Getting the Legislative Job Done, Eventually

By Nelda Holder –

A third legislative “overtime” act to continue funding government while the legislature argues over the state budget has added 18 more days to get the job done.

The requisite biennial budget was supposed to be approved by the end of the state’s fiscal year, June 30, 2015. The first extension was for August 14, the second for August 31, and the current target date is September 18. If that proves to be the magic date, the extra cost of keeping the governmental body functioning will total almost $1.5 million.

And although there is now an agreement between the NC House and Senate for a $21.735 billion budget target, a heavy overlay of policy issues is forcing the ongoing negotiations and prolonging the session—now expected to be the longest in 10 years. The current draft of the biennial budget is 508 pages long. The 2013 budget (approved July 25 that year) was 340 pages, and the 2005 budget (approved August 13) was 364 pages.

The proposed 2016 budget includes a small decrease in individual income tax for residents, from 5.75% to 5.5% (diminishing the rate by one-twenty-third, or 4.3%); and a corporate tax deduction of a full percentage point, from 5% to 4% (meaning the rate is diminished by one-fifth, or 20%). The budget also includes such varied dictates as siting requirements for swine houses and lagoons; powers of arrest for the Department of Natural and Cultural Resources and Department of Environmental Quality; types of scenic rivers; limits on certain environmental rules; and a phase-out of the noncommercial leaking underground storage tank fund.

One of the most publicly contested differences between the House and the Senate spending proposals has been the Senate’s plan to cut funding for some 5,000 teaching assistant positions and eliminate driver’s education funding in public schools statewide. A tentative compromise has brought that funding back to the table, but the agreement has not been finalized. Meanwhile, public schools have opened for the 2015-16 budget year without knowing what will ultimately be allotted for those two programs.

Also moving forward are such policy decisions as continuing corporate tax cuts while refusing—again—to give state teachers and state employees a raise in salary (although there may be a small, one-time bonus for these workers, and starting teachers may see a base salary increase). But both House and Senate have proposed sizeable cuts to the state’s pre-kindergarten program—$1.4 million from the former; $4.1 million from the latter.

In other areas, both House and Senate budgets fail to expand Medicaid; do not include funding for drug treatment courts; raise tuition at community colleges; and offer the effect of reducing state revenues by $652 million and $950 million respectively over the next two years. (Figures are taken from a Budget and Tax Center report from the NC Justice Center, a nonprofit advocacy organization focused on poverty in North Carolina.)

Removed from the budget negotiations but still being argued as separate legislation are such controversial proposals as changing the management of the state’s Medicaid program (Community Care of North Carolina) from what North Carolina Health News calls a “national model”—with the slowest cost-increase rate in the nation—to a private, corporate managed-care contract program.

A second hot-button issue has been the proposed change in sales tax revenue distribution (currently 75 percent retained by county of origin with 25 percent distributed on a per-capita basis statewide). The proposal originally introduced in House Bill 117 called for an 80 percent distribution based on county populations across the state, with 20 percent being retained by county or origin, severely cutting funding in cities and counties of origin. The proposal has since been revised to a 50-50 distribution plan.

The local effects of the latest proposal for Buncombe County would reduce funds retained from a projected $65.8 million in 2016-2017 to approximately $60.3 million, for a $5.5 million loss of income. The city of Asheville would move from a projected $20.8 million to $19 million, for a $1.8 million loss. (Asheville residents are already facing a property tax increase that is partially attributed to the $1.5 million loss in business privilege license fees at the hands of the Legislature.)

Other municipalities in the county would see these contrasts based on the 50-50 proposition: Biltmore Forest, $1 million under current allocation, $.9 million revised; Black Mountain, $1.5 million current, $1.4 revised; Montreat, $.39 million to $.36 million; Weaverville, $1 million to $.98 million; Woodfin, $.8 million to $.75 million.

Interestingly, this latter issue became part of what was originally a simple six-page bill called the North Carolina Competes Act, having to do with economic development and the renaming of the One North Carolina Fund to the Job Growth Reimbursement Opportunities, to a 16-page bill including the sales tax allocations. The bill was still in conference committee at this writing.

Read Nelda Holder’s blog, www.politicallypurplenc.com