Several top Republican lawmakers say they likely won’t reach a budget deal by an Aug. 14 deadline – a delay that will prolong uncertainty for public schools and other agencies that depend on state funding.
Since the last fiscal year ended June 30, the state has been operating under a temporary budget that keeps government running at current spending levels.
But the House and Senate budget writers tasked with negotiating a permanent spending agreement haven’t met yet, prompting a rebuke from Senate Rules Chairman Tom Apodaca during a floor speech Wednesday.
Apodaca, a Hendersonville Republican, called on the House’s top budget writers to meet soon with their Senate counterparts. He criticized the House for instead conducting public hearings to discuss differences between the two budget bills, including a two-hour meeting Wednesday afternoon.
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“They’re too busy going over our budget to sit down with us and discuss the differences – I guess they haven’t found those out yet – and negotiate and move forward,” Apodaca said. “I’d like to encourage the House appropriations team to join with the rest of us, and let’s get home before Labor Day.”
Rep. Chuck McGrady, also from Hendersonville, is one of the House budget co-chairs. He noted that finance chairmen from both chambers have already met to discuss taxes and revenues.
“We really can’t go down the budget road until we go down the finance road,” he said, adding that Senate budget co-chairman Harry Brown’s absence this week has prevented a meeting. “I don’t believe there’s any lack of willingness to hold meetings.”
McGrady said he expects an additional temporary budget will be needed because the talks will continue past Aug. 14. Apodaca was a bit more optimistic, saying prospects for a mid-August agreement are “looking not too good, but I think we can get there.”
The legislature hasn’t extended budget talks past mid-August in at least a decade. That’s when the school year starts in many counties, and school districts are already hiring teachers and teacher assistants without knowing how much money they’ll have.
“The districts are on a wait-and-see basis,” said Ed Dunlap, executive director of the N.C. School Boards Association. “They don’t know how many teaching positions or teacher assistant positions they’re going to have to fill. It’s really a guessing game.”
The Senate budget calls for cutting elementary school teacher assistants and instead hiring more teachers to reduce class sizes. The House wants to fund teacher assistants at the current levels.
Uncertainty in Wake
The uncertainty prompted strong criticism from Wake County Schools Superintendent Jim Merrill, who addressed House members during a hearing Wednesday. He pointed out that the new school year has already started for his county’s year-round schools.
“Our students cannot wait for the various levels of government to conclude a budget negotiation,” Merrill told legislators. “You’re currently debating whether to provide money that’s already been spent on tens of thousands of students. We simply can’t un-spend that money once negotiations end and the final budget is decided.”
The debate about teacher assistants, Merrill said, is particularly troubling because Wake has 753 already in year-round schools and an additional 1,850 employed for traditional calendar schools, which open Aug. 24.
In addition to teacher assistants, the two chambers must reach agreement on sweeping Medicaid changes and a variety of tax changes – policy items in the Senate budget that some House leaders say should have been separate bills.
“It makes it hard to unravel the budget and get to a place where we’re just negotiating dollars,” McGrady said.
Some extra money
The unusually long budget process comes as the state’s revenue is rebounding from the recession. The last fiscal year ended June 30 with a $445 million revenue surplus, giving legislators more money to spend than they had in the lean years of the recession.
“Now we have $450 million more dollars to fight over,” Senate Finance Chairman Bob Rucho said, joking.
Democrats and liberal advocacy groups have been critical of the budget delays, and some said legislators shouldn’t have gone on vacation during the first week of July.
“A lot of this has to do with politics and personalities,” said Rep. Tricia Cotham, a Mecklenburg County Democrat. “Our delay really creates obstacles for so many people and families throughout North Carolina.”
But another Democrat, Rep. Rick Glazier of Fayetteville, praised House leaders for taking more time. “The House is showing admirable patience in negotiating and working toward what I hope will be a good deal for the public,” he said.
When that deal will happen is anyone’s guess.
“I don’t want to play Santa Claus here,” Rep. Mickey Michaux of Durham said.
“You’ll be home for Christmas,” senior budget writer Nelson Dollar of Cary assured him.
Budget sticking points
Medicaid: Both the House and Senate have competing plans for controlling the costs of Medicaid, and with the Senate including its proposal in the budget bill, legislators must reach an agreement.
Taxes: The Senate budget includes cutting personal income taxes and adding sales taxes to services such as veterinarian visits and auto repair. The House has not proposed any similar tax changes.
Revenue distribution: The Senate budget features a controversial plan to change how sales tax revenues are distributed among counties. By switching from a point-of-sale distribution to a population-based allocation, rural counties would get a boost while some urban counties and others heavy with tourism could see less money. The plan has garnered strong opposition from Republicans in the House.
Spending levels: The House budget would increase overall spending by about 5 percent from the previous fiscal year. Senate Republicans say that hike is too big; their budget has an increase of about 2 percent.
Budget delays common
State lawmakers are supposed to pass a budget by June 30, when the fiscal year ends. But that doesn’t always happen. Here’s when both chambers have approved a two-year budget deal in past sessions:
2013: July 24
2011: June 4
2009: Aug. 5
2007: July 30
2005: Aug. 11