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THE
NC HOUSE PASSES IT'S VERSION OF THE BUDGET
The House met for hours on Monday and Tuesday and finally passed it's
version of the state budget for the fiscal year which began July 1 and
will end June 30, 2003. In a typical House display of fairly open debate,
over 20 amendments were heard and over a dozen adopted. This was after
days of debate on the budget the week before in the full Appropriations
committee. The House budget is a definite improvement, in many ways,
over the Senate's. The House also raises new revenue in a more progressive
manner than the Senate. Nonetheless, the House, just like the Senate,
does not raise enough revenue to avoid devastating cuts to many critical
programs. Below is a summary of the House budget and a comparison of
the Senate, House and Current TANF block grant plans. Shortly the NC
Budget and Tax Center will release a more detailed summary of the House
budget which can be obtained at www.ncjustice.org.
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THE GOOD
The House
deserves sincere praise for raising $901 million in revenue for this
year's budget without increasing regressive taxes which hurt lower income
individuals more than wealthy individuals or businesses. The Senate
Revenue Plan would add another half-cent to the sales tax in order to
raise revenue, which hurts the lowest income households the most. The
House instead relies on closing corporate tax loopholes. Both bodies
also take money from various state trust funds (highway trust fund,
tobacco settlement trust funds) and raise some fees, among other things.
The House's revenue package is far more progressive and fair.
The House budget cuts $102 million less and appropriates more money
to new items in Health and Human Services (HHS). The House also appropriates
more new money for Public Education items than the Senate.
Some
(but not all) Senate HHS and Public Education cuts that the House
Budget Avoids:
•
No
reduction to the CAP-DA program;
•
No
reduction to the CAP-MR/DD program;
•
No
cut to Area Mental Health Authorities;
•
No
cut of certain dental services to adult Medicaid recipients;
•
No
reduction of dental reimbursement rates paid under Health Choice;
•
No
cut of 166 vice principals;
•
No
cut to State Adult Care Home Specialist Fund;
•
Reduced
cut to Medicaid Case Management Services;
•
Reduced
cut for Local DSS Staff who provide many social services.
Some
(but not all) increased or new funding in the House HHS and Public
Education not found in the Senate:
•
$18.8
million for child care subsidies to reduce waiting list of about
20,000 (there is also $4 million cut in TANF for child care subsidies
which the Senate also makes);
•
$7.7
million to Health Choice so that enrollment will not have to be
frozen in September;
•
$42
million to reduce Kindergarten and First Grade class size;
•
$4
million supplemental funding for Low Wealth School Districts;
•
$28
million for expansion of More At Four preschool program.
THE
BAD
In spite of these very good efforts on the House's part, the fact remains
that the House did make $1 billion in cuts to programs and positions.
This means deep cuts have been made two years in a row. Some of the
cuts in HHS, Justice and Public Safety and Public Education are devastating.
Some
(but not all) House Cuts of Particular Concern:
•
$66
million in Public Education cuts to be made by Local School Systems
using their discretion - up from $25 million cut in Senate budget;
(budget language discourages cuts that would affect the classroom
or program for at-risk students, however, these cuts can be made,
and are likely, with state approval);
•
$3.1
million in mentor pay for first and second year public school teachers
- same as Senate cut;
•
Over
$20 million in cuts to Smart Start - about the same as the Senate;
•
2.9
million cuts to State Psychiatric Hospitals resulting in loss of
61 staff - same as Senate - the state hospitals are already under
federal investigation for understaffing;
•
$1.5
million in contracts with various direct health care providers for
women's and Children's health - same as Senate;
•
20%
reduction in funds for Dispute Settlement Centers this year and
another 10% reduction for next year - Senate takes 16% reduction
for this year.
•
$280,000
cut that eliminates three positions in family court - Senate cuts
$400,000 and seven positions;
•
$830,000
cut eliminating fifteen juvenile court counselors - Senate cuts
$1.3 million and 26 court counselors;
•
$1.5
cut closing three multi-purpose group homes (an alternative to juvenile
detention facilities) - Senate cut only one of the homes;
•
$450,000
cut in Juvenile Crime Prevention Councils - Senate cuts $890,000.
