Smaller Medicaid shortfall could mean more state raises

A key state lawmaker said Thursday that a rosier-than-expected budget forecast for the Medicaid program could mean that there's enough in the 2014-15 budget to provide modest raises to all state workers.

State Department of Health and Human Services officials actually raised the top projection for the Medicaid shortfall from $130 million to $140 million, but they said that they believe that number is firm and final.

Rep. Nelson Dollar, the lead House budget writer, said that might be enough to provide modest raises for all state workers and teachers.

"The numbers will be tight, and it probably won’t be as generous as we would like to be, but I’m fairly confident we’ll be able to," said Dollar, R-Wake.

House and Senate leaders and Gov. Pat McCrory have already proposed a $176 million plan to raise salaries for beginning teachers over the next two years. North Carolina's starting teacher pay is lower than surrounding states.

That plan caused an outcry from veteran teachers and state workers who haven't had a substantial raise since 2008.

State leaders have repeatedly said that any raises beyond the plan to increase starting teacher salaries would depend on the Medicaid shortfall. Dollar said the Medicaid numbers are good enough that lawmakers may have enough money to do both.

"Once those numbers are finalized, as long as we haven’t had any surprises in the process, it is certainly the desire of the General Assembly to provide some modest raise for hard-working teachers and hard-working state employees," he said.

Dollar warned that the plans could change if the state sees a so-called "April surprise" – the tax-time changes in state revenue that can make or break a budget. So far this year, income tax collections have been running below target, while corporate and sales taxes have been above projections.