McCrory directs budget cuts

As the June 30 budget deadline looms with no deal in sight, Gov. Pat McCrory is instructing state agencies to prepare for the worst-case scenario.

Posted 9:28 p.m. Jun 23, 2014 — Updated 11:57 p.m. Jun 23, 2014

Laura Leslie

RALEIGH, N.C. — As the June 30 budget deadline looms with no legislative deal in the works, Gov. Pat McCrory is instructing state agencies to prepare for what, for many, would be the worst-case scenario.

According to a budget guidance memo sent out Monday from the Office of State Budget and Management, agencies should plan to budget for July as if the lesser amount of funding in either the House or the Senate plans has been put in place.

McCrory makes one exception to that rule: The 7,400 teaching assistants that would be cut under the Senate plan are not being cut.

McCrory spokesman Josh Ellis pointed out that overall, budget spending is up slightly, especially in areas such as the Department of Health and Human Services, so not every area will see less funding. He suggested that larger departments could shift spending to absorb some changes in the short term.

However, agencies are directed to begin the termination process for any state employee whose job would be cut by the House and Senate proposals.

Teachers and state employees will see no pay increases under the guidance memo.

No expansion items, from additional pre-kindergarten slots to extra money for medical examiners, are to be implemented.

Each agency would have to adjust overall spending to match the lesser of the two spending plans. While they would not have to take exact line-item cuts proposed by either plan, the dollars will come out on the bottom line.

The cuts they may have to prepare for include:

The Department of Public Instruction would have to prepare for a funding cut of 30 percent plus 70 fewer school nurses.
The University of North Carolina system would see an additional $19.8 million cut.
DHHS would receive less in Medicaid funding - the Senate cut $32 million from coverage for 15,000 aged, blind, disabled and medically needy people.
The Department of Public Safety may need to prepare to close two women's prisons: Fountain in Nash County and North Piedmont in Davidson County.

House and Senate leaders have been hinting that, should they fail to reach a deal, they could walk away and leave the current budget in place.

McCrory's directive takes it one step further by beginning the process of enacting the lowest number proposed by either chamber, essentially calling their bluff.

Spokesman Josh Ellis took issue with that characterization, saying it's no different than in any year in which lawmakers don't appear close to a budget deal by the deadline.

Asked why the governor was instructing agencies to prepare for cuts that haven't yet been approved, Ellis said it's McCrory's job to prepare for the upcoming fiscal year, noting that schools and local governments are trying to plan as well.

The changes are not necessitated by budget constraints, he said, noting the state is beginning the year with a higher unreserved balance than last year.

"We certainly hope a budget compromise will be reached," Ellis said. "In case an amended budget isn't passed by June 30, we're trying to get the process in place."

Senate leader Phil Berger's spokeswoman, Amy Auth, wouldn't comment on how negotiations are going, except to say that negotiators "must receive the real numbers on Medicaid and the lottery we requested from DHHS and OSBM to move forward on the budget."

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