Budget deal resolves session's biggest political stories

The state budget brings clarity to long-fought battles over how teachers will be paid, how the Commerce Department will be organized, funding for rural development and other stories.

Posted 6:03 a.m. Jul 22, 2013 — Updated 10:34 p.m. Jul 22, 2013

Mark Binker

RALEIGH, N.C. — Many people hear "state budget" and think of columns of numbers, all neatly arranged, adding and subtracting funds in some boring and predictable way.

That, of course, is a mistake.

A state budget is an inherently messy mishmash of ideas, political priorities and compromises between the House, Senate and governor. The measure rolled out Sunday night is no different.

The $20.6 billion spending plan not only divvies up money, but between more than 550 pages in the budget bill and accompanying money report sets policies, creates new laws and reshapes government agencies. The sweeping document, which is due to be approved before the end of the week, helps bring to a close some of this year's biggest political stories – or at least gives a very strong hint as to how they will end.

Here are some of the major ongoing political stories affected by the budget:

Rural Center

A recent audit ripped the North Carolina Rural Economic Development Center for not making sure the state money it distributes actually creates the jobs promised by nonprofits. Plagued by controversy, the center's director resigned last Thursday, and Gov. Pat McCrory froze the center's state funding and spending.

The state budget ends state funding for the Rural Center, creating instead a new division within the Department of Commerce to take over many of the center's functions. It also creates a new "Rural Infrastructure Authority," which will receive the same amount of funding as the center. The new authority will be overseen by a 16-member board made up of the secretary of commerce and members appointed by lawmakers and the governor.

"We just think that problems in the Rural Center, that we need to look at different ways to help rural North Carolina. We think we'll streamline the process with what we've done," said Sen. Harry Brown, R-Onslow.

Commerce Department reorganization

McCrory and Commerce Secretary Sharon Decker have been asking for permission to turn many of the Commerce Department's functions over to a public-private partnership. The remainder of the Commerce Department would also be reorganized under a plan that has been held up in the Senate.

Although not as detailed as the bill passed by House lawmakers, a two-paragraph provision in the budget gives Decker permission to "reorganize positions and related operational costs within the Department to establish a public-private partnership which includes cost containment measures."

Related to this pending reorganization, the budget reduces funding for regional economic development nonprofits.

School vouchers

House leaders, particularly Rep. Paul "Skip" Stam, R-Wake, have been pushing for a program that would provide public tax dollars for some low-income students to attend private schools. The budget creates a $10 million-per-year "opportunity scholarship" program. Eligible students would be those whose families earned income equivalent to 133 percent or less of the guidelines for free and reduce-priced lunches. Scholarships would not total more than $4,200 per year.

The budget estimates this will be a cost-savings for schools and reduces the amount of money provided to the state's public school system by $11.8 million per year as a result of children leaving public schools.

The provision has been controversial, with opponents saying it will strip needed resources from public schools and backers saying children should be given a choice if the public school system doesn't meet their needs.

Education reform

While vouchers were a key priority for House leaders, the Senate won key concessions in other areas of the education budget. In particular, the budget ends career status – what some called tenure – for public school teachers. Instead, the budget allows public school systems to place teachers on a series of one-, two- or four-year contracts, depending on their length of service and performance. Although this makes the maximum length of a contract one year longer than prior versions of the bill, the concept is the same as an idea pushed by Sen. Phil Berger, R-Rockingham.

The budget also hews more closely to Senate-championed provisions in other areas as well, providing $10.2 million for bonuses for high-performing teachers, trimming back the number of teaching assistants and tweaking plans for a system that will give schools grades of A through F based on how well students perform.

Teaching assistants

There has been quite a bit of debate over the value of teaching assistants for early-grade classrooms. McCrory and other Republicans have argued for paring back the assistants, who are not licensed to teach on their own, in favor of providing more classroom teachers. The budget rolled out Sunday night trims the number of teaching assistants funded in both 2013-14 and 2014-15.

