May 2, 2003

SENATE PASSES BUDGET IN TWO WEEKS!

In this update:

• Senate Passes Budget in Just Two Weeks
          Senate Raises More Revenue
          Senate Restores Some House Budget Cuts
          Programs May Still Be At Risk
• Education Instead of Long-Term Suspension (HB 1135) Passes House

SENATE PASSES BUDGET IN JUST TWO WEEKS

In perhaps the quickest turnaround in the last 20 or more years, the Senate prepared and passed its version of the budget exactly two weeks after the House completed its budget. The primary political strategy of both parties and houses this session appears to be to get the budget completed as early as possible. This gives little time for public debate, but does respond to public and local government criticism about past year’s late budgets (not completed until well into the fiscal year) and long sessions. Because of the huge budget deficit – over $1.5 billion – for the third year in a row, the House raised some new revenue, but not enough to avoid numerous cuts to critical programs. In spite of the quick turn-around, the Senate did vastly improve upon the House budget. The Senate raised significantly more revenue than the House, which is what allowed them to restore many of the House cuts to HHS programs and other areas. Unfortunately, however, the final revenue numbers following April 15 tax-day are expected to be significantly lower than what is included in both the Senate and House budgets and this could necessitate a further round of deep cuts in programs or significant increases in taxes. The House rejected the Senate’s budget and so each body will soon appoint members to negotiate a final budget. More chances will come soon to make your voice heard in the budget process.

In addition, the Senate also implemented $6.5m in new fees – such as an increase in State Park and Recreation use fees – on top of the $43.4m increase in fees implemented in the House budget. While it is essential for the legislature to raise more money in order to fill part of the budget deficit and thereby reduce cuts to essential programs and services, almost all of these new sources of revenue will affect low and middle-income tax payers more than the wealthy. Legislators must remain mindful of tax fairness and not turn primarily to low income people to pay for services and programs for everyone.

Where Did the Money Go? Senate Restores House Budget Cuts

The Senate was able to restore funding to many programs that had been cut in the House budget. Over half of the new $125m raised went to the Clean Water Management fund. The Senate also restored $21.9m that the House cut in HHS programs. Other HHS changes in the Senate budget meant a net gain in HHS spending of only $14.8m, however, when compared with the House. Less was done to restore House cuts to Public Education. All of this ignores that for another year children and older adults, the two most vulnerable populations, are growing in number at a faster pace than the rest of the population and that results in a greater need for state services. State programs simply are not keeping up with need. Nonetheless, there was much relief all around that the Senate did not make many of the devastating cuts found in the House Budget.

The Senate also fully funded the NC Health Choice program and took the other cost-saving measures recommended by the NC Institute of Medicine (like moving children under 5 into Medicaid) to ensure the program stays open. In addition, fully funding Medicaid removes the violation of federal law that put the entire $150 million of federal funding for the Health Choice program in peril. Finally, the Senate declined to cut mental health services and in fact put $5 million more in the trust fund for mental health. (A $1 million shift was made at the last minute from MH program funding to eliminate other fee cuts, but this seems simply to be a tactical move for coming negotiations with the House.)

While the Senate restored funding for public school students with Limited English Proficiency, they took a bigger cut from discretionary funds sent to local school systems. The net effect could be that while LEP funding was maintained in the state budget, local school systems may still have to cut the their own funds going toward these same students. The House cut $42m and the Senate $44m from this discretionary funding to local school systems. The Senate and the House both cut per pupil funding for public school students who are at risk of failing. Funding for teacher assistants was cut $25 m in order to spend the money on reducing second grade class size. The problem is that class size is determined by system-wide ratios and any parent of a first grader knows, that just because first grade class size was reduced to 1:18 last year, your child (as is the case with mine) may be sitting in a class of 23 students or more. That class would be absolutely unmanageable without a teacher assistant. Until something changes, the reality is that teacher assistants remain needed at the same time class size reductions are phased in on paper.

State Employees and Teachers see a hodge-podge:

Teachers received a one step pay raise in both budgets and the Senate gave state employees a 1.81% raise, roughly equal to the teacher’s step increase, and somewhat more than included in the House budget. At the same time, the Senate picks up million of dollars by restricting eligibility to the state disability plan for teachers and state employees. This will mean many of these workers will no longer get coverage when they become disabled.

Programs May Still Be At Risk

Now the House and Senate begin to negotiate one final budget for the state. In the best of times, persons concerned about programs cut in either budget would have to let their representatives know of their feelings to ensure those programs are not cut. Senate Republicans made it clear that they did not support the Senate budget’s tax increases and House Republicans may do the same. So far co-Speaker of the House Richard Morgan has been able to deliver about 15 votes or more for the House budget, even with fee increases and freezing some taxes that are set to end. These votes were essential to the House Budget’s passage. He may not be willing or able to deliver these same votes, however, for additional freezes and increases included in the Senate budget, at least as things stand now.

But these are not the best of times. Next week legislators will get an update on how much revenue is coming in post tax-day, April 15. The rumors are that legislative fiscal staff are going to notify legislators there will likely be over $200 million – and possibly as much as $400m – LESS in revenue next year than they thought when creating these budgets. In other words, legislators will have to cut that much more from the budget or raise that much more in taxes in order to balance the final budget plan. If this is taken all in cuts, clearly it would be devastating to programs, state employees and North Carolinians.

So don’t think the Senate has saved these critical programs for good. It is time again for all legislators to know that cutting funds for Medicaid, Adult Home Specialists and child care subsidies is no way to balance the budget.

(TOP)

Education Instead of Long-Term Suspension (HB 1135) Passes House

Reps. Jean Preston (R-Carteret), Linda Johnson (R-Cabarrus), Earline Parmon (D-Forsyth), and Martin Nesbitt (D-Buncombe)

In addition to the Senate completing its budget this week, all bills that do not include an appropriation or tax had to pass one house or the other before the end of Thursday. Otherwise, they would be ineligible for consideration until the next biennium in 2005. Many important bills and bills of concern passed this week, but I will only discuss this one today. House Bill 1135 would require the Department of Public Instruction, in conjunction with the Department of Juvenile Justice and Delinquency Prevention and the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, to develop a State plan to ensure that students recommended for long-term suspension receive an appropriate education during the suspension. Currently, suspended students are put out on the street where they often get into serious trouble. In addition, missing so much educational time means they are less prepared for end of grade tests and that they may fail due to days out of school. Many spoke eloquently in favor of the bill either in committee or on the House floor including sponsors Jean Preston and Martin Nesbitt, as well as, Deborah Ross, Bernard Allen, and Rick Glazier.

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