State budget plans expand rural-urban divide

lbonner@newsobserver.com June 13, 2013 

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Works plant tobacco in Johnston County.

CHUCK LIDDY — News & Observer file photo

  • House spending plan

    The two-year, $20.6 billion plan approved Thursday by the state House now goes to the Senate, which has already passed its own budget. The Senate is expected to reject the House changes, which will send the chambers into a conference committee. Republican leaders have said they want to get the bill to Gov. Pat McCrory by the end of the month.

    Key disagreements

    • The House wants to spend $118 million more than the Senate on salaries for teacher assistants in early grades next year and recommends $50 million over two years to allow thousands of children in low-income families to attend private or religious schools. The Senate wants to eliminate job-protecting teacher tenure in the public schools and spend $53 million more next year on the University of North Carolina system than the House.

    • The Senate budget requires the Board of Transportation to charge tolls on all seven ferry routes by Nov. 1. The House maintains existing tolls on three ferries and authorizes the DOT to generate revenue through advertising or Internet service on ferries and other sources.

    • The House included $10 million to compensate victims of the state’s now defunct sterilization program. The Senate budget did not.

    • The Senate adds new registration fees of $100 for electric vehicles and $50 for hybrid vehicles, raising about $1.5 million a year. The House doesn’t include that provision.

    • The Senate allows local boards of education to charge up to $65 per participating student for driver education. They are currently allowed to charge up to $45. The House budget doesn’t include that provision.

Rural needs and state priorities seemed out of sync this week as legislators from poor and small counties tried to win sympathy from colleagues for their problems.

During debates on taxes and spending, rural lawmakers begged to keep job-rich prisons operating. They asked that a fund that supports small schools continue to operate as is. And they questioned how rural hospitals could absorb a proposed change in the tax law that will cost them millions of dollars each year.

The state’s rural-urban divide has been growing for years, but the differences are becoming more pronounced as more people pile into metro areas, suburbs spread and policies change. The battles were highlighted in the budget debate this week before the House took its final 77-40 vote Thursday and sent its plan to the Senate.

Rep. Paul Tine, a Kitty Hawk Democrat, said rural legislators need to stay on their toes or they’ll be run over by their urban counterparts.

“We rural legislators know it is more important now than ever that we stand up for rural North Carolina,” Tine said. “If urban legislators chose to band together, there is nothing we could do to stop them.”

The population shift from rural to urban and suburban is reflected in the legislature.

Five House members and four senators represent seven remote counties that the U.S. Census describes as completely rural. Meanwhile Wake County alone has 11 House members and five senators.

The demographic shifts mean that fewer legislators are concentrating on solving rural problems, especially economic ones.

It’s much harder to attract jobs to rural counties, said James Kleckley, director of the Bureau of Business Research at East Carolina University, which is why he’s worried about a proposal in the Senate budget to defund the N.C. Rural Economic Development Center.

“I’m really concerned about a lot of the things they’re doing,” Kleckley said.

The Senate also voted to close all three state drug and alcohol treatment centers, including the center in Greenville. That would mean lost jobs and people with drug habits and mental disorders set adrift, Kleckley said.

Most people who seek drug and mental health treatment from the state don’t have money and couldn’t afford private centers, he said.

“I certainly agree with capitalism, but there’s a role for government,” he said. “I’d like to think people up there see that.”

Rural hospitals hit

Administrators at rural hospitals are worried about a Senate tax plan that would reduce sales tax rebates for nonprofits. Rural hospitals say they operate close to the margins and can’t afford to lose the rebates.

Sen. Clark Jenkins, a Tarboro Democrat, said the tax plan would cost Vidant Heath Care, which has a string of hospitals in Eastern North Carolina, millions in higher taxes and lost jobs. The tax changes could cost five Vidant hospitals in his district 250 jobs, he said, which means less care for residents.

Senate leader Phil Berger said most nonprofits will still get their entire refunds when the refund cap is in full effect. Other large businesses are organized as nonprofits and pay their executives millions a year, Berger said.

Cody Hand, vice president and deputy general counsel for the N.C. Hospital Association, said legislators don’t understand how hospitals operate.

Lawmakers see the reserve accounts in the state’s largest hospitals that auditors require them to have and think hospitals are sitting on piles of cash, Hand said.

Legislators see large salaries, but don’t take into account hospital chiefs are running big corporations, he said.

A lack of understanding

Tine, the first-term House member who issued the warning about urban strength, said he thought there would be a big rural-urban fight at the legislature, but that hasn’t happened.

Instead of animosity, Tine said he’s found a lack of understanding about how policies affect rural areas. Rural legislators are talking about forming a caucus so the others “can better understand us and our particular issues,” Tine said.

Legislators all along the political spectrum and from all corners of the state are asking for help.

According to the U.S. Census, Burke, a western county with a population of 90,500, is metropolitan, but its unemployment rates run above state averages. The state describes Burke as one of the counties in the most economic distress. Budget proposals would close the Western Youth Center in Morganton, a state detention center for teenagers and young men. If the state closes the 18-story building on Jan. 1, it’ll save $8 million this budget year, but eliminate more than 300 positions.

Rep. Hugh Blackwell, a Republican who represents the county, couldn’t get the House to agree to close the prison in phases or to set up a task force to help laid-off employees find other state jobs.

In all, the House budget closes eight prisons and youth detention centers, eliminating 775 positions. Budget writers said the state just doesn’t need so many prison beds.

Mel Cohen, mayor of Morganton, said a county with high unemployment should not get another kick in the teeth from the state.

“It’s frightening for our county, for our citizens,” Cohen said. “To do this to us after we’ve had so may closings of furniture and textiles (plants) over the years and had high double-digit unemployment for the last several years.

“This is a hell of a blow. We can’t fight industry going to China and offshore, but this is our own state doing it to us.”

The House is listening to rural legislators, said Rep. Nelson Dollar, a Cary Republican and a chief budget writer. In response to their worries, he said, the House would let the Rural Center survive. The Senate would defund the center and set up a division in the Commerce Department to handle rural economic development. When House and Senate negotiators begin meeting on the budget next week, they’ll have to agree on strategy.

Lawmakers want the rural areas to thrive, Dollar said, and they appreciate how much attention rural economic development needs.

“What we will be working on is how to best structure those efforts,” he said.

The Associated Press, staff writer Craig Jarvis and news researcher David Raynor and contributed.

 

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