Looks like it might be a long, hot summer with a budget battle looming

It’s been a busy couple of weeks for the folks on Jones Street. After a week of subcommittee meetings, full appropriation consideration, input from the finance side, two rare Friday sessions, and two full days of debate, on Friday, May 3, the House passed its $23.9 billion General Fund budget proposal. 

On May 1, as the House was negotiating the budget, the N.C. Association of Educators teachers’ union marched on the state capital. Union organizers, a few thousand teachers, and Gov. Roy Cooper demanded $6 billion in additional spending for Medicaid expansion, a statewide $15 minimum wage, 5% pay increase for teachers, more health professionals in the schools, and expanded health benefits for retirees. You can check social media for photos of a few teachers meeting with legislators from their districts. You’ll also find photos of signs and shirts of the protesters. Warning: Some of them may be offensive and not suitable for children.

Crossover, that self-imposed deadline the General Assembly gives itself to pass legislation that must “cross over” to the other chamber to remain eligible for consideration during the two-year biennium, was set for May 9. Although the session started in January, legislators, like the rest of us, tend to be procrastinators and historically have left the majority of the work until the days leading up to the crossover deadline. All of us who spend most of our waking hours in the legislative complex had girded ourselves for the usual and expected late hours, frantic committee meetings, surprise last-minute substitute bill language and plenty of heated debate. 

But something weird happened this year. There were no sessions late into the night. Committee meetings were noticed with adequate time to prepare and attend and with expanded audio access, observers weren’t left in the halls to only catch snippets of debate.

The system was more transparent and open and again with expanded online access, bill language was easy to find and follow along. Stakeholders met throughout the week to work out differences and the public got ample opportunity to speak whenever it wanted.

There was some spirited debate around a few issues; distracted driving restrictions; requiring sheriffs to comply with ICE; voucher eligibility and funding, and a Franklin County water grant restriction. 

But most votes were nearly unanimous, debate was respectful — and even agreeable. Heard frequently before a vote was taken, “Let’s just get it over to the [House] or [Senate] and we’ll let them work out the differences.” Anyone familiar with the Hatfields and McCoys tradition at the General Assembly recognizes the irony in this plan. The House finished early afternoon on Tuesday, and the Senate completed its work by 1 p.m. Wednesday. Both sides not only met the deadline, for the first time in anyone’s memory, but also got done a day early. 

Even so, the work of the General Assembly is hardly complete. The Senate received the House budget and expects to complete its proposal by the end of the month. Senators have been meeting jointly with their House counterparts for months reviewing numbers and discussing priorities, and they’ve proposed a tax package. They’re not starting from scratch, but will put their stamp on $24 billion in government priorities. In the past, the Senate budget has been more restrained.

Earlier this week, the legislature’s nonpartisan fiscal staff discovered there may be $700 million surplus revenue, the largest since the Great Recession. Senate leader Phil Berger, when asked what lawmakers should do with the extra money, set out three priorities: 1) Fund reasonable government growth (3% in the House budget seems about right); 2) Sock money in the Rainy Day Fund to shore up savings reserves; and 3) Return some of it to the people who sent it to us, i.e. tax relief.

Sen. Mike Woodard of Durham, a key Democrat, set his priorities as 1) Replenish the Rainy Day Fund; 2) Invest in education; 3) Environmental cleanup; and 4) Medicaid expansion.

One of the key considerations is whether the surplus revenue is a one-time occurrence or is likely to repeat each year. It matters how recurring versus non-recurring funds are allocated. Recurring funds can pay for salaries (in other words, expenses that continue yearly), while non-recurring funds can pay for one-time expenses, such as capital improvements or worker bonuses.

When the Senate passes its budget, it’ll ask the House for concurrence, which is unlikely. If it disagrees, the General Assembly will negotiate in a conference committee, and that package will go for an up or down vote in each chamber. Then it will go to the governor.  

Cooper has made it clear he will veto any budget that doesn’t include Medicaid expansion. It is unlikely the Republican majority in the General Assembly will include expansion. Expect fiscal restraint from Republicans, while Democrats will say they want more. 

Without a veto-proof majority, can Republicans persuade enough Democrats to join them and override the governor’s veto? Unlikely. It’s going to be a long hot summer. 

We thought crossover was going to be the big storm. Who knew it might be just the calm before the storm?