Budget Conference Underway
Special Report - June 18, 2012
The Senate gave final approval June 14 to its $20.1 billion budget by a 3019 party-line vote. This budget will adjust the two-year $19.68 billion 2011-2012 budget passed by the Legislature last year. In light of the House declining to accept the Senate’s changes to HB 950Modify 2011 Appropriations Act, leaders from the two chambers will now work on developing a compromise. Governor Beverly Perdue (D) is expected to veto whatever budget is sent to her desk, partially because the General Assembly has refused to consider a three-quarter cent sales tax increase for which she and the lieutenant governor have repeatedly called. Should the legislature fail to override her anticipated veto, the state will continue operating under the budget as passed in 2011.
According to the General Assembly’s Fiscal Research Division, the state will experience a $232.5 million surplus for the 2012 fiscal year, while the 2013 surplus is estimated to be about $21 million, giving legislators $253.5 million to appropriate as they adjust this year’s budget. According to an analysis by the Civitas Institute, the Senate’s proposed budget “would increase spending by $210 million over the amount approved in last year’s biennial budget, and by $470 million over the current 2011-12 spending total.” However, it does come in lower than the House’s proposed $20.28 billion proposal and the governor’s $20.91 billion proposal.
The House and Senate budgets differ primarily in the areas of education and Medicaid. The Senate budget calls for a $54 million increase in education spending. The Senate incorporated much of Senator Phil Berger’s (RRockingham) education reform bill, SB 795Excellent Public Schools Act, and allocated $47 million toward implementing it. The House and Senate budgets differ on pay raises for teachers and state employees, with the House opting for $79 million to cover nearly across-the-board $250 one-time bonuses for many teachers and state employees, while the Senate chose to allocate $160 million in “Performance Pay” funds for “Compensation Increases and Personnel Flexibility.” The Senate increases include a 1.2 percent pay increase for many state employees and $84 million for pay raises or to retain personnel in local school districts. The Senate would provide $800,000 in additional funding for the Governor’s School, while the House would reinstate funding for the Teacher Cadet Program, the Parental Involvement Initiative, and Tar Heel Challenge. The Senate also implemented an across-the-board “management flexibility reduction” of two percent for all state agencies, except for education, to help cover any shortfall in the Medicaid budget.
The Senate budget does not include funds to pay $50,000 to living victims of forced sterilization from North Carolina’s eugenics program, which were included in the House budget. Senate rules do not allow the chamber to consider a budget that includes an eugenics compensation fund again this year because an amendment that included such a fund, along with several other measures, was tabled during Senate debate. Only if a majority of senators agree to suspend the chamber’s rules can a budget with an eugenics compensation fund be considered.
Unlike the House, the Senate does not propose using $42 million in unanticipated Lottery funds. Also unlike the House, the Senate decided to set aside $139 million of surplus revenue in the state’s Rainy Day Fund. The Senate budget includes two interesting provisions that are not found in the House version. First, the Senate budget would cap the state gas tax, a point of much debate and contention since the General Assembly removed a 2009 gas tax cap of 29.9 cents, at 37.5 cents per gallon from July 1, 2012 to June 30, 2013. The Senate budget also includes updates to nutrition standards that apply to child-care facilities. Specifically, Senators want to implement an exemption for meals sent by parents with their children and to bar state inspectors from checking lunches children bring to school from home.
Senate Approves Education Reforms - June 5, 2012
House Approves 2012 Budget - June 4, 2012
Education Committee Approves Reforms - May 30, 2012
State Spending At Highest - May 18, 2012
Governor Vetoes State Budget - June 13, 2011
House Passes State Budget - May 6, 2011
House Takes Up Budget - April 29, 2011
Legislative Highlights - April 21, 2011
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