Months before Gov. Pat McCrory set about building the spending proposal he’s set to promote on Thursday morning, its foundation shifted.
A new state law has ended the decades-old practice of automatically building in numbers that account for expected growth, such as covering the cost of more children attending public schools each year. Also no longer part of the beginning, or baseline, of the budget is the cost of covering additional people expected to enroll in Medicaid, the government health insurance program.
Those items are now debatable, instead of being included automatically based on regular forecasting.
Budget writers said they like the change in how the budget is built because it will lead to what they said is more accurate reporting later on of spending decisions. Parts of the budget debate and decision-making often end up as fodder in political campaigns.
The state education budget was a major issue in the U.S. Senate race last year, with Democrats claiming Republicans had cut education by $500 million, when spending of actual dollars had increased. The budget cut Democrats referred to was to the continuation budget, which is a spending plan that takes into account and builds in inflation and forecasts for such things as enrollment growth that government is obligated to cover.
Legislators last year passed a law to stop the use of a continuation budget as a starting point. Critics of the new way of budgeting say that it will make it harder for growing school districts to plan – and that it is more difficult for the public to track state progress on spending priorities.
The money school districts receive for enrollment growth translates into how many more teachers they can hire.
That will now be in the section of the budget that’s open to debate, called the expansion budget.
Legislators sometimes fund expansion items, but it’s not guaranteed. That’s a worry for growing school districts, which say that the new way injects uncertainty to their own planning.
Removing the cost of enrollment growth from the budget baseline makes hiring tricky for districts such as Wake County that have students in year-round schools returning to classrooms in July, said Wake Board of Education Chairwoman Christine Kushner.
“The earlier we know, the better off we are,” she said.
The state budget often isn’t approved by the time year-round schools start.
Wake County schools and the N.C. School Boards Association are asking the legislature to change budgeting for student growth back to the way it was.
“This is an essential tool for school districts to successfully plan for the next school year,” the association wrote in a statement of its legislative agenda.
State budget writers say the new way will offer a clearer view of state spending.
People talk about budget cuts “when we’ve spent more money,” said Sen. Harry Brown, co-chairman of the chamber’s budget committee. School districts don’t have to worry about the legislature failing to pay for enrollment growth, said Brown, a Jacksonville Republican.
The cost of paying for more people enrolled in Medicaid is also excluded from the budget starting point.
The Medicaid budget and how much should be put aside to account for details such as enrollment growth have been major sticking points in budget negotiations. A disagreement between the House and Senate last year over Medicaid spending was one of the reasons the budget was not finished by its June 30 deadline.
Adam Linker, co-director of the N.C. Health Access Coalition, said reducing the budget baseline lowers the bar for legislators, letting them take credit for spending increases they would make anyway. The coalition is part of the left-leaning N.C. Justice Center.
“In some ways, it’s less transparent,” Linker said. “It’s even more important for the public to watch the funding process.”
Sen. Ralph Hise, a Republican from Spruce Pine who helps guide development of the Medicaid budget, said pulling out costs for Medicaid enrollment and making them part of the expansion budget increases exposure of cost increases in the entitlement program.
“It does put more emphasis on what we have to have in the Medicaid budget each year,” he said.
Gov. Pat McCrory presents his proposed budget on Thursday at 11 a.m. Here are some questions and answers about the process.
Q. Is this a final decision?
A. No. McCrory’s budget is a starting point, and it’s written without knowing for sure how much money the state will have to spend next year. Revenue figures will be available in April, after the tax-filing deadline.
Q. What happens next?
A. The House will write its own budget.
Q. Then what?
A. The Senate writes a budget, using the House budget as a guide.
Q. And so that’s it?
A. No. With different versions passed by each chamber, House and Senate budget writers must meet to work on a compromise. McCrory will be working all along to see that his priorities are funded in the final version.
Q. Then it goes to the governor?
A. Once both the House and Senate approve a budget, it goes to McCrory. He can veto the budget, but the legislature has the ability to override a veto.
Q. What’s the time frame for all this?
A. Legislators and the governor aim to have a new budget finished by the time the new fiscal year starts on July 1. Lawmakers may miss that deadline, but they would have to approve a stopgap budget to keep government running if negotiations extend past July 1.