Numerous
deep cuts are made to child protection and welfare programs including:
•
$1.2
million from Families for Kids, which would eliminate the program;
•
$500,000
from Intensive Family Preservation,
•
$865,000
from Family Resource Centers,
•
$250,000
from the Community Child Protection Team Grant.
Deep cuts
were also made to teen pregnancy prevention programs which are described
further below in the discussion about the TANF block grant.
THE UGLY
The bottom
line is that neither the House nor the Senate raise enough revenue to
avoid devastating cuts to programs and services. In addition, much of
the revenue the House and Senate do find is "one time money,"
that is, they are only available this year for the state to use. Unfortunately,
these one-time funds, known as non-recurring funds, are being used to
pay for many recurring or ongoing expenses. The budget is also balanced
by one time cuts to non-recurring expenses and some new taxes implemented
in 2002 that are set to sunset, or end, at the end of the 2003 state
fiscal year. All of this means, that the House budget and revenue plans
may be seeting North Carolina up for a $1.5 billion budget deficit for
the next fiscal year. While this is a very ugly result, it is better
than making more cuts to critical programs. The missed opportunity,
however, is to raise more revenue from progressive sources that will
grow over time. Legislators would not be forced to chose between critical
programs year after year, if the tax system was keeping up with the
population growth and needs of the state.
This very discussion came up over and over in debate, when Republican
legislators tried to take monies from Smart Start in order to fund health
services for children and older adults. At one point during the House
floor debate, Representative David Redwine (D-Brunswick) responded to
Representative Sam Ellis (R-Wake), "If you care so much about this
why don't you enter a bill to raise another $100 million to fund this
[referring to various health programs]and I would be happy to support
you." Redwine was referring to the fact that House Republicans
voted against bills to raise more revenue, making it much harder for
the slim Democratic majority to do so. Nonetheless, the Appropriations
leaders, mostly Democrats, worked hard to restore significant amounts
of funding to health programs resulting in $102 million in fewer cuts
to HHS. Redwine also expressed his frustration that Republicans had
not themselves put forward a plan to make enough cuts to balance the
budget.
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MORE
CUTS INCLUDED IN THE TANF BLOCK GRANT
While the proposed budget cuts are sometimes quite deep, the proposed
Temporary Assistance to Needy Families (TANF) block grant plan is another
funding blow to several programs. [Click here for A CHART COMPARING
HOUSE, SENATE AND CURRENT TANF BLOCK GRANT PLANS] Each year the legislature
must approve, in the budget, a plan for how it will spend several different
federal block grants. The TANF block grant is one of the larger, more
flexible and more complicated spending plans.
There is about $25 million less in TANF funds to allocate for 2003 than
in 2002. This meant many programs must be cut. In addition more funds
were needed for cash assistance, due to higher caseload during the recession.
In addition, the state is paying part of a federal penalty (called SACWIS
Payback) with TANF money, leaving less money for current programs. The
state replaced some cuts in TANF funds with money from other sources
and this is so noted on the attached chart.
Teen
Pregnancy Prevention and Reduction of Out of Wedlock Births TAKE SUBSTANTIAL
CUTS
•
$2
million cut eliminating all TANF funding for Teen Pregnancy Prevention
- Senate cut all but $600,000
The House does allocate $650,000 for this purpose in recurring state
funds.
• $1.4 million cut eliminating
all TANF funding for Reduction of Out-of-Wedlock Births - Senate
cut all but $1 million
The House does allocate $700,000 for this prupose in recurring state
funds.
The prevention
of out-of-wedlock births is one of the four primary goals of TANF and
the House budget would remove all TANF funding from such efforts. The
House cut would result in the closing of 13 our of 68 Teen Pregnancy
Prevention Projects. Four programs had already been closed after cuts
made last year. Annually the Out-of Wedlock Birth funds prevent approximately
900 pregnancies and out of wedlock births, saving over $9.5 million
in Medicaid expenses. These cuts will also result in a funding cut to
the Adolescent Pregnancy Prevention Coalition of NC.
TANF Chart comparing
current, House and Senate TANF plans.
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