Just when lawmakers hoped to finish the legislative session, hostility among Republican leaders flared amid negotiations on the $21 billion state budget plan.
Gov. Pat McCrory and House Speaker Thom Tillis on Wednesday endorsed a new spending measure that separates top priorities – including teacher and state employee pay raises, new coal ash regulators and more Medicaid money – from the House’s broader budget bill.
The unusual move signals deep disagreement between the House and Senate about how to tweak the two-year state budget approved in 2013. The two chambers passed markedly different budget bills this year and made no progress this week when they met to reconcile the two plans before the fiscal year ends June 30.
The new measure only amplified the feud. McCrory and Tillis debuted the mini-budget bill with great fanfare in an announcement outside the governor’s mansion that snubbed Senate leader Phil Berger, an Eden Republican, who was not invited nor consulted.
Senate leaders later called the bill a “gimmick” that would “create an unbalanced, unsustainable budget” because it did not adequately cover the cost of the state’s Medicaid program.
“To abandon the field before we even start (budget negotiations) seems to be an inappropriate tack at this point,” Berger said after the announcement.
The intra-party discord may threaten to derail the spending bill and other major policy issues, such as film incentives, tougher coal ash regulations and a repeal of Common Core standards, and force lawmakers to extend the session into July, well beyond the expected late-June adjournment date. The session has no formal deadline, but each day costs taxpayers roughly $50,000.
Election year appeal
McCrory and Tillis sought to downplay the divisions even as they acknowledged a difference in opinion on how to tweak the budget. Both pivoted to appeal directly to the public in this election year, a move designed to pressure the Senate to support the new education-focused spending bill.
“I think that we have got a bill that is a consensus bill that the people on Main Street support, and I know the teachers in the classroom also agree,” Tillis, who is challenging U.S. Sen. Kay Hagan at the polls in the fall, said at the announcement.
“The plan we are presenting and the speaker is presenting is a plan that comes from outside the beltline in Raleigh and is more sustainable and practical to implement,” McCrory added.
As House lawmakers began to hear the bill, North Carolina teachers rallied outside to express concerns about the budget negotiations.
“For the past six years we’ve been under attack,” said Jessica Benton, a special education teacher at Millbrook Elementary in Raleigh. “We are mandated to teach with new curriculum and asked to do all this with less funding. I can barely afford the supplies we need. They’re not asking us for input, and we are the experts.”
Likewise, Hollie Blake, a teaching assistant at Lebanon Road Elementary School in Charlotte, said the lawmakers need to focus on more than teacher pay and cutting the budget.
“If they cut the transportation budget, we’ll lose our bus drivers. We’ll have longer routes for kids to get to school,” she said. “If they cut school nurses, it can be really dangerous not to have at least one nurse in every school.
“It feels like they’re attacking public schools from all fronts,” she added.
Similar to House budget
Like Senate Republicans, Democratic lawmakers responded with sharp language. Senate Democratic leader Dan Blue said McCrory and Tillis were playing “political games with students, teachers and working people across North Carolina.”
McCrory and Tillis said the new measure is designed to resolve the education priorities separately and provide some certainty to schools with students set to return in roughly eight weeks.
The plan mirrors the House budget proposal with an average 5 percent pay raise for teachers, a $1,000 salary hike for most state employees and a 1.44 percent cost-of-living adjustment for state retirees.
It also would maintain teacher assistant positions in lower grades, provide more money for textbooks, allow current teachers to maintain their tenure and restore salary bonuses to educators who receive a master’s degree in a related subject.
Other provisions, however, go beyond education to earmark $1.8 million for 25 new coal ash regulators and give state workers five extra vacation days.
What is different about the new plan and the House budget approved earlier this month is how the lawmakers pay for the spending items.
House lawmakers dropped an effort to get more lottery money by doubling the advertising budget – a move that drew scrutiny after The News & Observer revealed that lawmakers relied on inflated projections for revenue.
Instead, it relies on $116 million in additional lottery money from past-year surpluses and increased projects for revenue.
Cuts from state agencies
It also cuts $361 million from state agencies, taking reductions that appeared in the House and Senate budget bills, and taps $81.6 million once earmarked for reserve accounts. The new spending bill also would make permanent spending cuts in the two-year budget that would take effect next fiscal year.
The measure remains far from the Senate’s plan, which offered 11 percent raises to teachers, tied raises to tenure and cut more than 7,000 teacher assistants. And it does not address a bigger sticking point: how much money is needed to cover cost overruns in the Medicaid health care program for low-income residents.
The House put $134 million in an account to cover extra costs from unprocessed Medicaid applications and a backlog of health care providers that remain unpaid, which represents a best-case scenario from fiscal analysts. The Senate puts the estimated need at $160 million, the worst-case scenario amount.
At the announcement, McCrory and Tillis attributed the difference to a disagreement in methodology and suggested any budget gap is “bridgeable.”
But the differences are sure to spark more conflict Thursday when Senate lawmakers are expected to grill Art Pope, the governor’s budget director, on the numbers.