NC House, Senate move closer together, but budget deal uncertain jmorrill@charlotteobserver.comJuly 2, 2014 

— Once again, it comes down to how to improve teacher salaries.

The legislative session’s top issue is the key remaining obstacle for negotiations on a $21 billion state budget plan – and possible adjournment date.

House and Senate budget writers began to break through their bitter budget stalemate Wednesday with a compromise on how much to spend on Medicaid, a health insurance program for low-income residents. The two chambers agreed to allocate $137 million for Medicaid cost overruns in the prior year’s budget and put aside an additional $186 million to cover additional costs for this fiscal year. The numbers represent the midpoint between the House’s best-case projection and the Senate’s worst-case outlook.

The Senate stood steadfast at its mark for weeks, prompting political posturing that threatened to derail the final days of the legislative session. But senators agreed to a compromise in a rare public meeting of the budget conference committee after the House moved closer to its position. “We still have concerns,” said Senate leader Phil Berger, an Eden Republican. “We prefer to be at the worst case, but at some point you have to move the process along. That’s what we are doing.”

The resolution allows budget writers to know how much is left to spend on other priorities in dispute in the House and Senate spending plans approved earlier this session.

“Teacher pay is probably the next step,” said Sen. Harry Brown, the chamber’s top negotiator. “And after teacher pay things will probably start falling.”

It’s not an easy fix. The House wants to give teachers an average 5 percent pay raise, retain teacher assistants and maintain teacher tenure. The Senate is proposing an 11 percent pay raise – what lawmakers call the largest ever in North Carolina – but ties it to the elimination of tenure. Senators also want to cut $223 million for teaching assistants and cut the state Department of Public Instruction.

Gov. Pat McCrory and House Speaker Thom Tillis have said they won’t agree to a plan that cuts teaching assistants.

Other key differences still remain unresolved.

• The latest House compromise offer still includes a plan to double lottery advertising to juice sales and get $30 million in additional revenues. The Senate says it won’t agree to the move.

• The Senate continues to insist on a measure in the budget to cut Medicaid eligibility for thousands of elderly and disabled residents. The House says it won’t agree to the proposal.

• The House wants to give most state employees a $1,000 pay hike plus benefits, and retirees would receive a 1.44-percent cost-of-living adjustment. The Senate proposed an $809 salary bump plus benefits and a lower adjustment for retirees.

Democratic lawmakers were cautious about the move toward a compromise, particularly with the two chambers still about $170 million apart on Medicaid.

“The attitudes are positive … but the numbers don’t add up,” said Sen. Joel Ford, a Charlotte Democrat.

Senate negotiators said they were surprised when House members came to their meeting with a proposal that moved closer to their own.

“It was stuck yesterday when we left this building,” said Sen. Tommy Tucker, a Waxhaw Republican and Senate negotiator. “We had no idea the House was coming with another offer this morning. The House came forward with a reasonable compromise that we had to take seriously.”

Tucker and others said Tillis had been involved in the discussions that led to the breakthrough.

“If we continue to do these same kind of meetings every day, next week we get those other issues out there and vetted,” Tillis said later.

It’s unlikely a final deal on a budget will come this week with the Senate leaving early ahead of the July Fourth holiday. House and Senate lawmakers anticipate returning next week to continue the negotiations.

Frank: 919-829-4698

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