Senate leaders tout smaller budget plan

Senate leaders held a news conference Monday to preview their $21.47 billion budget proposal, substantially smaller than the House's spending plan.

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Berger and Brown
Laura Leslie
RALEIGH, N.C. — State Senate leaders held a news conference Monday to preview their $21.47 billion budget proposal, substantially smaller than the state House's $22.1 billion spending plan.

The actual document was not yet available Monday afternoon as Senate Majority Leader Harry Brown cataloged the highlights of the plan, saying it "protects the state's long-term fiscal health."

According to Brown, R-Onslow, the Senate budget increases spending by about 2 percent, a figure he said is in line with population and inflation growth. The House plan, by comparison, would increase spending by about 6 percent.

Highlights of the Senate proposal include the following:

  • Does not include an across-the-board pay raise for state employees, instead funding "targeted market-based pay raises" for categories such as community college instructors and correctional employees
  • Gives teachers an average 4 percent raise, with much of that going to raise starting teacher pay to $35,000 a year
  • Adds funding for more primary-grade teachers to lower average kindergarten class sizes to 17 and first- through third-grade class sizes to 15
  • Includes the contents of the tax and economic development overhaul rolled out by Senate leaders last week, including a small income tax cut but new sales taxes on advertising, veterinary services and other services
  • Moves state parks, aquariums and the Museum of Natural Sciences under the Department of Cultural Resources
  • Includes a modified Medicaid reform proposal with a two-year timeline for the overhaul (much shorter than the House's timeline)
  • Eliminates certificates of need by 2019. Regulators use the process to limit expansion of health care facilities to what they determine is needed in certain areas.
  • Eliminates the annual $260 million transfer from the Highway Fund to the General Fund
  • Raises $100 million by increasing Division of Motor Vehicles fees by an average of 20 percent (less than the House plan)
  • Does not include the transportation or capital bonds Gov. Pat McCrory is calling for
  • Establishes the Departments of Veterans Affairs and Information Technology
  • Adds $7 million per year for the Opportunity Scholarships school voucher program
  • Requires school districts with schools graded D or F to implement turnaround plans
  • Increases Medicaid reimbursement rates to doctors by 22 percent (26 percent for obstetricians)
  • Does not include the historic preservation tax credit, and funds the film grant program at its current $10 million per year

Sen. Ralph Hise, R-Mitchell, outlined the Medicaid reform proposal in the budget. He said it's a "hybrid model" that would divide the state into six regions. The state would offer contracts with three statewide entities, either for-profit managed care organizations (MCOs) or nonprofit, provider-led accountable care organizations (ACOs). Additionally, each region could have two additional Medicaid contractors that could only be nonprofit ACOs.

Senate President Pro Tem Phil Berger called the proposal "solid," adding that it "represents a consistent approach in dealing with things on the revenue side and things on the spending side."

"We hope the House will see it that way as well," Berger, R-Rockingham, added.

Berger said the bill's subsections will be voted on in Senate Appropriations subcommittees Monday afternoon, then through the Appropriations, Finance and Pensions committees on Tuesday. Floor votes are set for Wednesday and Thursday.

After that, the proposal moves back to the House, where, Berger joked, "we expect a grand reception and substantial support."

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