Senate Republican leaders announced Wednesday that they’ve agreed to remove controversial policy proposals for sales taxes and Medicaid from budget negotiations in an effort to speed a deal with the House.
House leaders and Gov. Pat McCrory have criticized those elements of the Senate budget, saying the proposals should be handled as separate pieces of legislation. Senate leader Phil Berger said his chamber will now pursue a separate economic development bill and a separate Medicaid reform bill.
That means the two chambers won’t have to reach agreement on jobs incentives, Medicaid changes or a controversial plan to change how sales taxes are distributed among counties, before they can pass a budget.
“We are at a point where the budget hasn’t been adopted and we’re trying to see what efforts can be made to move things forward,” Berger said. “It is our hope and our expectation that by doing that, we remove what has been represented as an impediment to our moving forward with the budget. That will leave us with the question of how much to spend.”
The House senior budget writer, Rep. Nelson Dollar of Cary, praised the Senate announcement but said “they certainly still have plenty of other policy elements in there.”
“It indicates some movement, which I think is a positive thing, but we certainly have plenty more work to do,” he said.
The legislature is facing an Aug. 14 deadline to pass a budget or approve another temporary budget if talks drag on. Berger said he’s hopeful that the final spending plan can be passed by that date.
Dollar was less confident Wednesday. “I think the enormity and complexity of issues that are still remaining in the budget would make that a very challenging goal,” he said.
Berger called on the House – mentioning Dollar by name – to work toward a plan with total spending of $21.65 billion, a 2.7 percent increase in spending. That number reflects population growth and inflation, he said.
By contrast, the Senate’s original budget featured $21.47 billion in spending, roughly a 2 percent increase. The House passed a $22.2 billion spending plan, which is about 5 percent above the previous fiscal year.
That means the Senate is willing to add $180 million to its budget if the House agrees to cut $500 million from its proposal.
Dollar, however, said he’s seen population and inflation figures that run closer to 3.5 percent. The $21.65 billion number floated by the Senate is “progress, but certainly we will need to make more progress in order to ensure that we are covering the needs of the state,” he said. “We’re coming out of a period of recession. ... We do have a number of areas that we have to give serious consideration to catching up.”
Berger wouldn’t say whether proposed personal and corporate income tax cuts would be removed from budget negotiations and placed in the separate economic development bill; his answer was “wait and see.” The Senate will put its proposal in House Bill 117, which passed the House months ago as McCrory’s “N.C. Competes” jobs incentives bill.
And while Medicaid changes won’t be part of the budget, Senate leaders say a plan to cut the program’s rising costs remains a key priority for this legislative session. “We think we are closer than we’ve ever been,” Berger said.