House, Senate reach agreement on two-year state budget
Posted July 21, 2013
Updated July 22, 2013
Raleigh, N.C. — House and Senate leaders announced Sunday that they have reached an agreement on a $20.6 billion state budget that will end teacher tenure and allow taxpayer money to be spent for private school tuition.
A final draft of the bill and an accompanying "money report" the provides much of the detail in the budget were posted online late Sunday night.
Both chambers have previously passed their own spending plans, but Republican leaders wrangled for weeks to come to a consensus even as the July 1 start of the 2013-2014 fiscal year came and went.
Republicans took over the General Assembly in 2010 for the first time in more than a century, but did not cement full control of state government until GOP Gov. Pat McCrory took office in January.
Both the House and Senate are expected to give the spending plan at least tentative approval on Tuesday.
According to a joint news release issued Sunday evening by Senate President Pro Tempore Phil Berger's and House Speaker Thom Tillis's offices, the 2013-2015 budget increases overall state spending by 2.5 percent while instituting a previously-passed tax plan that lowers the corporate and personal income tax rates.
The plan allocates $23.6 million in funding for a measure that scraps the longstanding teacher tenure system in favor of employing educators on contracts that are renewed based on performance reviews.
Starting in 2014, it would also set aside $10 million to allow families that meet income guidelines to get state money to pay private school tuition.
The news release makes no mention of raises for teachers or employees but does provide five bonus-leave days for state employees and fully funds the state retirement system and state health plan.
Berger, R-Rockingham, and Tillis, R-Mecklenburg, touted the spending plan as one that "safeguards North Carolina's long-term fiscal health" and also "invests in core services, streamlines state government, strengthens public education and grows North Carolina’s economy."
"Together, members of the House and Senate have carefully crafted a plan that smartly invests in key priorities like education and public safety while fulfilling our shared commitment to fiscal responsibility and accountability in state government," Berger said in a statement.
Liberal groups were less pleased with the final product produced after weeks of negotiations between Republican lawmakers.
"Lawmakers chose to drain available revenues by $524 million over the next two years through an ill-advised series of tax cuts that primarily benefit the wealthy and profitable corporations," wrote Alexandra Forter Sirota, director of the North Carolina Budget and Tax Center, which has been critical of the Republican-led legislature.
"This revenue loss isn’t just a number on a piece of paper — it means fewer teachers in more crowded classrooms, higher tuition rates and elevated debt load for families, scarcer economic development opportunities for distressed communities, and longer waiting lists for senior services."
Other highlights of the budget deal:
State spending on Medicaid is increased by $1.5 billion to cover what Republicans term as cost overruns. A special provision would allow the McCrory administration to develop a Medicaid reform plan in the coming months.
The budget also supports McCrory's plan for overhauling the North Carolina Highway Trust Fund, which prioritizes and pays for transportation infrastructure projects over the next 10 years.
The plan restores funding that had been previously cut for 69 positions within the State Highway Patrol, as well as another 22 magistrates and 175 probation and parole officers.
The budget meets the state's obligation to fund the state retirement system and state health plan, while providing state employees with 5 additional days of leave. The release makes no mention of any raise for state employees, whose salaries have remained largely stagnant for years.
The budget also eliminates state funding for the nonprofit Rural Economic Development Center, which was stung by a negative audit last week, triggering the resignation of its long-time president. In its place, the legislature is creating a new division within the North Carolina Department of Commerce to focus on improving services to the state's rural counties.
Victims of a state-sponsored eugenics, or forced-sterilization, program that ended in the 1970s will receive a one-time compensation. The budget allocates a $10 million fund, which will be split between all who apply by June 20, 2015. A group set up to help victims estimated up to 1,800 were still living last year, though it had only verified 146 of them.
Approximately $230 million will be set aside for the rainy day fund to protect against future shortfalls, bringing the total to approximately $650 million.
"Once again, Republicans in the General Assembly have produced a state budget that reduces taxes and right-sizes state government," House Speaker Thom Tillis, R-Mecklenburg, said in a statement. "This budget is another crucial step in putting North Carolina’s fiscal house in order."