NC lawmakers signal deal to keep state government funded

General Assembly lawmakers signaled a possible agreement late Monday on a way to keep state government funded as it lapses into a new fiscal year without a new budget.

The House was working to approve a funding bandage that essentially continues the current year’s spending levels until Aug. 14 – ideally enough runway for the legislature to finalize and send the governor a new, two-year spending plan, which will not be ready by the new fiscal year starting Wednesday.

Without a funding structure, the state couldn’t legally fund programs, paychecks or schools, though budget officials may adopt a contingency plan to continue essential services.

The Senate plans to take up this “continuing resolution” Tuesday morning.

It’s not a rare event. According to the legislature’s Fiscal Research Division, continuing resolutions have given budget negotiators time extensions in seven of the past 10 years.

But Rep. Nelson Dollar, a Cary Republican and senior chairman of the House Appropriations Committee, noted it would be a 100 percent funding extension, where past continuing resolutions have funded government at 95 percent.

“This is the cleanest CR I’ve seen in my 15 years (as a legislator),” said Rep. Skip Stam, an Apex Republican.

It didn’t advance without controversy, though. While it includes a promised, higher starting salary for teachers – at $35,000 – it also directs local school boards to use whatever funds they have on hand to pay for driver’s education programs.

Some lawmakers questioned whether that would force school districts to shift how they fund other operations, if they still wish to fund driver’s ed.

The apparent deal came as Gov. Pat McCrory urged lawmakers to move swiftly on a new budget.

McCrory sent a letter to legislators earlier Monday calling for a one-month temporary budget – a quicker turnaround demand than what the House was poised to approve – and for an end to “negotiation tactics that stall our progress.”

He referred unfavorably to some legislators’ efforts to have their session extend into September or October, noting that 40 state legislatures have passed budgets.

“While your thorough and thoughtful debate is appreciated, the people of North Carolina cannot continue to wait as that honorable work turns into negotiation tactics that stall our progress,” McCrory wrote.

McCrory used the letter to outline his budget and legislative goals.

He wants to build the state’s rainy day reserve fund to a minimum of six percent of the budget. “It is imperative that we prepare for any potential downturn,” McCrory wrote.

He wants the economic development plan, which he calls NC Competes, removed from the budget and passed as a separate bill. “The legislature’s indecision on a firm and sustainable economic development plan is putting North Carolina at a competitive disadvantage for jobs that our Department of Commerce is recruiting now.”

He urged the legislature to put his $2.85 billion bond packages for roads and various improvement projects to a vote of the people. The bond proposals have hit a roadblock in the legislature, with legislative leaders voicing doubts about one or both.

For Medicaid, he wants “physician-led reform” much like changes the House has proposed. The Senate wants to remove the state Medicaid office from the state Department of Health and Human Services and give oversight to a board of political appointees. McCrory wrote: “We believe that reform should focus on delivery of services, not on rearranging the boxes on a government organizational chart that also gives authority to an unaccountable board.”

He does not support major changes in the tax code “while the ink is barely dry on the tax reform we approved together in 2013.” But he does want to reestablish medical deductions for the elderly.

He does not support the sales tax redistribution plan in the Senate’s proposed budget. “This is not a State tax; this is a local tax and any forced change will result in a tax increase for millions of our citizens and businesses from the coast to the mountains.”

State budget director Lee Roberts was optimistic about the state having a temporary budget in place by Wednesday.

“There’s plenty of time for the House and the Senate to come together to reach an agreement,” he said Monday afternoon.

The state does have a contingency plan in case there is no stopgap budget by the time the new budget year begins, Roberts said. He declined to give details but said the state would tell employees before Wednesday, if necessary, which state services are essential and which are nonessential.

The governor has the authority to keep essential state services going without a budget, Roberts said.

“We believe the governor not only has the authority, but the responsibility to protect the safety and well-being of North Carolinians,” he said.

This story was originally published June 29, 2015 at 9:07 PM with the headline "NC lawmakers signal deal to keep state government funded."