctor can do about sexually transmitted diseases, pregnancy and birth control without parental consent; and Senate lawmakers will consider (but not vote on) a proposal to allow armed guards in elementary schools who aren't necessarily law enforcement officers.

The controversial gun bill gets a third reading on the House floor and the Senate will consider a controversial state charter school bill similar to ALEC-sponsored legislation. (More on ALEC below.) Gov. Pat McCrory -- who promised to hold regular media availability -- will not take questions after the Council of State meeting at 9 a.m. today. It is normal practice but McCrory has shunned the media after the meetings just about every time since he took office. He lists no other public events on his calendar today.

***Thanks for reading the Dome Morning Memo. A big day in North Carolina politics ahead. Get the scoop below. Send news and tips to dome@newsobserver.com.***

Morning Memo: Democrat files first tax bill, McCrory concedes ground

UPDATED: DEMOCRAT FILES FIRST MAJOR TAX BILL: With a bipartisan list of sponsors, Charlotte Democratic Sen. Dan Clodfelter beat Republicans to the punch on tax overhaul legislation. Clodfelter filed a bill Thursday to lower personal and corporate income taxes, as well as the state sales tax with a more modest expansion of taxable services. One big proposed change: a flat income tax rate at 6 percent, instead of three-tiered structure now, as well as exempting the first $11,000 in income from taxation. Clodfelter said it would help all taxpayers but especially low- and middle-income residents.

McCRORY SAYS NO INCOME TAX ELIMINATION: Gov. Pat McCrory, who campaigned on a plan to significantly lower personal and corporate income taxes and possibly eliminate them, is now conceding ground. McCrory took his budget tour on the road Thursday to Wilmington. The Star-News reported: "Even though McCrory cited the state’s tax system as a disadvantage in competition with South Carolina and Virginia, he said it was not possible now to eliminate the personal or corporate income taxes as part of his upcoming tax reform proposals."

***It's March Madness -- in basketball and state politics. Read more Dome Morning Memo below. Send news and tips to dome@newsobserver.com. ***

House speaker positions himself cautiously on tax overhaul

Republican House Speaker Thom Tillis is the latest Republican to express reservations about a plan to eliminate the state's income taxes.

In an interview with News 14, Tillis said he wants to move on a tax overhaul but "the question is how do you get there and can you possibly in five months unwind 50 years of taxation." On the issue, Tillis put himself "somewhere between where the budget director and where the Senate are in terms of how you do it.

Top Senate Republicans are pushing the plan to abolish the personal and corporate income taxes and increase the state sales tax to 8.05 percent from 4.75 percent. It also includes a 1.05 percent tax on every businesses earnings, with a $500 minimum. But earlier this week Art Pope, the governor's budget director, expressed personal concerns about the plan -- a strong signal that it may not survive in its conceptual form.

Laffer lauds GOP lawmakers for tax push at Civitas lawmaker 'training'

Economist Art Laffer told state lawmakers that the movement to overhaul the tax code in North Carolina is crucial to the national "fight for a different sort of economics."

"You are wearing the white hat," he said. "Don't let them take the white hate off you. Go to the goal line."

Laffer, the conservative economist and trickle-down believer, gave the keynote address at a "training" for state lawmakers hosted by the Civitas Institute, a conservative political organization.

The event featured presentations from a number of state lawmakers from outside North Carolina who are members of the American Legislative Exchange Council, known as a ALEC, a controversial group that pushes "model legislation" based on conservative ideology.

Morning Memo: GOP flirts with Charlotte for 2016 convention

GOP FLIRTS WITH CHARLOTTE: Could Charlotte do for Republicans in 2016 what it did for Democrats in 2012? The Republican National Committee’s meeting in Charlotte this week has fueled speculation that the GOP might return for its national convention in four years. “It’s always a possibility,” GOP Chairman Reince Priebus said Wednesday at the Westin hotel. “North Carolina was good to us. And it’s a red state – all the more reason to look at Charlotte.”

AFP TOUTS GOP REIGN IN NORTH CAROLINA: Tim Phillis, the national president of Americans for Prosperity, writes in a Politico op-ed that North Carolina is a state where the GOP plans to make a difference. It starts: "In Raleigh, N.C., on Jan. 11, a new free-market Republican governor celebrated his gubernatorial win at the inaugural balls. The occasion was historic for North Carolina: the first time since Reconstruction that a conservative GOP governor will be joined by free-market GOP state legislative majorities in both state legislative chambers." Read full piece here.

***This is the Dome Morning Memo a digest of important N.C. political news. Click below for more.***

Morning Memo: Tax plan details emerge, N.C. sheriff won't enforce gun orders

TODAY'S BIG STORY: Republican lawmakers outlined a proposal Wednesday to revamp the state’s tax system, offering a slew of reforms that would radically shift the tax burden in North Carolina. The proposal would eliminate personal and corporate income taxes in exchange for higher state sales taxes levied against groceries, medical expenses and other currently tax-free services.

SUPPORTERS SAY: Senate leader Phil Berger said the moves are necessary to modernize the state’s tax code and kick-start a struggling economy. He pointed to the state’s tax rates, saying the current 6.9 percent corporate tax rate and 7.75 percent personal tax rate for the highest earners are among the highest the region. “It is important for us in terms of our competitive posture with other states,” the Republican from Eden told reporters. “It is important for us in terms of making sure there is a fair allocation of the cost of government.”

CRITICS SAY: Critics caution that the proposals represent a fundamental change in who pays the state’s tax burden, and economists said that low-income people would feel the brunt. “For this particular proposal, the responsibility would shift from rich households and prosperous corporations to poor households and smaller businesses,” Dave Ribar, a professor at UNC-Greensboro, concluded in his analysis of the proposal.

***You are reading the Dome Morning Memo, the source for all his North Carolina politics. Much more below.***

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