State budget talks making little progress

On Wednesday afternoon, the House budget committee held yet another public meeting to discuss the differences between the House and Senate spending plans. House leaders said top budget writers are still trying to unpack the massive Senate proposal, which was nearly as much a policy document as a budget proposal.

According to House Senior Budget Chairman Rep. Nelson Dollar, R-Wake, the dollar difference between the two plans is $685 million, most of that in education, salaries and benefits.

The panel took public comments from a series of educators, from superintendents to classroom teachers, all of whom expressed support for the House's plan over the Senate's. They asked lawmakers to protect funding for teacher assistants and to reject a Senate proposal to lower class sizes.

Wake County Superintendent Jim Merrill said 50,000 year-round students in his district have already begun their school year.

"You’re currently debating whether to continue spending money that’s already being spent," Merrill warned. "We simply can’t unspend that money once negotiations end."

He also called the Senate's class-size reduction plan "a gift we literally cannot afford to take," because it would require Wake County to add 145 teachers it currently has no room for. Constructing additional classrooms to accommodate them, he estimated, would cost around $100 million.

"If we must wait until September or October, hang tough," he advised House leaders. "Make it worth our wait."

Union County Superintendent Mary Ellis echoed Merrill's concern about mandatory class-size limits.

"Oh please, dear God. sweet Jesus, don’t do that," Ellis told lawmakers. "Children don't come in neat packs of 24."

Many also spoke in favor of keeping state-funded driver education programs operating in the schools.

Transportation budget writer Rep. John Torbett, R-Gaston, said House members had found money for driver's education elsewhere in the budget, addressing the Senate's argument that the state should stop paying for it from the Highway Fund. But, he said, the Senate now seems to want to do away it altogether.

"It seems like there’s just another feeling toward driver’s ed," Torbett said.

Representatives from several counties implored House members to fight the Senate's plan to shift sales tax revenue and economic development incentive money so more of it is distributed to rural counties.

"North Carolina should use our assets to build prosperity in areas that need it. We shouldn't simply shuffle revenue from one county to another," said Deborah Carter, vice president of public policy for the Cabarrus Regional Chamber of Commerce.

Huntersville Mayor Jill Swain said North Carolina is the only state with local sales taxes that distributes part of the revenue based on population. Because of that, rural counties already receive $11 more per capita in sales tax revenue than urban counties, she said.

Some committee members expressed frustration with the lack of progress.

"How close are we to wrapping this thing up?" asked Rep. Mickey Michaux, D-Durham.

Dollar, pointing out that Michaux was House budget chair the year the legislative session ran till December, replied, "We’re going to try not to break your record."

But Rep. Rick Glazier, D-Cumberland.expressed support for House negotiators. "I think the House is showing admirable patience in working toward what I hope will be a good deal for the public."

"You go through a process, and however long that takes and however tortured that might be," Dollar responded. "I’m sure everybody here is of the same mind, and that’s to make sure we have a budget that best meets the needs of North Carolina."

As the House hearing continued, Senate Budget Chairman Sen. Bill Rabon, R-Brunswick, held his own press conference in another building to tout his chamber's plan for transportation spending. He noted that Gov. Pat McCrory has been traveling the state to stump for a $1.2 billion transportation bond. Senators say they agree with McCrory's concern for repairing and expanding roads and bridges, just not how he would pay for it.

"We believe there's a better way to achieve this goal than the proposal to spend $1.2 billion to spend on a few piecemeal projects," Rabon said.

Instead of borrowing to build new projects, senators have proposed cobbling together a new revenue stream to pay for roads and bridges. In particular, they would end the use of Highway Fund dollars for the State Highway Patrol and other items related to transportation but not directly related to roads and bridges.

McCrory's plan, they argue, would actually spend less on transportation over the next 20 years than what either the Senate budget envisions or even making no changes to highway funding at all. That's because the state would have to pay interest on those bonds, which Rabon argued would soak up future road dollars.

House leaders have been cool to the idea of borrowing for transportation costs as well.

McCrory argues that the state could both reorder transportation funding as the Senate proposes and do a bond that would jumpstart construction.

"We don't disagree with the objective of stopping the transfer," said Lee Roberts, McCrory's budget director, adding that the governor would have proposed a similar move if he had the same budget revenue numbers that were available to the General Assembly.

"We're not sure why Sen. Rabon thinks it's either-or." Roberts said.

As for the idea that borrowing costs would soak up road construction money, he argues that senators are making several assumptions that ignore factors typically taken into account in government borrowing, such as inflation.

Senators are also critical of the projects McCrory has proposed funding. The governor put an emphasis on projects that had cleared environmental and other approvals and were ready to build, but Rabon argued placing those projects at the head of the line would mean leap-frogging more pressing projects.

"I think it's wrong to insert politics back into transportation," Rabon said.

Many of the projects on McCrory's list didn't go through the normal vetting process but were called for in statutes passed in the 1990s and the first decade of the 2000s, when Democrats largely ran the General Assembly.

As a result, he said, projects such as building the last leg of Interstate 540 in Wake County would be bumped.

Roberts disputed those assertions, saying the projects singled out by the administration scored high on the transportation priority list and were ready to begin construction.

"The intent of what we're trying to to do with the bond is accelerate projects," he said.

Now is the time to borrow, he said, because of historically low interest rates that the Federal Reserve has said should nudge up by the end of the year.

While Senate and House leaders were talking to the public Wednesday, there were few signs members of the two chambers were talking to each other in advance of an Aug. 14 deadline, when a temporary spending measure is set to expire.