Senate wants to tie teaching assistant money to economic development bill

Senate leaders have drafted a bill that gives school districts more flexibility in how they spend money but would require the state House to pass a controversial economic development and sales tax bill.

Posted 11:14 p.m. Aug 14, 2014 — Updated 1:07 a.m. Aug 15, 2014

Mark Binker

RALEIGH, N.C. — Senate leaders are holding a technical fix to the state budget sought by Gov. Pat McCrory, House leaders and school district officials hostage to a package of economic development and sales tax measures passed by the Senate but thus far shunned by the House.

Senators sent that measure to the state House on a 34-6 vote Thursday night.

Legislative leaders largely finished their work two weeks ago but have been at odds over a lingering set of issues, including a measure that would create a new economic development fund, allow counties to raise sales taxes for education and transit needs and carry out several other economic developments measures.

House and Senate negotiators agreed to compromise economic development legislation, which the Senate has passed. The House has thus far not taken up the compromise because it is unpopular with rank-and-file Republicans who are circumspect about government-funded incentives.

In the meantime, school districts have identified technical problems with the budget. One of those problems restricts the ability of school districts to convert money set aside for teachers to teaching assistants, a key piece of flexibility for a number of rural school systems. Among others, McCrory has called on lawmakers to fix this issue.

As both the House and the Senate make plans to adjourn for the year this week – albeit similar plans have been scuttled several times this summer already – senators have crafted a bill that would fix the teaching assistant issue.

"Based upon the description, it does sound like it would work," said Leanne Winner, a lobbyist for the North Carolina School Boards Association.

However, there's a catch.

TAs tethered to sales taxes

The bill carrying the teaching assistant fix, House Bill 718, also contains language modifying how sales tax provisions in House Bill 1224 would work.

House Bill 1224 allows counties to place a referendum on the ballot raising local sales taxes a quarter-cent or a half-cent for either education or transit needs. The new language in House Bill 718 makes modifications to how much county commissioners can control the money used for education with regard to budgets passed by local school boards.

House Bill 718 also says that both sections of the bill – both the sales tax language and the teaching assistants fix – will go into effect only if House Bill 1224 becomes law.

"You all are playing political games," said Sen. Josh Stein, D-Wake. "You're actually saying to the House, 'If you care about TAs, you've got a gun to your head. ... You have to fire TAs or put up with our bad bill.'"

But Republican leaders said that both the teaching assistant fix bill and the sales tax measure would help counties and local school districts.

"It gives counties another avenue to raise revenue for education rather than property tax, and I think most counties will support it," Sen. Harry Brown, R-Onslow, said.

Many House members were uncomfortable with the new sales tax authority. As well, House Bill 1224 contains several economic development provisions that bring with them varying degrees of controversy. They include:

A job catalyst fund designed to help the governor and the secretary of commerce land big economic development projects such as car manufacturers. The state budget sets aside $20 million in case this fund is created, and there's the potential for more money to be added in case of a specific project requires it.
A boost to the state's JMAC fund designed to help a paper mill in western North Carolina convert to a more environmentally friendly power source.
A measure to allow North Carolina companies to raise small investments through crowdfunding.
A fix to the state's unemployment laws that would allow the state to keep certain records confidential.
An extension of the state's renewable energy tax credit designed to help certain solar projects.

The House isn't scheduled to take any votes until 10 a.m. Friday. House leaders will apparently be faced with the choice of adjourning without a teaching assistants fix, getting the fix by agreeing to a somewhat unpalatable bill or leaving the legislature in a state of continued limbo.

House Rules Committee Chairman Tim Moore, R-Cleveland, said House Republicans have scheduled a caucus meeting before session Friday. A vote of that group, he said, will likely determine what the chamber does later in the day.

Asked whether he thought it was appropriate to tie the teaching assistant fix to the economic development bill, House Speaker Thom Tillis also said he needed to talk with fellow Republicans.

"It certainly wouldn't be the first time either chamber has done something like that," Tillis said.

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