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NC House budget overestimates lottery revenues, documents show

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  • Film incentive proposal gets into NC House budget
  • Judge temporarily suspends new legislative building rules
  • Where the budgets differ

    The final approval of the House budget Friday sets the stage for lawmakers to begin negotiating a compromise plan next week with the Senate.

    Teacher pay hikes and Medicaid spending are the biggest differences. But the budgets also diverge in other ways – some big, some small:

    Crackdown on puppy mills

    The House put a measure in the budget to make it easier to crack down on large commercial dog breeders suspected of operating so-called “puppy mills.” The bill addresses an issue dear to Gov. Pat McCrory and his wife. Senate leaders vowed not to pass the measure this session.

    Teacher tenure

    The Senate eliminates tenure for current teachers, tying it to a large pay hike. The House budget would allow existing teachers to keep their career status but end it for new teachers.

    Teacher pay endowment

    A proposal from Lt. Gov. Dan Forest to create an endowment to accept public and private funds that supplement the salaries of high-performing teachers is included in the Senate budget. The House left it out.

    Teaching Fellows

    The Senate cuts the program that gives scholarships to the students who agree to teach in public schools. The House originally cut the program but then brought it back with an amendment during committee discussions and added $3 million in funding.

    New judicial panel

    The Senate creates a special three-judge panel appointed by the chief justice of the state Supreme Court to hear challenges to the constitutionality of state laws. The House budget does not include the provision.

    Historic preservation tax credits

    The House added a provision to renew tax breaks for the renovation of historic buildings. Senate leaders are reluctant to carve loopholes into the tax code. McCrory released a statement praising the House’s decision, saying the tax breaks were an economic driver for small towns and large cities.

    State employee pay hikes

    The House would give most state workers an extra $1,200 – or a $1,000 pay hike plus benefits. The Senate, like McCrory, has proposed a flat $1,000 to cover all compensation, with $809 of that a salary increase.

    State Bureau of Investigation

    There is some rare agreement on moving the SBI out from under the Attorney General’s Office and under the Department of Public Safety, but the Senate also wants to move the state crime lab. The House budget wouldn’t move the crime lab.

    Higher education cuts

    The Senate budget didn’t call for any cuts to the UNC system, but the House wants another $20 million in cuts – bringing next year’s total spending reduction to about $94 million.

    Transportation

    • The House wants to eliminate all ferry tolls and sets aside $6 million to pay for replacement ferry vessels. The Senate made no changes to the ferry system.

    • The Senate proposed to increase the cap on the highway use tax collected on sales of commercial vehicles and recreational vehicles, an idea the House ignored.



RALEIGH The House budget that won approval Friday overestimates how much lottery money the state is expected to receive, documents show, jeopardizing Republicans’ plan to increase teacher pay.

The N.C. Education Lottery warned legislative staffers that the House’s plan to boost lottery sales by doubling the advertising budget would generate only $59 million next year – far less than the $106 million designated in the budget.

It is outlined in a fiscal memo sent to legislative staffers before the House voted Thursday and Friday to approve the $21.1 billion spending plan.

The documents, obtained by The News & Observer, show that the House’s projection didn’t take into account language in the bill eliminating lottery advertising at college sporting events and restricting the description about jackpot payouts. The lottery commission suggests the limits would cost them $47 million in sales.

State Rep. Nelson Dollar, the lead House budget writer, would not say whether he saw the projection before the House vote. But he said the analysis contradicts a legislative fiscal analysis done a year ago that found the advertising restrictions would have no effect on sales.

The lottery commission declined to discuss the analysis. A lottery spokesman said that an attorney for Speaker Thom Tillis asked the agency to first consult with the attorney general’s office to determine whether it qualified as confidential communication.

The apparent hole in the House spending plan only complicates the difficult task ahead as lawmakers attempt to reconcile it with the version approved by the Senate.

The two budgets represent fundamentally different visions for paying for the state’s priorities, and the disconnect puts teacher pay hikes, health care for low-income residents and a half-dozen major policy initiatives in limbo.

It represents the widest gulf between House and Senate Republicans since the party took control of the legislature in 2011.

“I think they are about as far apart as the distance between Atlantic and Pacific oceans,” said Rep. Mickey Michaux, a Durham Democrat and former lead budget writer. “It’s going to be difficult for them to come together because the Senate is in an intransigent mood and the House is in an ameliorated mood and … it’s going to take some time for the two to come together.”

House Republicans downplay the differences, but Senate leaders are more matter-of-fact. “We are a long way apart from the House budget,” said Sen. Jerry Tillman, a leading Republican from Archdale. “They took a different approach.”

Teacher pay will dominate

The teacher pay issue dominated the two-hour House debate on the budget Friday morning.

Rep. Alma Adams, a Greensboro Democrat, expressed concern that the lottery money would not materialize.

“We’ve got to honor the promises we make to our teachers and state employees,” she said.

Republicans defended the plan, saying teachers will get the 5 percent average pay hike regardless of whether the lottery meets projections.

In the debate, Dollar said the state already uses $220 million from lottery ticket sales to pay teachers, noting that Democrats increased the amount in 2010. “The fundamental truth is that this is a sound budget,” he said.

Seven House Democrats voted with the majority Republican lawmakers to approve the budget 77-35.

Rep. Tricia Cotham, D-Mecklenburg, said she joined the GOP in voting for the budget because it includes teacher raises and is far better than the “draconian budget cuts” included in the Senate budget.

“Leaders are called to make difficult decisions. We must work across the aisle, bridging party lines for the betterment of our state,” Cotham, a former Charlotte-Mecklenburg Schools teacher and administrator, said in a Facebook post.

The issue of how to increase teacher pay, which ranks near the bottom in the nation, is likely to consume much of the discussion when the two chambers begin negotiations next week. Lawmakers may also take into account Gov. Pat McCrory’s budget, which differs from both the House and Senate plans on several key points.

The Senate proposed 11 percent pay hikes for teachers who relinquished their career status, or tenure rights. The Senate’s budget also cut 30 percent from the Department of Public Instruction and elsewhere in education to pay for the plan.

The House budget cuts the state education department 1 percent and allows existing teachers to keep their tenure.

Policy divided on Medicaid

Equally thorny is how to approach Medicaid, a $13 billion health insurance program for the poor that continues to see cost overruns and lagging wait times for care.

The Senate removed thousands of elderly and disabled residents from the program and sought to separate the Medicaid office from the Department of Health and Human Services.

The House did neither but still managed to put less money into the program to cover the current shortfall and future growth.

Staff writer Dan Kane contributed to this report.

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