Gov. Pat McCrory met with House Republicans on Friday after House budget negotiators worked late the night before on the $21 billion revised spending plan for this year.
In an afternoon interview with WUNC, McCrory said he would consider vetoing the budget if it doesn’t address “his issues and concerns.”
In recent weeks, McCrory, a Republican, has objected to teacher raises above 6 percent, which he said would steer too much money away from other state needs, cuts to Medicaid that would push elderly people off the rolls, and cuts to teacher assistants.
Asked about McCrory’s veto threat, House Speaker Thom Tillis said, “I think he has some concerns with just the funding. I hope that he’ll be pleased with” the House and Senate consensus bill.
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Both the House and Senate are controlled by Republicans, and the GOP has veto-proof margins in each chamber. Republicans are used to overriding budget vetoes – they turned back former Democratic Gov. Bev Perdue’s budget vetoes twice. But even the threat of a veto highlights the state’s high-level GOP intraparty struggles and the different interests of a governor who must run statewide and legislators running in mostly safe districts.
McCrory met with Senate Republicans earlier in the week.
Rep. Justin Burr, an Albemarle Republican and budget negotiator, said Friday that no final decisions have been made on the big issues, such as the size of teacher raises or health and human services spending.
“We’re still working out all those pieces,” he said.
Less tax revenue
As negotiations ratcheted up, legislators found out that the package of tax cuts they passed last year will result in lower than predicted tax revenue.
A memo from legislative fiscal research staff Thursday first reported by WRAL said personal income tax collections will lag more than expected, bringing in $680 million less this year, $205 million less than the original estimate.
Over five years, income tax collections will be $880 million lower than anticipated.
The analysis did not include an update on the impact of the corporate tax cuts or sales tax changes.
Burr said the new tax collection information wouldn’t affect this year’s budget.
But Senate Minority Leader Dan Blue said Republicans’ tax-cut decisions led to the state’s “teacher pay crisis.”
Average teacher salaries are among the lowest in the nation. Raising them has been a budget focus this year.
“Governor McCrory and legislative Republicans are desperate for an election-year Band-Aid and have offered every gimmick they can think of to avoid accountability for their staggering fiscal recklessness,” Blue, a Raleigh Democrat, said in a statement. “Given this new information, it’s all the more important that any budget deal operate in real numbers for the long-term. We need to pay our teachers now in a sustainable, responsible manner.”
The tax cuts and resulting limits on revenue have been lurking in the background of the budget debate.
At a budget meeting earlier this month that House members invited superintendents to attend, Cumberland County Superintendent Frank Till, when asked to choose between higher teacher raises and fewer teacher assistants or smaller raises where the assistants kept their jobs, said he would “do something to raise revenue.”
The tax cuts came up in the Senate on Thursday during the debate on a bill that would overhaul Medicaid by moving to managed care and having insurance companies compete with provider-led networks for Medicaid patients.
The bill’s supporters say the state needs managed care to keep control of Medicaid spending, citing the string of budget overruns in the government insurance program for 1.7 million low-income children, select parents, the elderly and disabled.
But Sen. Terry Van Duyn, an Asheville Democrat, said health care providers and patients were being scapegoated when the real problem was legislators budgeting too little.
“It seems to me that this bill is a smokescreen to keep us distracted from another real problem,” Van Duyn said, “the $500 million hole created by tax giveaways to corporations and the wealthy.”