September 6, 2002

The budget conferees began meeting this morning - Friday - in unannounced but "open" meetings to negotiate the details of the budget. THe Health and Human Services, Education and Justice and Public Safety budgets have the most differences (between House and Senate versions) to be worked out and so those committees met nearly all day. The full Appropriation Committee Chairs (the "Big Chairs") had already sent the subcommittees a list of several items that they had resolved previously in closed door meetings. For example, the Big CHairs had decided to take the Senate cut of $25.2m from public schools instead of the House cut of $66m. (Public Schools have discretion over how to make this cut within their budget.)

This meant the subcommittee had to resolve whatever was left of the money items and then had to resolve any differences in the special provisions (budget explanatory language). When I left at 4 the HHS Subcommittee had decided most, but not all, money items and is going to meet at 9am on Monday to decide special provisions and any remaining money items. The Education Subcommittee had decided their money items but still had overspent about $8 million and they were going to stay to try to resolve special provision language. On the whole, the committees were frequently going with the smaller cut, though the education committee had found $20 million from investments earned on the "escheats account" that they could use to cover some of their deficit.

Where is the money coming from? When will we see the whole budget and revenue picture?

Well the plan is to roll the full budget out on Wednesday or Thursday and include within it the revenue raising bill language. The Governor continues to press hard that the budget cannot use Hurricane Floyd money or Golden Leaf Trust fund dollars, which means, the legislature needs a few hundred million more to get a ballanced budget. This additional money can come from a new revenue source or more cuts. Rumor has it that the budget will include most of the House revenue plan (closing tax loopholes etc.) but not an increase in the sales tax or reimbursement to local governments for funds they have lost. Rumor also has it that the budget would include the lottery referendum bill and this, presumably, is the new revenue source that is the alternative to more cuts. It is very unclear that such a budget can pass in the House. Even if it does pass in the House and the referendum passes, the Governor would still have to call the legislature back for a special session to pass the actual lottery law. It is unclear that the lottery could be implemented quickly enough to raise enough money this budget year to fill the hole. SOOOO.... what next? The bank tax loophole, the cigarette tax, increasing income taxes, and/or increasing corporate tax rates are all still valid revenue options that could be implemented and could raise hundreds of million of dollars, not just now but also in future years!

IT IS TIME TO CONTACT YOUR STATE REPRESENTATIVES AND ASK THEM TO

1) RAISE ENOUGH REVENUE TO PROPERLY RUN STATE GOVERNMENT;

2) FUND CRITICAL HEALTH AND HUMAN RESOURCES, HOUSING, EDUCATION AND OTHER PROGRAMS THAT ARE ESSENTIAL FOR THE RESIDENTS OF THE STATE.

Go to the Covenant with NC’s Children website and send an e-mail message or letter to every member of the Committee with a few clicks of your mouse. Use the suggested text or compose your own message. It ’s easy and quick.

MORE NEXT WEEK. SORRY THIS IS SO BRIEF.

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