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House gives first nod to $21.1B state budget

RALEIGH Embracing a plan to generate more state gambling revenue, House Republicans gave initial approval Thursday to a $21.1 billion state budget that uses the lottery to provide teachers with an election-year pay hike.

The 81 to 36 vote came after a seven-hour debate in which Democrats questioned whether the money would materialize and Republicans defended the move.

“What I didn’t suspect (when the state approved the lottery) was the folks that would get addicted to gambling would be the General Assembly of North Carolina,” said Rep. Grier Martin, a Raleigh Democrat, who voted against the lottery. “We liked the first hit of it so much we decided to double down on it, and take a double dose of that addicting substance and then use that to try to pay for teacher salaries.”

“I’m against gambling,” responded Rep. Bryan Holloway, a King Republican and a chief budget writer. “But we are dependent on those dollars whether we like it or not. If you don’t want to depend on those lottery dollars then here’s the question I put to you: How much less do you want to give to teachers and state employees?”

The lottery move is just one way the House budget diverges significantly from how Gov. Pat McCrory and the state Senate proposed to pay for the state’s priorities.

The two legislative chambers crafted fundamentally different spending plans, creating the widest gulf between Republican House and Senate leaders since they took control in 2011, a year in which they crafted the budget in unison.

A final House vote is expected Friday morning, and the chambers will begin to reconcile the plans next week.

All parties want to increase teacher salaries, which rank nationally near the bottom, but do so at different levels and pay for it in different ways.

The House budget would give teachers an average 5 percent pay hike and makes the bottom-level salary $33,000.

Senate lawmakers proposed an average 11 percent raise for teachers, though tied the hikes to the end of tenure and redirecting money from elsewhere in the education budget to pay for it. The governor proposed an increase between 2 percent and 4.3 percent, depending on experience level.

What makes the House plan novel is how it covers the cost of the salary hikes.

The House wants to allow the N.C. Education Lottery to double its advertising spending to roughly $34 million to draw more sales. It’s an unorthodox move for Republican lawmakers, who are strong lottery opponents.

The extra $106 million the House expects to generate from the state lottery covers the bulk of the pay hike. But lottery officials warn that other language in the budget to restrict the advertising content may make it difficult to meet.

Neither Republican or Democratic lawmakers attempted to remove the lottery provision in any of the 37 amendments considered. But House Speaker Thom Tillis said after the vote that lawmakers could shift the funding sources for the raises in discussion with the Senate about a compromise.

Puppy mill crackdown

Two major changes to the bill were made on the House, and neither is in the Senate budget: the addition of a measure to make it easier to crackdown on large dog breeders suspected of operating so-called “puppy mills” and a grant program to encourage film production companies to make movies and TV shows in North Carolina. The Senate included a film grant in a separate bill.

The puppy mill measure is a priority for McCrory, whose wife made it her most prominent legislative goal. Rep. Jason Saine, a Lincolnton Republican who authored the amendment, said it is much narrower than what McCrory wanted but “we can only go so far.”

The film program is merely a place holder designed to spur talks with the Senate when the two chambers meet to craft a compromise plan. The state’s top-tier film incentives expire at the end of the year, a move that may drive the film industry from the state.

Rep. Ted Davis, a Wilmington Republican, called the grant program insufficient a day earlier but acknowledged that his own GOP colleagues wouldn’t support an extension.

“Our intent is to keep North Carolina competitive and retain jobs,” said Rep. Ruth Samuelson, a Charlotte Republican who worked with Davis on the amendment.

SBI amendment fails

Under the House budget plan, most state employees would see a $1,000 pay hike, plus benefits, and five more vacation days. It also provides retired state teachers and workers a 1.44 percent cost of living adjustment. The pay increase is slightly more than what the Senate proposed.

In other areas, the budget:

• Adds money for two dozen new environmental regulators focused on addressing the state’s coal ash ponds after a spill from a Duke Energy facility into the Dan River earlier this year.

• Scraps a Senate plan to cut Medicaid eligibility for thousands of aged, blind and disabled people.

• Bans tanning beds for people under age 18.

• Extends tax breaks for revamping historic buildings.

•  Transfers the State Bureau of Investigation to the Department of Public Safety.

Democrats tried to strip the language removing the SBI from the Democratic Attorney General Roy Cooper’s office, but their amendment failed.

The move comes as the SBI investigates campaign contributions to top lawmakers from the sweepstakes industry and probes the state’s regulation of coal ash. But Republicans said the transfer to within the governor’s administration would make the agency less influenced by politics, an assertion that Cooper rejects.

In other amendments, Democrats revived debates from a year ago about taxpayer-funded vouchers for students who attend private schools and the the expiration of the earned income tax credit. But moves to curtail the voucher program and restart the tax break failed by wide margins along partisan lines.

Rep. Nelson Dollar, a Cary Republican and lead budget writer, sought to look past the criticisms and emphasized that “nobody is being left out of this budget.”

“I believe we have crafted a very strong budget that is sound, that is responsible and that funds our top priorities in very difficult times,” he said.

Frank: 919-829-4698
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