Warren's Weekly: no agreement on state budget

SALISBURY, NC (WBTV) - Each week Representative Harry Warren (R-Rowan County) provides WBTV with an update on what's going on in the General Assembly, with a particular eye on issues having an impact in Rowan County.

Here, unedited, is the latest edition of what we call "Warren's Weekly:"

Instead of my usual weekly update on the happenings at the General Assembly, I thought you might like to visit three different perspectives written by those close to the action:

1) Sarah Curry with the John Locke Foundation provides a very succinct summation of last week's activities. It is with her permission that I pass this along to you. (Note: she wrote this on Thursday, July 10.)

Jul. 10th, 2014: - johnlocke.org

Still no agreement on a budget in North Carolina
By Sarah Curry

View in your browser.

The budget is still under debate at the General Assembly, and an exciting debate it has become. This week the House did not hold votes during session, and many of the members stayed home in their districts while the Senate held regularly scheduled session meetings.

Last week the major sticking point between the House and Senate was the funding needed for the state's Medicaid program. That was settled on Thursday, when both chambers agreed to $136.5 million for the state's Medicaid shortfall and $186.3 million for the rebase, the funds needed to continue the program under existing law. That agreement led to a difference for the total Health and Human Services budget between the two legislative bodies of only $132 million. While it still seems like there is a lot to be agreed upon within HHS, the disagreement about Medicaid has been mostly resolved.

This week the focus shifted from Health and Human Services to Public Education. House members still wanted to increase lottery-advertising dollars amid stricter marketing guidelines with the hope it would generate more revenue. The Senate wanted to tie a teacher salary increase to removing tenure status. Each chamber was opposed to the other's ideas. On Tuesday the Senate agreed to relinquish its hope of ending teacher tenure.

Wednesday morning the House called a conference committee meeting to discuss two major issues within the education budget, a teacher pay raise and teacher assistants. The House wants to give a 5 percent pay increase costing $178.3 million and use $165.9 million in increased lottery funds. The Senate wants to eliminate all teacher assistants, saving $233 million, and give teachers an 11 percent pay increase costing $468.7 million.

When the meeting began, the House had invited superintendents from multiple school districts as well as teachers to weigh in on the discussion of cutting teacher assistants. The Senate had agreed to a meeting between House conferees and no one else, so they left the meeting and returned an hour later. Once the Senate returned, some cutting words were spoken between the leaders of the House and Senate, and the debate about compromise began again. The House presented another budget offer, not much different than what was proposed a week prior. Senate leaders brashly reminded the House they had conceded their teacher tenure plan for compromise and now it was the House's turn to give some ground.

A few hours later the House met again with the Senate in a brief meeting where they agreed on the lottery figures. The House agreed to remove the additional lottery marketing funds and increased regulations, which took $29.5 million from the House's projected bottom line. The Senate accepted the compromise and told committee members each chamber should come up with another offer.

Today the major points of contention have come in the form of press releases. Both the House and Senate have come up with new budget offers. Instead of releasing them in committee, as has become usual practice, they each decided to send press releases stating the details of their next offers for the budget negotiation process.

See each chamber's statements below about their most recent budget offers.

From Speaker Thom Tillis (R-Mecklenburg):"The House was pleased to present the fifth House offer to the Senate this morning that included our revised lottery position, increased teacher pay to an average of six percent and maintained the House's commitment to preserving existing teacher assistant positions without impacting Medicaid eligibility. We will continue to move towards a budget compromise that fulfills the promises we made to teachers while maintaining classroom resources across the state."

From Senate Majority Leader Harry Brown (R-Onslow): "The Senate has bent over backward to compromise with the House by accepting over $100 million less in Medicaid, taking teacher tenure out of the equation and offering to fully fund teacher assistants -- in exchange for the Senate's top priority of an 11 percent teacher pay raise. We have now offered more than $171 million to be used toward their top priorities of Medicaid and teacher assistants. This is a serious effort to compromise, and we look forward to hearing from our House colleagues."

And just when you thought the budget debate was only between the House and Senate, here's a reminder that the governor has the final say on the budget. About two hours after the House sent their press release today,

Governor McCrory decided to add his two cents and sent a press release as well.

I will veto the latest Senate plan or any plan that resembles it because I know of no financial way we can go beyond the House proposal without eliminating thousands of teacher assistants, cutting Medicaid recipients and putting at risk future core state services. I'm committed to clearing my calendar next week to meet with any Senate or House member -- both Republicans and Democrats -- to personally communicate my resolve and to communicate to teachers who are waiting in limbo as the school year approaches.

One thing is for certain, the budget negotiations are far from over and we can expect to see a lot more before legislators go home for the year.

2) The Legislative Bulletin produced by the North Carolina Association of County Commissioners and reprinted with their permission gives you yet another perspective.

Bulletin #14-09 Friday July 11, 2014

House, Senate continue to work on budget deal

2014 Legislative Session Stalls

There was limited activity at the General Assembly this week as legislators focused on budget negotiations. Neither the House nor Senate has held committee meetings, refusing to move bills until they reach a budget agreement. With House members other than budget conferees for the most part not even in town, that chamber has held only skeleton sessions. The Senate voted on two bills during its three sessions, moving the rest of those on the calendar to next week.

