Breaking down key NC Senate budget proposals

From Staff ReportsMay 29, 2014 

Senate proposes fee increases to raise cash

To find money for its priorities, the Senate is proposing to raise fees on a variety of business interests and tapping state reserves intended for other purposes.

The increased fees would generate about $28 million and the bulk would come from hospitals.

The Senate’s budget puts more of the costs of treating Medicaid patients on hospitals, to the tune of $15 million a year. It would be the second year in a row the surcharge to providers levied by the state increased, according to the N.C. Hospital Association.

Other fees changes:

• The cost of commercial fishing licenses would nearly double from their fiscal year 2012-13 level, with the standard license moving to $400 from $250. It would add $1.3 million a year.

• The ABC permit fees for bars and restaurants would jump. For beer and wine, the fee would double to $400. Mixed beverage permits would increase to $1,000 from $750. The increased fees would generate $9.6 million a year.

• A new fee would be charged to those who ask the state Forest Service for forestry management plans, with a sliding scale depending on the size of the project.

Even bigger sums would come from the state’s reserve accounts, including nearly $57 million left unspent from a year ago. Those reserves were supposed to go toward state employee benefits. Another approximately $23 million would be diverted from two accounts used for incentives to recruit companies to North Carolina.

In addition, the state would issue general obligation debt, which does not need public approval, to spend $15 million to construct a new western crime laboratory in Edneyville.

Staff writer John Frank

N.C. weighs increasing highway use tax

The highway use tax the state can collect on vehicle sales from businesses that buy trucks and from other people who buy recreational vehicles would rise under the budget proposal.

There would be no change in the taxes collected on most car and truck sales.

Currently commercial vehicles are capped at $1,000 and recreational vehicles at $1,500. Both caps would rise to $2,000 in January and $3,000 in July 2015 under the Senate plan. That would be enough to generate an additional $11 million in annual state revenues.

“We’re opposed to that,” said Bob Glaser, president of the N.C. Automobile Dealers Association.

He said farmers and businesses that buy heavy commercial trucks would be hurt by the increase, and North Carolina truck dealers could lose sales.

“It just drives the sale out of the state,” Glaser said. “You’re going to buy the truck where the lowest tax is.”

Taxes on vehicle sales actually will remain lower in North Carolina than in most neighboring states.

North Carolina’s highway use tax brings in nearly $600 million a year, so a proposed 1 point tax rate increase would be worth about $200 million.

The budget also would:

Increase from $150 to $250 the highway use tax cap paid by people moving their cars to North Carolina from other states, generating an additional $3.2 million a year.

• Eliminate a motor fuel tax refund for taxi cabs starting Jan. 1, worth $185,121 per year.

• Cut $6.7 million from DOT’s transit, rail, ferry, bike-pedestrian and aviation branches – to increase funding for construction, road maintenance and pavement preservation.

• Give the Division of Motor Vehicles more funds to produce a new-format driver’s license, to make other technology and customer service improvements, and to start allowing some drivers to renew their licenses online.

Staff writer Bruce Siceloff

No raises for UNC faculty; Elizabeth City State targeted

The Senate plan contains no substantial cuts to the UNC system, unlike McCrory’s proposal. And while UNC staff would see the same raise as other state employees, there is no pay increase for faculty or administrators in the Senate plan.

UNC President Tom Ross issued a statement saying the plan “offers clear evidence that the North Carolina Senate understands the critical role our public universities must continue to play in North Carolina’s economic future.”

Despite the positive overall financial picture for the UNC system, there was a bombshell: a provision requiring the UNC Board of Governors to develop a plan for “dissolving” any campus where enrollment has declined by more than 20 percent between 2010-11 and 2013-14. The provision does not specifically identify Elizabeth City State University, but senators confirmed that it targets ECSU.

“We have the tendency around here not to face up to particular situations. ... Sooner or later we’re going to have to come to the realization that this institution is not able to stand on its own,” said Sen. Tom Apodaca of Hendersonville. “We’re giving the Board of Governors the authority to make that decision.”

ECSU has been through several rounds of budget cuts as enrollment dropped, and the university is downsizing and tailoring its academic offerings.

“Clearly the legislature is signaling they want a plan for Elizabeth City State University’s future,” said Peter Hans, board chairman. “The Board of Governors wants ECSU to succeed and we’re close to having a roadmap that will give them the best opportunity to be all they can for that community and region.”

