Under the Dome

NC House differs with McCrory on budget plans

Gov. Pat McCrory’s state budget proposal is getting some changes in the state House, which began rolling out its own version of a spending plan Thursday. Many of the budget’s key provisions – including pay raises for state employees and the latest plan on jobs – are expected later, likely Sunday or Monday.

Still, House members began outlining differences in spending goals, and many are the result of the state’s brighter revenue projections, which include a $400 million budget surplus for the current budget year, which ends June 30, and a bigger surplus for the next.

Some differences served to highlight policy disagreements between House Republicans, who hold a majority in the chamber, and McCrory, also a Republican. House members expect to pass a budget next week and send it to the Senate.

Major parts of the House’s plan were made public Thursday as spending committees met.

The House did not include funding for a plan by McCrory to move all state-run tourist attractions under the Department of Cultural Resources – a move that would shift the N.C. Zoo and N.C. Museum of Natural Sciences out of the Department of Environment and Natural Resources.

The House budget would ignore McCrory’s budget request for $4 million to design and build new DMV headquarters in Raleigh. House members also would cut the state’s gas tax deeper than what McCrory’s budget proposed.

Both the House and McCrory call for 1 percent to 2 percent cuts in higher education, with built-in exceptions for several smaller campuses.

Also on the chopping block: McCrory’s signature reform program for government efficiency.

The House budget also reverses cuts made during recent, leaner years. Some areas targeted for cuts in the McCrory budget – such as the UNC system – would see smaller cuts in the House version.

“The improved funding picture has allowed us to address a number of critical needs in our state,” said Rep. Nelson Dollar, a Cary Republican and the House’s senior budget writer. “The administration was having to do their budget at a time where we were having to plan for a $270 million revenue shortfall, and so they had to responsibly balance the budget within the known resources at that time.”

House budget subcommittees debated their sections of the spending plan for hours on Thursday. More long sessions are expected next week, especially regarding possible changes to tax policy and state employee salaries.

Asked about raises for teachers and employees Thursday, Dollar struck a cautionary note.

“Although the revenue picture came in strong and demonstrates a very healthy economy in North Carolina, the caution is that a large share of those additional funds are nonrecurring funds – they can only be used for one-time expenses,” and not salaries, he said.

Democrats disagree

Democrats were already blasting the budget proposal, saying it doesn’t do enough for education. In a news conference Thursday, House Democratic leader Larry Hall of Durham said the state is falling behind South Carolina in school spending.

“The challenge is just matching South Carolina, and that’s a pretty low bar,” he said. “This budget falls dramatically short of the budget we need to move North Carolina forward.”

Hall said the legislature should eliminate revenue triggers that are expected to lower the state’s corporate income tax rate. He pointed out that while the budget proposal increases spending for textbooks, teacher assistants and other school expenses, the total still falls short of some pre-recession levels.

Dollar dismissed the criticism. “It sounds like he didn’t even look at the budget before his comments,” he said of Hall. “Any fair-minded person would be very complimentary of our education budget.”

The initial proposal would increase K-12 school spending by $269 million – or about 3.3 percent – and add new funds for charter schools and teacher bonuses. A big chunk of the increase is $100.2 million to handle school enrollment growth, which is expected to add 17,000 students in the next school year.

Democrats on the budget subcommittees unsuccessfully sought to eliminate provisions related to private school vouchers and charter schools. But spending plans for the court system and other state agencies drew less criticism and quickly cleared committees.

More details on the way

Still, House Republicans weren’t thrilled with some of the governor’s budget requests – and left them out.

McCrory had requested seven new positions to “institutionalize” the work of the North Carolina Government Efficiency and Reform initiative, or NC GEAR.

“The General Assembly decided we weren’t going to do that,” said Rep. George Cleveland, a Jacksonville Republican, of the $872,000-a-year request.

While officials in the administration say NC GEAR pays for itself by finding savings in state government, Cleveland and other lawmakers are skeptical of the program’s impacts. “I just do not see it happening,” he said.

State Budget Director Lee Roberts has emphasized the requested positions are necessary for NC GEAR’s potential and that the program is by nature worth the expense.

House members also added spending items that weren’t in McCrory’s plan, with some targeted toward specific counties.

In the subcommittee dealing with agriculture and natural resources, Rep. Chris Millis, a Republican from Pender County, questioned why the budget included $200,000 for the American Legion World Series this year.

Informed by staff that it was going to be in Cleveland County – House Speaker Tim Moore’s home turf – the room erupted in laughter and Millis backed off, saying it was the first time he had seen the proposal.

The budget could look different after this weekend, when Republican budget writers polish up the document. They say the full draft will be posted late Sunday night or early Monday morning. Moore has said he wants to vote on the budget and send it to the Senate by the end of next week.

The quick deadlines have meant a grueling schedule for budget writers and the legislature’s nonpartisan staff, who worked until nearly midnight Wednesday to prepare for Thursday’s meetings.

“I wish I’d had this group with me when I was in business – I’d have made a hell of a lot of money,” Rep. Craig Horn, who leads the education budget, said of the staff.

Staff writer Craig Jarvis and Benjamin Brown of the N.C. Insider contributed to this report.

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