House and Senate stare across a 'fiscal Grand Canyon'
Published June 19, 2015
Editorial by Fayetteville Observer, June 19,2015.
The N.C. House and Senate have completed work on their budget proposals and left themselves staring across a fiscal Grand Canyon - a $700 million difference of opinion.
This gap isn't likely to be closed easily or quickly, because it's filled with ideological clashes over the state's direction and management.
The Senate spending plan, passed Thursday, totals $21.5 billion. The House budget, passed earlier this month, would spend nearly $22.2 billion.
The House is almost certain to reject the Senate budget, which will send the dueling plans to a conference committee that will try to resolve the differences.
There are sticking points aplenty, starting with dramatically different approaches to Medicaid reform, with the House favoring a continuation of government management and the Senate wanting to privatize it.
Both budgets try to beef up teacher pay. It appears all of our lawmakers want to scrape education funding off the bottom of the national barrel. But the Senate will balance its education budget on the backs of teacher assistants, getting rid of more than 8,000 of them over the next two years. If it happens, the Senate will be kicking off yet another crisis for our public schools, especially those in low-wealth communities that are already struggling to provide an adequate education. Creating a few more lead teachers in return for those cuts won't get the job done.
But then, the Senate needed to find economies somewhere, because it wants to make deep cuts in the corporate tax rate that will cost the state about $600 million. It cuts personal income taxes too. This is in keeping with the Senate's inclination to make big changes fast instead of phasing them in over a period of years.
But slowly is the way it should be done, because there are inevitably surprises - like this year's happy gift of a $400 million surplus when most budget analysts were expecting a small deficit. Nobody knows if that's a one-time fluke or a long-term trend. Betting the house on a trend is risky budgeting.
It's equally risky to make sharp cuts in incentive programs and assuming that the tax cuts alone will be sufficient to lure new business here. And it helps no one when the Senate wants to impose new sales taxes on nonprofits, especially hospitals.
Getting the House and Senate to agree on those issues will likely take weeks, or even months, of negotiation.
Meanwhile, the state's fiscal year ends in less that two weeks, meaning a series of continuing resolutions to keep government running and local government - especially school boards - left in limbo about state funding as they try to fashion their own budgets.