Pre-K

McCrory advocated for creating more pre-kindergarten slots while lawmakers put forward bills that would limit which 4-year-olds would be eligible for state-funding pre-K programs. The budget bill leaves the eligibility criteria alone but funds 2,500 additional slots, bringing the total number of state-funded spaces in pre-K classrooms to 27,500.

School safety

In the wake of the school shooting in Newtown, Conn., lawmakers floated a number of proposals to make North Carolina schools safer.

The budget proposal contains several provisions that were in a House proposal, including a grant program to help pay for more school resource officers, establishment of anonymous tip lines, better coordination between schools and local law enforcement and money to help install panic alarms in schools.

The budget also provides for the creation of volunteer school safety resource officers, who would have to be former law enforcement officers or members of the military. Volunteers would have to meet certain firearms proficiency standards and would have powers for arrest while performing their duties.

Unemployment

Changes to North Carolina unemployment laws have been at the center of controversy all year. A recent unemployment report showed North Carolina's unemployment rate holding steady at 8.8 percent for June.

The state budget sets aside $4.8 million for a "retraining program focused on unemployed and underemployed North Carolinians, military veterans, and North Carolina National Guard members." Specifically, the program will focus on certifications and skills needed to help someone get a job right away.

Group homes

Residents of group homes for the mentally ill have had an up-and-down year. After rescue funds in February to help keep residents in their current homes, this population once again faced crisis when neither budget bill provided for a long-term solution.

The new budget provides another short-term fix, setting aside $4.6 million for the next 12 months. It also provides for a pilot program to study new ways of providing group homes and orders a study of different group home solutions between this summer and when lawmakers return to work in May.

Department of Justice

The budget does not appear to move the State Bureau of Investigation from the Department of Justice to the Department of Public Safety, a legislative proposal panned by McCrory, a Republican, and Attorney General Roy Cooper, a Democrat, alike.

Budget writers make one significant shift in the Department of Justice. They take the state's crime lab out of the State Bureau of Investigation and make it a separate division, giving Cooper more direct oversight over the division.

Council of State

In general, Republican members of the Council of State – those offices elected statewide including the governor, attorney general and certain department heads – fared better than those who ran as Democrats.

Lawmakers, for example, added a communications director, policy director and director of constituent services to the staff of Republican Lt. Gov. Dan Forrest. Meanwhile, the Secretary of State's Office and Department of Insurance, both headed by Democrats, lost staffers.

Voter ID

Lawmakers have been haggling over whether and how to create a requirement that all those voting in person at the polls would have to show photo identification. A bill to put that requirement in place has passed the House and is pending in the Senate.

The state budget sets aside $1 million per year to pay for costs associated with a voter ID program. This falls short of the $3 million price tag associated with other versions of the bill.

Eugenics compensation

House and Senate Republicans have a long-standing difference over whether to provide compensation to victims of the North Carolina forced sterilization program that ran between 1929 and 1974. After resisting a compensation program for more than two years, Senate Republicans appear to have relented.

The new budget sets aside $10 million for victims of the program. The exact payment per victim will depend on how many apply. As many as 1,800 victims may still be alive, but so far, the state's efforts to find them have yielded only 146 people.

Families of victims who have already died would not be eligible.

Payments will be made in June 2015, and the money would be exempt from state taxes.

Medicaid reform

McCrory has been pushing for permission to make over the state's Medicaid system, pushing a plan that would contract with managed care companies to care for the state's poor and disabled population.

Provisions in the state budget give the governor the green light to pursue this idea, despite initial reservations by legislators. However, the governor is authorized only to develop such a plan, not put it in place.

Economic development

Some lawmakers had hoped that lowering tax rates would get rid of the need for the state to offer incentives to companies hoping to expand or move here. Decker said that would not be the case.

"If that were true, the state of Texas would have no incentives, and they've got a huge multimillion-dollar fund," Decker said during an May committee meeting.

Budget writers took that note to heart and, despite passage of a major tax reform bill, provided $60 million for Job Development Investment Grants and $14 million for the Job Maintenance and Capital Development Fund grants over the next two years.

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