House, Senate leaders outline budget deal
Posted July 29, 2014
Raleigh, N.C. — The legislature's top leaders gave more details Tuesday of the $21.3 billion budget deal they say is all but complete except for final drafting and proofreading.
House Speaker Thom Tillis and Senate President Pro Tem Phil Berger issued a news release and fielded questions from reporters Tuesday afternoon, but a copy of the budget bill and accompanying documentation likely won't be available until late Tuesday or sometime on Wednesday.
"Not only do we have a framework agreement as far as the budget is concerned, we have the details pretty much worked out," Berger said.
Both Tillis and Berger took pains to credit budgets from the past two years, during which they took political fire for paring back education and other state spending, with allowing them to do what they described as "the biggest teacher pay raise in the state's history."
Teachers will get an pay raise that amounts to 7 percent on average this year. The budget also boosts early career teacher pay to a minimum of $35,000 per year by the 2015-16 school year..
Teaching assistants and other non-certified school employees are due to get a $500 pay raise under the plan, while rank-and-file state employees would get a $1,000 pay raise and five bonus vacation days, the lawmakers said.
The state's fiscal year started on July 1, but operations did not stop because the legislature passed a two-year budget in 2013. However, school districts and local governments have already had to set their budgets for the fiscal year and have watched nervously as deliberations continued.
Democrats objected to the process used to push through the budget. While Republican leaders were trumpeting the measure, members of the public and rank-and-file members of the General Assembly knew few of the details. Votes are expected on the plan later this week, just before the close of session.
"They’ll ram that through both chambers and then they’ll go home and say 'Look what a great job we did,'" said Rep. Susan Fisher, D-Bumcombe. "And that’s what they’re gonna do before the public even knows what’s in the bill."
Other provisions concern film grants, economic development
Without the full budget bill to review, it's impossible to say for sure how all of the provisions will fit together or determine the source of funding for salary boosts. Lawmakers typically use news conferences to play up portions of the bill they want voters to know about, while leaving some of the gorier details for others to dig for once the document itself is filed.
That said, here are details of the provisions outlined Tuesday:
TEACHING ASSISTANTS: The budget does not cut any teaching assistant positions, but it does move $65 million worth of funding out the teaching assistant line item. That is money that school districts had converted to pay full teachers. Tillis and Berger said that they moved that money to pay for teachers, making the accounting neater.
Another $24 million in funding for teaching assistants was made "non-recurring," meaning next year's legislature will have to act or it will expire. That money, Berger and Tillis said, went to pay for things other than teaching assistants.
TEACHER SALARY SCHEDULE: The budget replaces the state's current 37-step teacher pay system with a six-step system. Berger and Tillis said the change would pave the way for future changes that would allow the state to pay more for teachers who teach in hard-to-staff schools or high-demand subjects.
MASTER'S DEGREES: The budget continues pay bonuses for teachers who completed at least one course in a graduate program by Aug. 1, 2013.
HIGHWAY PATROL: Budget writers provided increased pay for state troopers who are eligible for salary step increases.
MEDICAID and DHHS: The budget trims $135 million from Medicaid and elsewhere in the Department of Health and Human Services. However, budget writers avoided changes that would cut back who is eligible for care under Medicaid, the state health insurance program for the poor and disabled. Rather, the budget anticipates a 1 percent cut to the rate paid to some providers.
VOUCHERS: Budget writers set aside $800,000 more for a voucher program that would allow tax money to help students attend private schools. It is unclear how that additional money would be used, but Tillis said it would be used in the "second half" of the academic year.
FILM GRANTS: The budget will allow the state's tax credit for film and television productions to expire at the end of the year. In its place is a $10 million grant program that will allow the commerce secretary to try to lure new productions. However, the $10 million is short of the $60 million to $80 million per year the state has been spending in recent years.
The grant program may be something of a placeholder.
"The film tax credit was always a political football," Tillis said. "We've got something, if we can figure out a way to make our members comfortable with it, to make it clear that the citizens of North Carolina are getting a net benefit for it. Then, I think those are the kind of discussions we can have next year."
HISTORIC CREDITS: The budget allows a tax credit program for redevelopment in historic areas of cities to expire. City leaders and the Department of Cultural Resources had advocated for continuing the credit, saying it was a key economic development tool.
Like the film credit that is expiring, the historic credits cut against the efforts to reform the tax code that lawmakers passed last year. Tillis credited Sen. Bob Rucho, R-Mecklenburg, and Rep. Julia Howard, R-Davie, with pushing for the credits expiration.
ECONOMIC DEVELOPMENT: Budget writers set aside $20 million for a new job catalyst fund that lawmakers anticipate will be used to close the deal with large companies thinking about relocating to North Carolina.
LEFT OUT: The budget bill does not deal with puppy mills, nor does it move forward with a House proposal to sell Jennette's Pier in Nags Head.
PRESERVED: The budget does not cut funding for school nurses or The Wright School, a Durham school for 6- to 12-year-olds with serious emotional and behavior issues.
It's unlikely advocates for state agencies and programs that rely on state funding will be comfortable until they see full details of the spending plan.
Should lawmakers pass the budget later this week, it is unclear what Gov. Pat McCrory would do. He has said on several occasions that he would veto budgets that rewrite Medicaid eligibility – something that is not a feature of this budget – or cut funding for teaching assistants, and he expressed skepticism about offering teacher raises of anything more than 6 percent.
However, a spokesman for the governor said Monday that it would be "premature" to comment on this current budget outline.
Other critics were less restrained despite not having seen the full scope of the budget.
"Budget writers are moving forward with a budget framework that is unsustainable and fiscally irresponsible," said Alexandra Forter Sirota of the liberal-leaning Budget and Tax Center. "They ignored the state’s revised revenue estimates, which show that the tax cuts passed last year are costing the state much more than lawmakers previously claimed, while primarily benefiting wealthy taxpayers and profitable corporations, not average people."
Sirota was pointing to recent fiscal memo that showed the state is taking in less money than expected after last year's tax reform package.
House Democrats were also critical of the tax deals impact on the budget.
"We know why we’re here today. It’s because of the giveaways we did. We gave them to out of state corporations We gave tax breaks to millionaires and we knew that we didn’t have the revenue." said House Minority Leader Larry Hall, D-Durham. "Yet and still, we made those decisions."
Without the tax cuts, estimated to cost the state more than 680 million dollars this year, Hall said Republican leaders wouldn't have had to choose between funding health programs and teacher raises. They've have had money to do both.
"Out of state corporations and millionaires – they’re getting the gold mine," Hall said. "Citizens of North Carolina regarding education and health care - they’re getting the shaft."
Gov. Pat McCrory said as recently as Friday that he would veto any budget plan that cut teaching assistants or Medicaid eligibility to pay for teacher raises beyond 6 percent.
Both Berger and Tillis preside over supermajorities, which gives them the power to override a veto at will if their caucuses agree.
Berger and Tillis said they're "optimistic" that the governor will approve of their spending plan. But they also revealed that he wasn't privy to the negotiations that produced the weekend deal.
McCrory spokesman Josh Ellis said the governor is reviewing the proposal.
"There are several major issues that are being worked on, including Medicaid eligibility, to hopefully avoid a veto," Ellis said Tuesday night. "We appreciate the ongoing dialogue."