The state Senate took a preliminary 30-19 vote Wednesday afternoon to pass a budget for the state over objections from Democrats who argued the spending plan shortchanges education.
The Senate’s $21.47 billion plan increases spending 2 percent. After a final vote Thursday morning, House and Senate leaders are expected to spend weeks hashing out differences between their proposals. Legislators are already expecting that a temporary budget could be needed to keep state government running past June 30, when the current fiscal year ends.
Approved last month, the $22.2 billion House budget would increase spending by about 5 percent. It also featured industry-specific tax credits and across-the-board state employee raises that the Senate didn’t include in its plan.
While they didn’t speak about their concerns, three Senate Republicans broke with the Senate’s leadership and voted no. They were Sens. Fletcher Hartsell of Concord, Bob Rucho of Mecklenburg County and Andy Wells of Hickory.
Unlike the House budget, the Senate plan includes a variety of policy items – overhauling the state’s Medicaid system, adding new sales taxes and cutting personal income taxes. While all those proposals are controversial, Democrats focused their criticism on education issues during five hours of debate.
“This budget simply does not make a meaningful investment in our children’s education,” said Sen. Gladys Robinson, a Greensboro Democrat. “We’re refusing to invest in North Carolina’s once excellent educational system.”
The Senate agrees with the House and McCrory on plans to raise the starting teacher salary to $35,000. Teachers would, on average, see a 4 percent raise – although newer teachers would see the biggest increase.
“Where we lose teachers is in the first 10 years or so of their careers,” Senate leader Phil Berger said. “That’s where we have been shortchanging our teachers the most.”
The plan also calls for making a trade in many school classrooms: cutting about 5,000 teacher assistant positions while adding about 2,000 elementary school teachers to reduce class sizes.
“We are trying to fund the most effective classrooms, and we have not cut teacher assistant funding as much as transfer this funding to reduce class size,” said Sen. Dan Soucek, a Boone Republican.
Democrats argue points
Democrats argued that the state should do both. “We need the lower class size, and we need the teacher assistants in these lower grades,” said Sen. Mike Woodard of Durham.
Democrats filed a series of amendments that would have added more education funding by killing planned cuts in the state’s corporate income tax rate. The amendments died in party-line votes or were scrapped by Senate Rules Chairman Tom Apodaca through a legislative maneuver.
Wednesday’s budget debate lacked the bipartisanship of the House process last month, when several Democratic amendments passed and more than 30 Democrats voted for that spending plan.
“The major difference over here is the corporate tax package” made it difficult to gain bipartisan support, said Sen. Angela Bryant, a Rocky Mount Democrat.
Most of the 14 GOP-sponsored amendments offered on Wednesday involved minor tweaks, but one drew particular fire from Democrats.
Apodaca proposed shifting $3 million from the UNC School of Law to the Mountain Area Health Education Center in Asheville, which trains doctors who serve rural areas.
“If there’s anything we have too much of, it’s lawyers,” Apodaca said.
But Sen. Jeff Jackson, a Charlotte Democrat and a graduate of the law school, said the UNC cut was the wrong way to fund a worthy program. He called the move “piñata politics, where we can, at the last minute, make cuts to anything.” Woodard said the cut appeared to target UNC law school professor Gene Nichol, a prominent critic of the legislature.
Sales tax shift debate
Also drawing concern Wednesday: Senate leaders’ plan to change how sales tax revenues are distributed among counties. The proposal would base allocations on population, rather than keeping most revenue in the counties where sales occurred. The shift would benefit rural counties that lack retail at the expense of urban centers.
“I’m quite surprised that you, as Republicans, would be involved in the redistribution of the wealth,” said Sen. Joel Ford, a Charlotte Democrat. “What are these low-wealth counties going to do with the money? What jobs are they going to create?”
Senate Majority Leader Harry Brown of Onslow County defended his distribution plan, citing funding shortages that prevent school improvements in poor counties.
“I’m not saying that this sales tax piece will fix all the problems, but if we don’t take some kind of measure it will only get worse,” he said.
Overall, the Senate budget’s 2 percent spending increase is the right level, Berger argued as Wednesday’s debate wrapped up.
The state’s current budget surplus “really is a test for us of whether we’re going to go back to the old way of doing things, where if we’ve got money lying around, we’re going to spend it,” Berger said. “Two percent is enough to cover the growth in the state.”
Wake transit tax spared
The Senate voted unanimously Wednesday to remove a budget provision that would have prevented Wake County from having a half-cent sales tax referendum to pay for transit.
Wake commissioners are hoping to put a half-cent transit sales tax referendum on the ballot in 2016. But the Senate legislation would allow counties to increase the tax rate by only one-quarter cent at a time. That would have meant Wake would need two separate elections to have a half-cent transit sales tax.
A budget amendment proposed by Sen. John Alexander, a Raleigh Republican, inserted an exception for Wake to keep its existing authority for a half-cent sales tax increase. It would, however, require Wake to hold the referendum by December 2016, and the county wouldn’t be allowed to use state funds on any light-rail projects, which are not currently part of plans under review.
Wake County transit planners eliminated light rail – electric-powered trains that can run on tracks or on streets – from consideration earlier this year, calling it inflexible and expensive. Instead, they’re looking at “rail rapid transit” trains that would consist of rail cars called diesel multiple units – with each car powered by its own diesel engine.
Sen. Dan Blue, a Raleigh Democrat, said he backs Alexander’s change. “This fixes half of our problem,” he said. Blue proposed a second amendment that would have allowed Wake’s local sales tax to go as high as 2.75 percent – above the 2.5 percent cap in the Senate budget bill.
Blue’s proposal failed in a 18-30 vote, mostly along party lines. Sen. Bob Rucho, a Mecklenburg County Republican, said letting Wake have a higher tax than other counties wouldn’t be fair.
“We can have a system where every county can be treated the same” under the Senate budget, he said.