Budget delay has ripple effect in North Carolina
Published August 10, 2015
by Paul Wolverton, Fayetteville Observer, August 9, 2015.
The inability of North Carolina's legislature and governor to decide how to spend more than $21 billion of taxpayer money is creating problems throughout North Carolina.
Public school systems can't make sound spending plans. Community college students don't know how much their classes are going to cost. And the list goes on.
But those issues haven't spurred lawmakers and the governor to a resolution, even though they are 39 days past the July 1 start of the 2015-16 fiscal year - the due date for the new budget.
The budget delay affects state agencies and local governments to varying degrees. Businesses and individuals need the lawmakers to make choices on taxes and other policies.
Most public schools, for example, are only a few weeks away from the start of classes but don't know how many teachers they'll be required to hire and whether they will be told to lay off teacher assistants.
Community college students don't know whether their tuition is going to rise this fall.
Some observers say any heartburn the delay causes is tempered by the opportunity to find and address bad or poorly written laws hidden in the text's hundreds of pages.
"While groups beat the political drum, those of us concerned about crafting a politically balanced budget applaud the General Assembly for its deliberate negotiations," lobbyist Brian Lewis wrote on his company's website.
"Here, slow is good," Democratic consultant Gary Pearce said on his political blog.
Normally, a group of House and Senate members would meet behind closed doors to make a budget deal. This year, state House leaders have held public hearings to pick through the Senate's version of the budget before commencing the private meetings.
The House is examining the legislation bit-by-bit to figure out what the Senate wants to do. It has asked members of the public what they think.
At 508 pages, the Senate's budget is nearly 200 pages longer than the House edition. It includes changes that state senators want to make to state law - changes that some say are better handled on their own instead of inside a 300- to 500-page spending plan.
"From the House's perspective, the Senate had tied everything into a Gordian knot," state House Rep. Chuck McGrady of Hendersonville said in a newsletter to his constituents. McGrady is a co-chairman of the House Appropriations Committee.
"Basically, the last month has been spent by the House trying to understand all the policy in the budget and considering how to untie the knot without conceding some rather significant policy positions in budget negotiations," McGrady wrote.
Medicaid reform
A major clash emerged over proposals to reform Medicaid. House and Senate leaders have significantly different ideas on how best to pay doctors and other medical care providers while discouraging fraud and unnecessary treatment.
The Senate put its preference into the budget bill. The House wants Medicaid handled separately.
The Senate version of the budget includes a plan to change the formula used to distribute local sales tax revenues back to North Carolina's counties and cities. The Senate plan would take millions of dollars away from wealthier counties and give the money to less-affluent counties.
House members have disagreed with that plan, and the governor threatened to veto it.
The House and Senate are striving to compromise on the best way to offer corporate incentives to lure new jobs to North Carolina. The Senate put its idea into the budget.
After more than a month of stalemate with the House, Senate President Pro Tem Phil Berger announced Wednesday that the Medicaid, sales tax and corporate incentives items would come off the table in the budget negotiations and be handled separately.
"It is our hope and our expectation that by doing that we remove what has been represented to us as an impediment to our moving forward with the budget," Berger told reporters.
Spend less
Then Berger asked the House for a concession: Spend less.
The House voted to spend $22.16 billion in the upcoming fiscal year, almost $700million more than the $21.47billion the Senate proposed.
On Wednesday, Berger proposed a spending limit of $21.65 billion. That is about 2.7 percent more than this past fiscal year and is based on inflation and the state's population growth, Berger said.
"While this proposed spending limit is significantly higher than either the Senate's or the governor's original proposals, the number is sustainable and the policy rational for developing a budget at that level is sound," Berger said.
The Senate's $21.65 billion spending target is too low, Nelson Dollar, the senior House Appropriations Committee chairman, told WRAL and The Associated Press. The state needs to catch up from cuts it made during the years of the Great Recession, he said.
Plus, the Senate budget still has "dozens" of other policy items, Dollar said.
Other disagreements
In policy and spending choices, the House and Senate budgets have other areas of disagreement. Some of them:
Teachers and teacher assistants. The Senate wants to reduce class sizes in kindergarten through third grade by laying off an estimated 6,800 to 8,500 teacher assistants during the next two years. The money saved from the teacher assistant salaries would hire 2,000 more teachers. The House wants to keep teacher assistants.
Taxes. The Senate budget cuts personal and corporate income tax rates and in exchange imposes sales taxes on advertising, veterinary services, pet grooming and boarding, and repair and maintenance services.
Driver education. The Senate voted to end state funding for driver education in public schools and eliminate the requirement for new drivers to pass the class in order to get a learner's permit.
State employee pay and benefits. The House budget has a 2-percent raise for state employees and retirees. Most workers wouldn't get raises in the Senate budget, and the Senate would quit offering retirement medical benefits to future employees.
Historic property tax credits. The House budget offers income tax breaks to developers who rehabilitate historic properties; the Senate opposes these tax breaks.
It's become common for the state budget to be unfinished after the July 1 start of the fiscal year. A chart compiled by the legislature's staff shows that lawmakers have been late more often than not since 1987. One of the longest sessions in recent history was in 1998, when legislators didn't finish work on the budget until just before Halloween.
The last time the state budget was enacted before the start of the fiscal year was 2011.
Last year, the legislature passed the budget in August following a fight over teacher pay raises and whether to cut teacher assistants.
"So from a historical perspective, 2015 really isn't that unusual," McGrady, the Hendersonville House member, said in his newsletter. "I'm telling people that we'll pass a budget when we feel we've got it right," he wrote.
