From lottery to teacher pay Senate budget delves into big policy issues

But it has cropped up as an easy-to-miss footnote tucked among the two volumes that describe the state Senate's $21.47 billion budget proposal in some 700 pages. The lottery provision is one of dozens of changes to state law contained among the changes to how the state raises and spends money in the Senate budget.

Senators pushed the policy-laden measure through the Appropriations, Finance and Pensions committees on Tuesday. They anticipate the chamber will pass its plan by the end of the week.

Then the real work will begin. Members of the state House earlier this year passed a $22.1 billion budget that was, by comparison, relatively bereft of policy proposals. Given the differences both in spending and policy reach, House leaders say it will be difficult to reconcile the two budget versions.

"I've never seen two versions of the budget further apart," Rep. Nelson Dollar, R-Wake, the House's lead budget writer, said Tuesday. "Major policy issues should not be in the budget but debated as separate bills."

The new fiscal year begins on July 1. House and Senate leaders have already agreed that they will pass a "continuing resolution," a temporary spending measure that keeps the state operating while the chambers work out the budget differences, if no final budget is done by then. Given the breadth of differences, observers of and participants in the budget process say it looks increasingly likely a CR will be needed.

There is perhaps no bigger difference between the House and the Senate than over Medicaid, the health insurance program for poor and disabled. Both plan to change the system, but House budget writers would move relatively slowly over the next five years, relying on home-grown accountable care organizations, or ACOs, run by doctors and hospitals in order to contain costs. Senators want to move more quickly, and would lean on managed care organizations run by insurers while still leaving the door open to ACOs.

"I think this shows the Senate is serious about Medicaid reform," said Sen. Harry Brown, R-Onslow, the chamber's chief budget writer.

As senators are debating their budget, Dollar and other members of the House are pushing forward with a stand-alone Medicaid measure.

Asked why he believes the complex reform effort, which has been a subject of intense debate over the past four years, should be in the budget, Brown said, "It all relates back to the budget and revenue and expenses, so we just felt like it ought to be part of the budget."

Senate budget writers redrew how they would use the $562.4 million the state anticipates receiving from the North Carolina Education Lottery next year. Rather than aiming the bulk of the funds toward classroom support, the Senate budget would use lottery funds for "noninstructional support personnel," such as janitors and bus drivers. Teachers would then be wholly funded out of tax revenue.

It's not unusual for lawmakers to rearrange how lottery funds are used. However, the bill also makes to changes to how the lottery raises money.

First, it would let the lottery spend up to 1.5 percent of its revenue on advertising, up from 1 percent.

"The impact of that would be felt almost immediately," said Lottery Director Alice Garland.

Lottery officials estimate the state would raise $31 million more a year.

Right now, Garland said, the lottery cannot afford to advertise year round and cannot advertise all new scratch-off games. Raising the amount of advertising dollars available, she said, would allow the state to better spread the word on new games.

One of those new games could end up being a new e-instant game that Garland likened to a scratch-off ticket that could be purchased and played online. The Senate budget anticipates earning more than $12 million per year from the new game once it's up and running.

"We need to stay current," Garland said. "If you look at the millennial generation, everything they do is on a mobile unit online."

In order to reach those who bank, shop and communicate online, she said, the state needs to offer games online.

Illinois, Michigan, Minnesota and Georgia already offer e-instant games, she said.

Any sort of online game, Garland said, would take at least six to nine months to set up, and it would likely come with "responsible gaming" limits on how much a player is able to wager every week.

Still, critics say such an expansion would be both a new direction for the state as well as for Republicans, many of whom opposed the lottery when it passed a decade ago.

"Anything that is online is going to make it more accessible," said the Rev. Mark Creech, executive director of the Christian Action League, who called it "sad" that the GOP-led legislature was moving to expand the state's gambling enterprise.

Between K-12, community colleges and the state university system, North Carolina spends more state tax dollars on education than anything else.

Like the House budget, the Senate budget moves starting public school teacher salary to $35,000 per year and provides money to move teachers along their salary steps, which are pre-programmed salary increases. The House provided an additional 2 percent raise.

In a bigger departure, the Senate budget lowers the average class size in elementary schools to 15 students per classroom. It does that in part by paring back the number of state-funded teaching assistants in early grades.

"A lot of that TA money wasn't being used for TAs," Brown said, adding that Senate leaders believe that providing a "high-quality teacher" in every classroom and reducing class-size is more important.

A smaller but significant change for students came about because of a change to a transportation portion of the budget. In an effort to reserve transportation funding for building roads, bridges and the like, senators have tried to stop transferring money from the Highway Fund to items that merely relate to the roads, such as driver's education courses.

Sen. Ralph Hise, R-Mitchell, said that provision could force parents to pay as much as $350 for driver's education if they want their teens to be able to obtain a learner's permit. That's because current law requires student drivers under age 18 to take driver's education before obtaining the first level of their graduated driver's license.

An amendment Hise pushed through on Tuesday removed the driver's education requirement for those early permits. Instead, the amendment raises the score a person would have to earn on a written driving test before obtaining any sort of license, and it would expand the amount of time a driver would have to spend in the car under the supervision of an older driver from 60 hours to 85 hours before moving on to the next stage of the graduated driver's license system, which allows young drivers more autonomy.

"I think driver's ed is still a valuable option," Hise said, noting that the bill still contemplates allowing community colleges to offer driver's ed courses.

But in the meantime, he said, greater experience behind the wheel would offset the loss of formal training.