Whether or not agreement is reached on the state budget, the Senate appears to be preparing to conclude the 2013-2014 session. The Rules Committee chair moved a number of bills from various locations into that committee and announced his intent to hold Rules meetings every morning next week beginning Tuesday. It is typical for remaining legislation to move quickly once the budget is resolved, and we can expect the same pattern if that happens.

State Budget Lurches Backwards/Forwards/Sideways Budget pundits cheered last week's agreement on state Medicaid spending levels, hoping a Senate/House compromise could be reached by mid-week this first full week of July. No such luck—public conference committees thus far have produced little more than bruised feelings and twitter feeds running amok. Wednesday's morning session on education and teachers' salary increases erupted into a Senate walk-out as House conferees sprang surprise testimonies from school superintendents and teachers speaking out on behalf of the House's education plan. When Senate members returned to chair their portion of the two-hour meeting, sharp and protracted questions focused on whether the House's latest budget proposal showed any compromise or movement to Senate priorities.

Wednesday's afternoon session showed a bit more humor, as morning threats of being in session until Christmas brought out a wreath, Christmas stockings, and lumps of coal. The Wednesday afternoon session showed a bit more promise too, when newly designated House conferee member Speaker Thom Tillis pledged that the House would consider meeting the Senate halfway for teacher salary increases—from 5 percent to 8 percent. The Senate had already agreed to scale back its plans for cutting teachers' assistants, although the House fretted that such a move would lead to Medicaid service and eligibility cuts. Also dropped from the House's earlier proposals was an increase in lottery advertising spending coupled with advertising restrictions—the House had counted on using the extra $30 million towards its education spending plan. The meeting quickly adjourned with Senate and House conferees agreeing to rework their respective budget proposals separately based on new availability numbers.

On Thursday, the Senate and House shared their new plans electronically between members. The House nudged its teachers' increase to 6 percent—the Senate's stayed at 11 percent, showing its concerns that the House's slight movement was not enough to break the impasse. The Senate also revised upwards its estimates for savings due to eliminating the medically needy Medicaid category, growing from less than $4 million to more than $100 million. These new savings were set aside to give the House an option of either lessening Medicaid cuts or keeping teachers' assistant positions. The House originally scheduled another public conference committee today, but Senate members declined attendance and the meeting was rescheduled for Monday. Governor McCrory weighed in with his concerns over the proposed Senate plan, threatening a veto of the proposal should it move forward.

The biggest challenge continues to be finding the revenue needed to fund a substantial teachers' salary increase while preserving TA positions and current Medicaid eligibility standards. Should the chambers eventually decide on the 8 percent level, at roughly $350 million, the House and Senate must find and agree to another $160 million in significant cuts. Any line item could be called into question to fund teachers' raises.

While there is agreement on the total amount of spending in many of the subcommittee categories, line item specifics have yet to be made public. Examining the Senate's latest proposal on agency program transfers shows a number of issues still under contention, such as its reluctance to transfer the animal welfare program from the Dept. of Agriculture and Consumer Services to the Dept. of Public Safety. Also, as noted above, finding cuts to cover substantial teacher increases may open up total subcategory spending once again.

Likewise, no public discussion has occurred on competing special provisions, so any agreement there is uncertain as well. What is principally at stake for counties is the House's special provision to award non-emergency medical transportation to a private vendor, effectively removing the Medicaid client and funding stream from North Carolina's nationally recognized coordinated system of human services transportation.

- Johanna Reese, Government Relations Director, NC Association of County Commissioners

- David F. Thompson, Executive Director, NC Association of County Commissioners

---------------------------------------------------

3) And finally, with permission from MVA Public Affairs, I provide this from their weekly publication sent out on Friday, July 11:

GOVERNOR'S DESK

The Governor signed:

HB 267, Captive Insurance Amendments

HB 330, Planned Community Act/Declarant Rights

HB 379, Amend Veterinary Practice Act/Fees

HB 1025, DOT/DMV Changes

HB 1034, Volunteer Fire and Rescue Finances

HB 1052, Adjust the Utility Regulatory Fee

HB 1117, Confirm Pledge of Joint Account Laws

HB 1139, State Nat. and Hist. Pres. Adds and Deletes

HB 1182, UNC Nonappropriates Capital Projects

SB 797, 911 Board/Back-up PSAP

SB 761, Credit for Military Training

ON THE FLOOR

For a majority of the week, the Senate and House legislative sessions were very brief or skeleton sessions were held so that House and Senate Appropriations Committee members could focus on budget negotiations.

On Thursday, the Senate adopted the conference report for SB 812, Replace CCSS with NC's Higher Academic Standards.

COMMITTEE REPORTS

Joint Budget Conference Committee Meetings

Joint Conference Committee on SB 744, the Appropriations Act of 2014, met several times this week. House and Senate Appropriations Committee members met to try and come to an agreement on a final state budget. The majority of the debate centered around education related issues.

IN THE NEWS

Raleigh News & Observer: NC Senate to reject House's coal-ash bill

Raleigh News & Observer: Gov. McCrory threatens to veto NC Senate's proposed budget

Raleigh News & Observer: Common Core compromise sticks in NC Senate

Winston-Salem Journal: Captive insurers find N.C. appealing