House To Consider Senate Budget

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House To Consider Senate Budget

Special Report - May 21, 2010
The North Carolina State Senate voted 30–16 this week to approve SB 897—Appropriations Act of 2010, its version of the $19 billion state budget, which proposes to spend $400 million more in the 2010 fiscal year than was spent in the 2009 fiscal year, despite cutting about $800 million from the budget as it was approved last year. Education and Health and Human Services account for about 80 percent of the budget, and both saw their funding cut. After balancing last year’s difficult budget with a combination of stimulus funds, cuts, and $1 billion in new and higher taxes, the Senate focused on closing a projected budget gap of $800 million to $1 billion with deeper cuts, continued stimulus funds, and fee increases. The Senate allowed two hours of floor debate on the budget bill on May 19 before cutting off debate to ultimately vote to pass the bill onto the House for consideration.

The Senate cut the $7.1 billion education budget by about four percent. School systems would have the option of furloughing employees instead of permanently cutting positions as a means to meet a $300 million cut. They will also be given more flexibility to allocate those funds they do receive, including $73 million more in lottery revenues than expected. For next year only, some lottery funds could be used to pay teacher salaries due to a proposed exception to the lottery statute’s requirement that lottery funds can only be used for class size reduction, More at Four, new buildings, and need-based college scholarships. Central offices in local school districts would see a nine percent cut in funding for operations, a five percent reduction in funds for assistant principals, and a 21 percent cut in funds for nurses and social workers to assist at-risk children. The Senate budget includes a slight increase in funding for the Community College system to serve the increased number of students seeking retraining or new careers.

The Health and Human Services budget includes $400 million to address increased demand for Medicaid, while cutting other Medicaid services and looking for ways to save with managed care. Controversy over possible corruption and inefficiency in the implementation of programs to provide at-home assistance to 38,000 Medicaid patients caused the Senate to eliminate those programs, and replace them with more targeted programs to serve a smaller fraction of those patients, who truly need the help. The Senate budget also included a $60 million reduction in state spending on in-home personal care services.

Small businesses in the state, which gross $1 million or less, would take advantage of paying the 6.9 percent corporate tax rate instead of the higher income tax rate, under which many of them have traditionally fallen. Commerce would receive an additional $10 million to use as economic incentives to lure large corporations to the state.

The budget process has really only just begun. The House will begin consideration of the budget next week, starting with a public hearing to be held on Monday, May 24 at 7 P.M. at the N.C. State University McKimmon Center. The hearing is an opportunity for members of the public to provide feedback on the Senate budget and on priorities for the House budget to consider. The hearing will be interactive and broadcast to Bladen Community College, Central Piedmont Community College in Charlotte and Southwestern Community College in Sylva in order for citizens across the state to participate. Once the House drafts, debates, and passes its budget, members of the House and Senate will create a conference committee to reconcile differences and form a final compromised budget on which both chambers will hold and up-or-down vote.