Perdue budget veto brings uncertainty

lbonner@newsobserver.comJune 29, 2012 

  • Veto Q&A Q: Will state government shut down without a new budget? No. The state will begin the second year of a two-year budget Sunday. The budget that Gov. Bev Perdue rejected makes changes to that budget, but the baseline plan will be in force. Legislators were working on a basic supplement to the budget that would spend about $1 billion in federal grant money for welfare, teen pregnancy prevention, child care subsidies, and other programs. Though that supplement is not in place, the governor’s office said public services will not be disrupted. Q: What are the legislature’s options now? Legislators could work with Perdue on budget changes. She wants to do that; GOP legislative leaders don’t. They can override her veto if the House has enough votes. Or, they can leave the second-year budget as it stands and go home. Q: Why is this happening? The Democratic governor and Republican legislative leaders don’t work together well. Perdue says she’s taking a stand for schools, while Republicans emphasize budgeting with tax cuts and without gimmicks. Q: When is the last time the legislature left without a revised second-year budget? 1996. Gov. Jim Hunt called lawmakers back into session to work out an agreement. Q: Has the budget ever before been approved late? Yes. Many times. The state budget year begins on July 1, but governors and the legislature sometimes took that deadline and stretched it days or months. In 1998, the budget was approved in late October.
  • More information What Perdue wants Gov. Bev Perdue and legislative leaders are arguing over $100 million. Perdue wants to spend it this way: • K-12 schools: $76 million • N.C. Pre-K: $10 million • Pre-K and kindergarten assessments: $5 million • Eugenics victims: $5 million • Probation officers: $3.4 million • Help America Vote Act: $600,000

Gov Bev Perdue’s veto Friday of the proposed $20.2 billion state budget leaves schools, courts and college students on scholarships facing an uncertainty they haven’t experienced in years.

The impasse between the Democratic governor and the Republican-led legislature may mean lawmakers will finish work in a few days without putting a revised budget in place.

Perdue said she wants to draw legislative leaders into negotiations.

She has made at least two suggestions in the last week for spending about $100 million more on K-12 schools, probation officers and other items by using money from reserve accounts or an unexpected bump in revenue. Legislative leaders have rebuffed her suggestions, and said they don’t intend to rework the budget.

The revenue bump that Perdue is referring to comes from businesses not yet claiming a new $3,500 tax credit, law makers said. Because businesses still have time to claim the money, the state can’t spend it, Sen. Bob Rucho, a Mecklenburg County Republican, said on Thursday when Perdue first suggested the idea.

“I really tried to forge a consensus with them,” Perdue said. “Ultimately, they told me ‘No.’ They said, ‘Take it or leave it.’ I refuse to give up.”

Flanked by two large signs listing “Top 20 Budget Flaws,” Perdue said the legislature’s plan falls short in many areas. But the budget discussion isn’t about money, she said, but about the state’s priorities and future.

House Speaker Thom Tillis said Perdue’s spending suggestions were “structurally flawed,” and that she is holding up progress for the sake of one-half of 1 percent in a $20.2 billion budget.

“It must be all about ego,” Tillis said. “The governor is willing to take pay raises away from state employees and teachers. She’s willing to take classroom funding away and we’re trying to fill a hole because federal funding is going away. We’re increasing state spending. It sounds more political to me than principle.”

In odd-numbered years, as they did in 2011, the legislature approves a two-year budget. In even-numbered years, they make adjustments to the spending plan they approved the year before.

Under the two-year budget approved last June, school districts have less to spend next year. When the expiring federal money is considered, their accounts drop by $333 million. House and Senate leaders softened that blow when they revised the budget this month; schools would have about $190 million less next year. They also added $18.6 million more for UNC need-based financial aid, and put the Family Court program, where domestic and juvenile cases are handled, back on a steady source of funds.

The association for school superintendents is advising school leaders to tell legislators and Perdue’s office how the cut would hit their districts and urge them to work together “to address the looming shortfall of $333 million.”

The legislature’s budget also gave 1.2 percent raises for state employees, teachers and other school personnel – the first raises they’ve seen in four years. Those raises won’t happen if the veto stands and no compromise is reached.

In her news conference, Perdue spoke directly to teachers and school employees, saying that she wants them to have raises and gave them more in her budget proposal.

While most would get raises in the legislature’s budget, she said, some teachers and state employees will lose their jobs.

“Raises for some and pink slips for others is not the right thing,” she said.

Picking up the attack launched by legislative Democrats, Perdue said legislators should not give tax breaks to some of the state’s wealthiest residents while failing to do enough for schools. Legislators passed the tax break last year.

“I simply don’t believe as a citizen that the General Assembly should give tax breaks to equity partners in law firms, to lobbyists and other wealthy business owners while they leave the needs of our classroom and our state unmet,” she said.

The new tax break is expected to cost the state $336 million.

Tillis countered that Perdue proposed to cut the corporate tax rate, a break that would have gone to large businesses.

This is the second year in a row that Perdue has vetoed the budget. Last year, the House and Senate were able to cancel her veto, with five House Democrats joining Republicans in an override.

This year, six Democrats voted for the Republican budget. Friday, four of the six were uncertain how they would vote on an override. One of the Democrats, Rep.Timothy Spear of Washington, has been absent, dealing with the death of his father and a family illness. So far, only Rep. William Brisson of Dublin has indicated he would continue to support the GOP budget and vote for the override.

“We’ll be back next week on Monday or Tuesday to take up a veto override if we have sufficient votes,” Tillis said.

The last time legislators left Raleigh without adopting a new second-year budget was in 1996, when differences over how to spend a budget surplus sent the Democratic Senate and the Republican House home without an agreement.

Then-Gov. Jim Hunt called legislators back to work the following week for a budget session, and they worked out a deal.

Bonner: 919-829-4821

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