Negotiations set to begin as Senate finishes its budget

The House has already passed a budget that spends more than $22.1 billion and differs with the Senate on key policy items.

"There are several big issues that, if you get those resolved, the rest of the budget pretty much falls into place," said Sen. Harry Brown, R-Onslow, the chamber's senior budget chairman.

Of those big issues, the stickiest might be a sweeping Medicaid reform plan. House lawmakers are drafting a plan to change how the insurance system for the poor and disabled works as a separate bill, while senators have included their vision in the state budget. The two approaches are markedly different both in how quickly the changes would take place and what those changes would be.

Brown said that senators would likely insist on Medicaid remaining part of the budget. The Senate has been frustrated that lawmakers have left town in prior years without resolving the question.

Senators have also included a package of tax changes and changes to state economic development programs in the budget that House budget writers have approached though separate bills that are quite different from the Senate approach. That, too, could be a sticking point, because it will determine how much money is available to spend on state programs.

Gov. Pat McCrory said Thursday that he cannot support the portion of the Senate plan that would divert some sales tax revenue from urban to rural counties. Senate leaders say the change would help even the playing field and bring down property taxes for poorer counties, but the governor said taxpayers in urban areas will end up paying the bill.

"It's a local tax, and those local people who collect that tax should be able to keep it and invest in the infrastructure that they've put their money into to encourage people to come to their counties," McCrory said.

Although debate was brief Thursday, Sen. Terry Van Duyn, D-Buncombe, did sum up Democratic objections by pointing to cuts in the corporate tax rate included in the bill drafted by the Republican majority. Those reductions, she said, would cost the state $600 million over the next two years.

While Republican leaders expanded the number of lead teachers available for elementary school classrooms, they pared back the number of teaching assistants the state will pay for, eliminating more than 8,000 TA positions over the next two years. Democrats focused on those TA cuts during debate Wednesday.

"We are making a decision here that we don't have to make," Van Duyn said. "We do not have to take that money away from our students. We could keep in our schools. but we are making a decision to give it away to corporations."

In terms of process, House Bill 97 will return to the House, where lawmakers will almost certainly vote to formally reject the Senate version of the plan. That will trigger the appointment of a conference committee, a group of House members and senators that will be charged with drafting a compromise bill.