RALEIGH -- Gov. Bev Perdue signed a $19 billion state budget late today, after House and Senate Democrats gave it their final blessing.
The budget avoided many of the deepest cuts under consideration, but leaves a deficit for next year that could swell to $3 billion.
“I signed a budget today that does more with less, but still keeps North Carolina moving forward toward a full economic recovery,” Perdue said in a statement. “This year was tough, but next year will be tougher. This budget puts our state on firm ground as we head towards the challenges of next year.”
No one is claiming to be thrilled with the budget, which covers the fiscal year that begins Thursday. Democrats, who control both legislative chambers and write the budget, noted that they propose to cut spending across all categories of government to cope with an $800 million revenue shortfall caused by the recession.
"A priority for this legislature was to act decisively to create jobs, encourage economic activity and provide job training and educational opportunities and protect core government services," said Rep. Mickey Michaux, a Durham Democrat.
Republicans say Democrats just didn't cut enough and didn't take measures to deal with next year's deficit, which is assured, as tax increases adopted last year expire and federal stimulus dollars evaporate.
"I've heard all this talk about tough decisions," said Rep. Johnathan Rhyne, a Lincolnton Republican. "I suggest to you there's not one tough decision in this bill."
The budget plan requires one more vote, scheduled for today. It is expected to pass, and Gov. Bev Perdue is expected to sign it. This year would be the first in seven that the state has had a budget in place before the fiscal year starts.
"As it stands after today's vote, this budget is a clear win for the people of North Carolina," Perdue said in a statement after the vote. "We took big cuts and made hard choices, but by tomorrow we will have balanced the budget with our priorities intact. Most importantly, North Carolina will be positioned to fully recover from this global economic recession."
The plan uses money from the state lottery to stave off cutting teaching jobs, although school boards could order furloughs. It cuts $50.7 million to in-home care services for Medicaid recipients, which means 18,000 of the 38,000 people currently participating would lose benefits.
Democrats said those who truly need the services would still receive them, a claim the personal care service providers dispute.
The budget could also lead to a tuition hike on university campuses.
And cuts could get worse in January. The budget relies on $519 million in federal Medicaid money that may not come. The budget includes a contingency plan that would raid reserve funds, cut the state's contribution to the retirement system and cut another 1 percent from state spending.
Hoping for cash
Gina Frutig, a Durham elementary school teacher who was laid off a few weeks ago, said she is worried about whether the state will get the money. "There's a lot of money that's been budgeted that may or may not be there," Frutig said.
Education leaders were generally relieved by the final budget plan.
The legislature did the best it could, given the circumstances, said State Board of Education Chairman Bill Harrison. The cuts weren't as severe as some ideas legislators were kicking around.
For UNC system leaders, their $70 million cut was half what the House had proposed.
"On a relative basis and particularly considering the economic climate, the 2010-11 state budget we received from the General Assembly was nothing short of remarkable," UNC President Erskine Bowles said Tuesday.
In the House debate Tuesday, Republicans complained that they were left out of the budget process and that the state could have had a more effective spending plan if they had started from scratch, rather than trim around the edges of the previous year's budget. Rep. Paul Stam, an Apex Republican, said next year's budget may represent an increase from this year's actual spending.
Democrats said that Republicans proposed both cutting taxes and cutting spending, which would not meet the constitutional requirement that the state have a balanced budget.
"Leadership does not require either of us running for election in the fall on the backs of teachers and students and firefighters and the citizens of this state," said Rep. Rick Glazier, a Fayetteville Democrat. "We sat and made the decisions, and the Republican opposition was nowhere to be found."
Next year's worries
Democrats don't disagree that next year's budget could be even tougher.
"What happens next year when that $3 billion problem is sitting there staring us in the face?" Sen. Phil Berger, the Senate minority leader, said Tuesday.
Democrats responded that the budget under consideration is for the next fiscal year.
"We came down here last year facing the worst recession since the Great Depression," said Sen. Martin Nesbitt, a Democrat from Asheville. "We came down here this year to face the longest recession since the Great Depression. Whatever happens next year, we'll face that too."
Staff writer Michael Biesecker contributed.
