Under the Dome

As deadline nears, will temp budget have ‘pink slips’?

Lawmakers were still working over the weekend on details of an expected bill to put into place a temporary state budget. It would keep the state running while the House and Senate work on reaching an agreement about the major spending plan for the next year.

A vote on a “continuing resolution” is expected Monday or Tuesday.

The new fiscal year begins Wednesday.

While it is temporary, the deal should provide glimpses of how things are going on the budget front. The CR, as it is called, should have an end date, for example, which would provide a new deadline for the larger state budget talks.

And some lawmakers have said the CR could make some key decisions about teaching assistants in the state. The Senate budget proposes to cut TAs in favor of hiring more teachers for lower-grade classrooms. The House has not supported TA cuts.

One advocacy groups, Progress NC Action, was raising money over the weekend in an effort to highlight the issue this week in partnership with an education-focused group, Aim Higher Now. The groups want to produce “pink slips” to highlight the possible job losses.

“Slashing the majority of state funded TAs is a massive cut,” Progress NC Action wrote in a solicitation for money. “People need to know about it.”

It’s expected that legislators are trying to resolve that issue before school districts begin hiring for the new school year.

Sen. Terry Van Duyn, an Asheville Democrat, said last week a deal on a continuing resolution was elusive because of the TA plans.

“We could not push through a continuing resolution because Senate Republicans insist on cutting TAs and House does not,” she wrote on Twitter.

Concerns mount on sales tax plan

Some lawmakers continue to be wary of a plan, passed in the Senate, to shift around sales tax proceeds.

Some House members and representatives from North Carolina cities are expressing doubt about the reliability of the General Assembly staff’s projections about the financial impacts of the Senate’s sales tax redistribution plan on individual county and city budgets.

The plan, which would generally redirect more sales taxes to rural areas, is among the most controversial elements of the Senate budget. The dispute about the revenue projections stems from the fact that the Fiscal Research Division used a 3.5 percent growth rate statewide to estimate potential impacts on individual counties.

Some counties expect higher sales tax growth rates than that in coming years, which, they say, could lead to greater negative financial impacts. Critics also said the numbers provided by the staff rely on the passage of county sales tax referendums, which might never materialize, and thus overstate positive impacts.

If the numbers are off, cities and counties will face sizeable budget shortfalls.

Rep. John Bradford III, a Mecklenburg County Republican, ticked off more than a dozen counties in a meeting last week that stand to lose revenue under the Senate plan, according to the staff projections.

“The challenge is if your county (has been projecting) to have a growth rate greater than 3.5 percent, you’re in a lot more trouble than this policy document really even suggests,” he said. He suggested the impact on Mecklenburg County would be greater than the $12 million the staff estimated for 2019-20.

“A vote for this budget at least in my view is really going to turn out to be a monster (tax) increase for the people back in my county because we’ve got to go plug this hole,” Bradford said.

Fiscal Research Division employees have said their projections aren’t intended to be budget documents for use by cities and counties, but instead show the broad policy implications of the proposed changes.

“I think that any representative should be able to look at the document and find out whether the areas they represent are negatively or positively affected by the change,” said Barry Boardman of the Fiscal Research Division.

But some legislators want more precise estimates on how the redistribution will affect the counties they represent before voting on the changes.

Rep. Susi Hamilton, a New Hanover County Democrat, asked the division in an email whether it could input historical sales tax growth figures from her counties, New Hanover and Brunswick, into its spreadsheets to try to get a truer picture of how the changes would affect them.

Boardman responded that staff was asked to create a model that incorporated conservative assumptions to assist policymakers on how distributions would change, positively or negatively. He added that order of magnitude would change under different growth assumptions, but that the change “would not be significant enough to alter policy decisions.”

“To summarize, trying to produce county-by-county growth estimates would be very difficult and time-intensive, and would not provide any significant, additional insight with respect to the policy decision to change the local sales tax distribution,” Boardman wrote.

Hamilton responded in an email, saying Boardman’s unwillingness to run the historical numbers was “troubling.” She said North Carolinians have a right to more reliable projections.

“How on Earth are we supposed to evaluate this if staff can’t tell us what the long-term financial ramifications are going to be?” she said in an interview.

Boardman wrote in an email to Hamilton that plugging in historical data wouldn’t necessarily produce more accurate projections and that it was beyond the scope of the Fiscal Research Division to provide information on 100 counties and hundreds of municipalities.

Sen. Tom Apodaca, the Senate’s influential Rules chairman, released a statement backing the legislative staff. “Given the Fiscal Research Division's excellent track record, it’s incredibly disappointing when legislators attack their own nonpartisan staff for providing their best estimates on fiscal issues,” he said. “It’s like (former baseball manager) Earl Weaver running on the field and kicking dirt on the umpire whenever he disagrees with a call.”

J. Andrew Curliss, Colin Campbell and Patrick Gannon

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