For the state’s community colleges, the Senate plan cuts funding by $17 million to adjust to an enrollment decline, but it would fund some programs in health care and technical fields at a higher level based on market demand and skills gaps.

Staff writers Jane Stancill and Lynn Bonner

Raises for teachers who give up tenure, but no money for textbooks

The big-ticket item for public education is $468 million to fund an average 11 percent pay increase for teachers – but it would only be available to those who give up tenure. The N.C. Association of Educators called the proposal a “political game” and “a vindictive and cynical attempt to take advantage of economically hard-pressed teachers in North Carolina.”

School administrators would not see raises, and nonteaching school and central office staff would see a $500 raise – lower than the one proposed for other state employees.

State funds for teacher assistants would be cut nearly in half, by $233 million, paying for them only in kindergarten and first grade. Before reductions in the past few years, teacher assistants had staffed classrooms from kindergarten through third grade.

The Senate plan would cut the state Department of Public Instruction by 30 percent, or $15 million.

The budget did not provide an increase in textbook money, now funded at about $15 per child. Instead it directs schools to begin to transition from books to digital materials.

Gov. Pat McCrory, whose budget included smaller raises for teachers, had doubled the textbook budget. On Thursday, he expressed disappointment with the Senate plan, saying: “I think we need a more comprehensive approach, long-term sustainable and fiscally responsible approach on how we are going to pay our teachers in the future so it’s a career as opposed to a one-time pay increase.”

State Superintendent June Atkinson said besides pay, the budget would “eliminate essential services for teachers and schools and leave teachers with more duties and less support.”

“Teachers need raises to keep them in classrooms, but we should not burden them with more responsibilities that are now done by NCDPI and other local support personnel,” Atkinson said in a statement. “We cannot continue to ask students to do without textbooks and instructional supplies. North Carolina deserves better than this.”

Jane Stancill and Lynn Bonner

Appointed three-judge panel could hear challenges to state law

Frustrated that a single judge can undo the laws that the General Assembly passes, Senate budget writers have proposed a three-judge panel to hear lawsuits challenging the constitutionality of their actions.

The provision would require any lawsuits that allege a law is unconstitutional on its face – as opposed to one that claims a law is unconstitutional only in the way it’s applied – go before a trio of judges sitting in Wake County.

Members of the panel would be sitting superior court judges from different parts of the state appointed by the chief justice of the state Supreme Court. It’s similar to the way challenges to redistricting of state and congressional districts are handled.

The current chief justice, Sarah Parker, has reached mandatory retirement age and her successor will be elected in November. Republicans Mark Martin, senior associate justice , and Ola Mae Lewis, senior resident Superior Court Judge in Brunswick County, are running for the seat.

There have been a string of judicial rulings – especially by federal judges – blocking laws enacted over the past few years, including those involving abortion, education and private school vouchers.

It’s not clear that the General Assembly can pass a law preventing people from suing in federal court.

Staff writer Craig Jarvis

By the numbers

$21.2 – billion total Senate budget

$5,800 – average annual raise for public school teachers

$233 – million amount saved by cutting some teacher’s assistants

$3 – million amount saved by eliminating Teaching Fellows

70 – number of school nurse positions cut

1,000 – number of additional pre-kindergarten slots funded

$4.9 million – to create a new Division of Medical Assistance

$1.75 million – amount to fund coal ash cleanup

$1.1 million – for natural gas exploration and marketing state’s gas resources

$128,000 – amount saved by cutting House in the Horseshoe site in Sanford

$391,000 – amount saved by closing Museum of Forestry in Whiteville July 1 ($391,000).

$1 million – amount going to Medical Examiners

Budget timetable

Wednesday night: Senate budget introduced.

Thursday: Debated in committees.

Friday: Full Senate will debate, consider amendments and vote on the bill in the late afternoon or early evening.

After midnight: By law, the bill must be voted on a second time on a subsequent day. So, the Senate will take a final vote in the early morning hours Saturday.

 It will then be sent to the House of Representatives, where budget-writers have been preparing their own spending plan, to be made public early next month. Selected members of both chambers will confer and come up with a compromise budget, which the General Assembly will vote on and send to the governor for his approval.

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