Easley to propose budget for Legislature's short session

Raleigh, N.C. — Gov. Mike Easley plans to hold a press conference Monday morning to announce the budget amendments that he will press the General Assembly to pass in the short session that begins Tuesday.

Watch Easley propose his budget at a press conference LIVE at 11 a.m.

No landmark legislation – such as the 2005 state lottery, 2006 ethics rules and 2007 Medicaid spending – awaits lawmakers, but they face pressure to deal with thorny issues, such as reform of the state's mental-health and probation systems, while tinkering with the budget.

"I do believe there will be some legislative debates designed for show," said John Hood, president of the conservative John Locke Foundation in Raleigh. "I don't think any substantive, complex legislation will pass."

It all starts with the budget. The state is on track to collect more revenue than was projected for the fifth consecutive year, but legislative analysts and Gov. Mike Easley's office agree it will only be about $150 million – or less than 1 percent of the $20.7 billion budget that runs through June 30.

That figure is well below the more than $1 billion extra that lawmakers had to play with in both 2006 and 2007. And even when the coffers were flush, leaders in the House and Senate always take to the art of dissuasion to keep short the line of colleagues and advocacy groups seeking money for new initiatives.

"We do have a lot of competing needs and a lot of competing expectations, and so I've been busily (damping) down expectations (with) whoever I've been meeting with, because we want to leave the state in good fiscal condition and continue our fiscal stability," said House Speaker Joe Hackney, D-Orange.

Senate leader Marc Basnight, D-Dare, was more blunt: "We have very little money this year."

Easley is expected to press for any extra funds to go towards pay raises, teacher performance bonuses and $42 million in additional fuel costs for school buses. The pay raise for teachers is necessary for Easley's pledge to raise teacher salaries above the national average by the time he leaves office in January.

Every 1 percentage-point salary increase for all state workers, including teachers, costs about $130 million.

Easley will also propose more money for the state's struggling mental health system and money to increase staffing within the state's probation and parole offices.

Easley acknowledged that those initiatives will call for millions in additional funds and plans to call on state agencies to make spending cuts. Easley budget adviser Dan Gerlach said those cuts will amount to "several hundred million dollars" in cuts, but overall state spending will grow by about 4 percent.

"It's going to be a tough session," Easley said last week.

The largest single financial choice on the table this session will be whether to offer voters two statewide bond referenda to pay for transportation projects and university projects – estimated at around $2 billion apiece.

Basnight, Hackney and Easley formed a blue-ribbon transportation panel several months to assess the state's highway and public transit needs and come up with recommendations.

The commission, which will make recommendations to the Legislature a few hours before it reconvenes at noon Tuesday, is expected to propose both the bond package and an end to the $172 million transfer of automobile-related taxes and fees the state's Highway Trust Fund to the general operating budget.

"The logic of a transportation bond is hard to dispute given massive needs we have and the opportunity to try and get in front of inflationary factors," said Beau Mills, chairman of NC Go!, a coalition of local governments and road-building trade groups. "The big question is whether the short-session legislators are going to be willing to take this on."

Republicans support the bond, to be paid for with the money from the Highway Trust Fund.

However, in separate interviews, Hackney and Basnight questioned whether such a bond package will pass this year. Easley will not offer a bond proposal in his budget.

"Without another revenue stream, which we don't anticipate on either transportation or education, it's hard to see where you could do a big, big bond package," Hackney said. Basnight, meanwhile, said a small road-building package may pay for very little and may not benefit the state as much as a bond package for universities.

The GOP wants to vote on ending the state's de facto death penalty moratorium, extended by legal battles over the role of a physician should play at executions. Senate Minority Leader Phil Berger, R-Rockingham, said they also want debate on legislation that would make it a separate crime to kill the unborn child if a pregnant woman.

Republicans, who hold the lowest number of seats at the Legislature in a decade, though, will likely struggle again to pass be heard on policy unless they're working with strong bipartisan support.