Legislators are now
talking about adjourning around the end
of the month after the House on
Wednesday, by a vote of 105-9, passed a
$14.02 billion budget for the coming
fiscal year and sent the bill on to the
Senate. The document achieves what many
thought would be all but impossible given
the state's tight revenue situation --
funding all the major goals set by Gov.
Jim Hunt and legislative leaders, paying
off the remaining court-ordered tax
refunds and doing it all without raising
taxes.
Some creative financing tactics were
used, including one that saves $275
million in the coming fiscal year by
changing the way the state pays teacher
salaries. In prior years, the state added
the cost of July and August teacher
salaries to the budget -- even though the
fiscal year ends in June -- to account
for teachers who want their annual
salaries divided into 12 paychecks
instead of 10.
Gov. Hunt was pleased with the budget,
saying in a statement that "the
budget bill . . . puts our children,
families, schools and the environment
first in a difficult budget year. It will
provide full funding for Smart Start and
will keep us on track to raise standards
for teachers while raising their salaries
to the national average. I look forward
to working with the Senate to keep our
focus on our top priorities and to move
quickly to pass a final budget."
One of the few public complaints came
from the N.C. Economic Developers
Association. Don Kirkman, president-elect
of the NCEDA, said the budget doesn't
contain adequate funding for industrial
recruitment. “The House budget . . .
calls for cutting the Industrial
Recruitment Competitiveness Fund in half,
from $2 million to $1 million. This is a
serious blow to recruiting new industry
this upcoming year. The return on
investment from new employment and tax
revenues is much greater than the amount
of the fund.”
Kirkman urged his members to contact
their senators to urge them to restore
full funding of the industrial
recruitment fund.
Approval of the budget bill by the House
came after more than seven hours of
debate during which several amendments
offered by Republicans were narrowly
defeated. Most attention centered on a
provision in the legislation expanding
the N.C. Court of Appeals from 12 to 15
judges. The three new judges would be
appointed by Gov. Hunt and would remain
on the bench until standing for election
in 2004. Some GOP House members said that
amounted to packing the court by a
lame-duck governor.
An amendment offered by Rep. Art Pope
(R-Wake) to drop the three new judges
from the budget failed 57-55. Rep. Joe
Kiser (R-Lincoln) offered an amendment to
fund the new judges but have them
appointed by the next governor; it failed
59-53. Some other amendments, which also
failed, focused on the GOP members'
concern that the budget doesn't
adequately fund Medicaid costs.
The nine votes against the budget all
came from Republicans: Reps. Cary Allred
(R-Alamance), Cherie Berry (R-Catawba),
Billy Creech (R-Johnston), Michael Decker
(R-Forsyth), Sam Ellis (R-Wake), Julia
Howard (R-Davie), Joe Kiser (R-Lincoln),
Art Pope (R-Wake), and Edgar Starnes
(R-Caldwell).
After Wednesday's House action to approve
the budget, the key Senate appropriations
committees immediately took up the
legislation Thursday morning.
The budget includes 5 percent pay
raises for state employees -- more than
Gov. Hunt proposed -- and injects $120
million into the state's depleted Rainy
Day Fund. The House budget is slightly
more than $100 million more than what
Hunt had proposed spending for the year.
"We think it's a good budget. We
think it's about as tight as we can draw
it. We tried to do good in this budget
and harm no one. That's been our goal all
along," House Appropriations
Co-chair Ruth Easterling (D-Mecklenburg)
said during floor debate.
The budget bill, H.
1850 2000 Appropriations Act, would
put $120 million in the Rainy Day Fund;
$100 million in the Repair and Renovation
Fund; and $30 million in the Clean Water
Management Trust Fund. It includes $255.6
million to fund average 6.5 percent pay
raises for North Carolina's 81,500
classroom teachers, the fourth and final
annual step in raising teacher pay to the
national average. It includes another
$135 million in bonuses for teachers at
schools that meet or exceed academic
expectations. It includes money to
expand the Smart Start early childhood
educational program into all 100
counties, but would wait until January --
halfway through the fiscal year -- to
take that step. Gov. Hunt had wanted
enough money to begin the final expansion
of the program in September.
The spending plan envisions 5 percent
raises for all other state employees,
including community colleges and UNC
System faculty, the largest raise they've
been offered in several years. To find
enough money for that, the House proposes
reducing the state's contribution to the
state employees' retirement fund this
coming fiscal year by $172.5 million.
Officials said the state could safely
take that step because the retirement
trust fund is extremely healthy.
The Department of Health and Human
Services suffers several major spending
cuts in the House budget, including a $70
million reduction in Medicaid reserve
funds, a $32.4 million reduction in
Medicaid funding based on more recent
projections of demand, and $25.2 million
gleaned from Medicaid drug rebates and
earned revenue.
The budget does not include any money to
fund Hunt's proposals to expand
eligibility for the child health
insurance program but does eliminate a
waiting period for children with
long-term disabilities or health
problems.
The House budget includes a new $8
million program for housing alternatives
for mentally ill children who would
otherwise be institutionalized, a $3
million reserve for system reforms, and
nearly $7 million for a Medicaid program
to pay for home services and medical
equipment for 600 people with mental
disabilities. The funding reflects a move
by the state away from institutional care
for the mentally ill and toward
community-based treatment programs.
