State Government

The General Assembly Finally Adopts a Budget on Time

By Steve Tuttle

Whatever else the 1999 session of the General Assembly will be remembered for, it will go down in history for accomplishing something that had not been done in 20 years. It adopted a budget on time.

Despite a long-standing law that requires the General Assembly to adopt a biennial budget by July 1, the start of the state's fiscal year, the legislature has missed the deadline each year since 1979. Lawmakers didn't agree on a revised budget last year until nearly Halloween when North Carolina's legislature was the last state in the nation to adopt a budget and adjourn for the year.

Gov. Jim Hunt, who usually frowns on drinking, was so enthused at the prospect of signing a budget bill into law on time that he broke out a bottle of champagne at the Mansion during a June 30 bill-signing ceremony.

The $13.5 billion new spending plan raises spending about 4.6 percent over last fiscal year. Almost all of the new spending is lavished on education, including nearly $240 million for teacher pay raises in the third of four steps to get their salaries up to the national average, and $140 million in bonuses to teachers whose students excel academically.

How the General Assembly completed its work on time is a credit to raw politics, common sense and economic good luck. First, for the first time in four years the House and Senate both were controlled by the same party. That allowed House Speaker Jim Black, a Democrat from Matthews, to let the Senate's Democratic leaders look over his shoulder during House budget deliberations. While that caused some delays in adopting a budget by the House, the time was more than made up when the spending plan moved across the hall. Senate leaders took one look at the House budget and found they were in agreement with 85 percent of the plan. It took the Senate less than two weeks to make only a few substantive changes before sending the bill back across the hall.

Common sense also played a role in the speedy adoption of the budget. In years past legislators have used the budget as a vehicle to legislate social issues and as a convenient place to hide pork-barrel spending, amendments known as “special provisions.”

Last year's state budget contained a record 152 special provisions, up from 122 in the fiscal 1997-97 budget. This year's spending plan has only a couple dozen, according to Rann Coble of the N.C. Center for Public Policy Research. When the budget bill is just that — a roadmap for collecting taxes and spending the money properly and efficiently — and not laden with extraneous matters, then it's easier for lawmakers to reach decisions, Coble noted.

Luck also came into play when lawmakers found they had $330 million more in revenue to play with than anticipated, including a $69 million corporate income tax windfall from R.J. Reynolds' sale of its overseas cigarette business. The extra money came in handy to fill in gaps that stood out in the budget blueprint Gov. Hunt submitted back in January.

Like the public schools, the community colleges also were big winners in this year's legislative session. The budget gives the community colleges an additional $18.8 million for critical program needs and routine maintenance — money the colleges had been robbing our of their salary budgets.

Community Colleges President Martin Lancaster called the new budget “the most dramatic statement of community college support in years, perhaps decades.”

Lancaster was further pleased when the General Assembly, at NCCBI's behest, created a new fund that will generate $113.7 million over three years to improve the colleges' worker training programs. In something of a slight of hand, the legislature cut unemployment insurance taxes by 20 percent on all employers with a credit ratio of 4 percent or greater, and then imposed on them a 20 percent “training contribution” tax to benefit community colleges and to enhance job training programs managed by the Employment Security Commission.

Finding additional money for the community colleges has been a legislative priority of NCCBI Chairman Phil Phillips, the High Point business leader.

But while legislative leaders congratulated themselves for finishing before July 1, 46 other states had beat them to the finish line. By the time North Carolina was wrapping up its budget, every other state except New York, Oregon and Wisconsin already had finished.

l Like all other state government employees, members of the Council of State got a three percent pay raise last month, a boost that raises their pay into the magical six-figure category. Now, the lieutenant governor, attorney general, secretary of state, state treasurer, state auditor, superintendent of public instruction, commissioner of agriculture, insurance commissioner and labor commissioner all will take home $103,310 a year.

The raises push up the pay received by the secretaries of administration, corrections, commerce, transportation and five other state agencies, to $98,003 a year. The governor and the chief justice of the state Supreme Court both will make $113,656 a year. However, the highest-paid state official will continue to be the controller, who will pull down $124,677.

Steve Tuttle can be reached at stuttle@nccbi.org or at 919-836-1411.

COPYRIGHTED MATERIAL. This article first appeared in the August 1999 issue of North Carolina magazine.