@NCCapitol

Senate budget includes smaller classes, SBI shift, tax cuts

Posted May 24, 2011 4:01 a.m. EDT
Updated May 24, 2011 7:11 p.m. EDT

— Senate Republicans unveiled their $19.4 billion plan for North Carolina state government on Tuesday, saying there's plenty for Democratic Gov. Beverly Perdue to like in it.

Budget subcommittees began reviewing portions of the budget Tuesday morning in advance of a vote by the full Senate Appropriations Committee later this week.

"The Senate budget overall cuts taxes, reforms education and reduces spending," Senate President Pro Tem Phil Berger said, calling it "a responsible document."

"It keeps the promises that government has made to the people to provide core services," said Berger, R-Rockingham.

The proposal spends $130 million more than the budget passed by the House three weeks ago, but it is still about $500 million less than Perdue's spending plan.

Appropriations Committee Co-Chairman Sen. Richard Stevens said Perdue should be pleased with the Senate's efforts to reduce public school class sizes and create a merit-based pay system for teachers and state employees.

The budget plan spends $141 million more on education than the House proposal, including $62 million more for public schools and an extra $88 million for the University of North Carolina system. Still, the spending levels are lower than Perdue's recommendations.

Under the Senate proposal, 13,000 teaching assistants in grades 1-3 would lose their jobs, but school districts would invest those savings to hire 1,100 teachers in those grades to reduce class sizes. The plan also would add five days to the public school calendar, provide $100 million for school construction and phase out state funding of school buses.

Senate Minority Leader Martin Nesbitt said the budget guts early education.

"The teacher aides are the best deal the state of North Carolina has gotten anywhere," said Nesbitt, D-Buncombe.

Perdue said she is still reviewing the Senate budget but said the House and Senate need to properly fund education in their final budget proposal.

"By the time they come together, they need to send me a budget that protects our schools, community colleges and universities," she said in a statement. "If they pass a budget that undermines our schools and fails to protect the quality of our education system, then I will have no choice but to veto it.”

The budget needs to be approved by July 1, when the new fiscal year begins.

Five House Democrats would need to vote with Republicans to override any veto, and at least one wasn't supportive of the Senate's spending plan.

"There's just no way I'll be able to support it," said Rep. William Brisson, D-Bladen.

The North Carolina Partnership for Children, which serves as the funding clearinghouse for the Smart Start pre-kindergarten program, also would be dismantled under the Senate budget. About $70 million for the program would funnel through the state Division of Child Development, and Smart Start and the More at Four program would be overseen by the state Department of Health and Human Services instead of the Department of Public Instruction.

"Abolishing Smart Start is the wrong direction to go on education," Olson Huff, chairman of the Partnership for Children, said in a statement. "You can't get older children to perform in school by taking resources from younger children – at the very time that their brains are being hard-wired to learn."

The DHHS budget would be cut an extra $28 million under the Senate proposal than in the House plan, including more cuts to Medicaid reimbursement rates, community support and services.

The Department of Justice funding would be reduced by 70 percent under the Senate budget, from $90 million to $25 million. Much of that is tied to the transfer of the State Bureau of Investigation and its beleaguered crime lab to the new Department of Public Safety.

The head of that department, which would be created under a consolidation plan proposed by Perdue, would be appointed by the governor and approved by lawmakers.

The crime lab has been criticized since an independent review last year found that analysts overstated blood-stain evidence in more than 200 criminal cases over a 16-year period.

Still, Attorney General Roy Cooper said moving the SBI and the crime lab would be a mistake.

"You've taken away an important tool in the fight against public corruption, and I think it's outrageous," Cooper said. "This move would take away that independence and put the investigations at risk."

The Senate also called for a 0.25 percent cut to the tax rate in each of the state's three personal income tax brackets and allows a penny increase to the state sales tax rate, which lawmakers passed two years ago to balance the budget, to expire as scheduled at the end of June.

Perdue had called for keeping three-quarters of that penny increase in place to help fund schools.

The Senate proposal also would exempt small businesses from taxes on their first $50,000 in earnings, but it wouldn't cut the corporate tax rate. Perdue had proposed dropping the rate from 6.9 to 4.9 percent, but senators said the state couldn't afford the drop in revenue.