The budget document assumes a zero
beginning unreserved credit balance for
the new fiscal year -- the most stark
sign that the state scrapped the bottom
of the barrel finding emergency money for
Hurricane Floyd victims during an
emergency special session last winter. It
projects total tax revenues during the
year ahead of $13.216 billion and
investment income of $214 million. It
continues the long-standing practice --
strongly opposed by NCCBI -- of
transferring into the General Fund $170
million from the Highway Trust Fund and
$13.8 million from the Highway Fund.
The spending plan projects a current
operations budget (expansion budget, new
money) of $65.6 million for the Highway
Fund and spending of $83.48 million by
the Highway Trust Fund. Including federal
funds, total Highway Fund availability of
new money to spend during the year would
be $1.247 billion.
The budget sets the salary of the
governor and the chief justice of the
state Supreme Court at $119,339 and the
salaries of the members of the Council of
State at $105,326. Cabinet secretaries
would be paid $102,903.
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The House
Budget at a Glance
(Budget
cuts in parentheses)
Increase in Pay and Benefits for State
Employees
* Classroom teacher pay raise:
6.5 %
* Pay raise for principals and assistance
principals: 10 %
* Raises for all other state employees,
community college and university faculty:
5 %
* Retirees' COLA: 4.6 %
* Add 1 percent employer contribution to
401(k) plan
* Increase Rainy Day Fund: $120 million
* Increase repair and renovation fund:
$100 million
* Increase Clean Water Management Trust
Fund: $30 million
* Reduce retirement system contribution:
($172.5 million)
* Reduce debt service funds: $52.2
million
* Reduce death benefit contribution:
($10.9 million)
* Reduce funds for increases in health
plan premiums: ($32.7 million)
* Reduce portion of state payment for
retiree health benefits: ($50 million)
Public Schools
* Final installment on raising
teacher pay to national average: $7.8
million
* Funds to improve student performance:
$8 million
* Increase English as Second Language
funds: $3.7 million
* Supplemental funding for small school
systems: $2 million
* Increase funding for exceptional
children: $5 million
* Increase funds for schools in poor
counties: $5 million
* Central office administration funds:
$3.4 million
* Funds to help schools pay increased
fuel costs: $7 million
* Reduce adjustment of average salary
based on actual experience: ($42.4
million)
* Reduction in projected average
salaries: ($8.2 million)
* Cut projected enrollment growth by 972
students: ($6.9 million)
* Adjust payments for vacation days: ($5
million)
Universities
* Projected enrollment increases:
$21.1 million
* Increase in off-campus enrollment: $10
million
* Additional tuition receipts approved by
Board of Governors: ($3.3 million)
* New need-based financial aid program:
$5 million
* Adjust inflation increase at UNC
Hospitals: ($2.7 million)
* Tuition grants to state students
attending private colleges: $3.3 million
* Funds for historically black colleges
to close minority achievement gap:
$500,000
* ECU's continued transition to doctoral
institution: $1.5 million
Community Colleges
* Enrollment growth: $20.5
million
* Supplement for summer term instruction:
$7.2 million
* Increase funds for occupational and
continuing education: $3 million
* Eliminate community services block
grant funding: ($1.8 million)
* Reduce equipment funds: ($2 million)
* Increase estimate of tuition and fees:
($3 million)
* Increase in-state tuition per semester
hour by 75 cents: $2 million
* Increase tuition charges from 14 to 16
semester hours: $2 million
* Reduce need-based financial aid fund
balance: ($1 million)
* Reduce management information system
fund balance: ($2 million)
Health and Human Services
* Reduce adoption assistance funds:
($2.3 million)
* Eliminate child support call center:
($1.5 million)
* Transfer Medicaid reserve funds: ($70
million)
* Reduce Medicaid funding based on new
projections: ($32.4 million)
* Increase Medicaid drug rebate receipts:
($12.1 million)
* Increase receipts from prior year
earned revenue: ($13.1 million)
* Increase receipts across department:
($3 million)
* Eliminate 29 vacant positions: ($2.1
million)
* Reduce Smart Start funds: ($49 million)
* Reduce funding to AIDS drug assistance
program: ($5 million)
* Reduce funding to developmental
evaluation centers: ($1 million)
*Reserve for mental health court rulings
and reforms: $3 million
*Increase funding to community mental
health programs: $4 million
*Establish child mental health
residential program: $8 million
*Special children adoption incentives
fund: $6 million
*Infant mortality program: $1 million
*Smart Start: $44 million
Department of Commerce
* Industrial recruitment
funds: $1 million
Aid to non-state entities
*Grants to community development
agencies: $1 million
* Technological Development Authority:
$3.5 million
Courts System
*Funds for court technology: $6.7
million
* Replace other equipment: $1 million
Transportation
* Increase
maintenance/contract resurfacing: $20.9
million
* Replace, repair and renovate
facilities: $9 million
* Operating assistance for urban and
regional transit: $5.9 million
* Rural transit assistance: $1.3 million
* Equipment for 28 new Highway Patrol
troopers: $1.3 million
* Reserve for DMV computer system
maintenance: $3.3 million
* Reserve for maintenance: $10.5 million
Construction
* Matching funds for federal water
resource programs: $13.4 million
* National Guard armory in Charlotte:
$1.6 million |
