The House took the first, major step towards adopting its budget this week when various subject-matter appropriation committees reported out their parts of the budget. Beginning today and continuing over the weekend, the Appropriations co-chairs (one of which is me) will stitch the parts together adding some critical portions to a House budget, the first part of which will go on-line on Sunday night or Monday morning as a new version of House Bill 97 [2015 Appropriations Act]. That first part will be the finance provisions which include any new fees or tax provisions. Thereafter, the budget’s revenue provisions will be reviewed by the Finance Committee on Monday afternoon.
As has been done in the past, the hope is that a complete draft budget will go on-line at some point on Monday. This is probably the document that everyone wants to see, since it will incorporate all of the provisions adopted by the subject-matter appropriation committees and the proposed finance provisions along with those provisions that have statewide application, for example, all salary, retirement and State Health Plan-related provisions. [UPDATE: the draft version of House Bill 97 (The 2015 Appropriations Act) is now online here and the House Appropriations Committee’s “Report on the Base, Expansion, and Capital Budgets for House Bill 97” (the so-called “money report” is online here.]
After the Finance Committee takes action, a new version of House Bill 97, incorporating any changes made by the Finance Committee, will be posted on-line. On Tuesday, the full Appropriations Committee is expected to meet in an all-day session to consider amendments to the revised budget bill. Thereafter, the provisions relating to pensions will be reviewed by the Pensions and Retirement Committee, probably on Wednesday morning.
When the budget is approved by the full Appropriations Committee, most likely on Tuesday, a new version of the budget will be available on-line. It will be that version that the House is expected to take up on Wednesday and Thursday (and hopefully not Friday).
So what are the big issues? Some of them are obvious — like, “Are state employees, including teachers, going to get a pay raise and, if so, how much?” Some of them are not so obvious — like, “With the idea of a statewide bond being pushed by Governor McCrory, will the House support a bond referendum and, if so, how much will be proposed for capital projects and which projects will be funded within the budget and which projects would be funded by the general obligation bonds?”
My week was a week of really early mornings and very long nights. Following the new revenue numbers issued last week by the Department of Revenue, the Appropriations co-chairs gave each subject-matter committee new targets. Some of the committees had been given targets that required some more budget cuts, and most committees had a bit more flexibility as they drafted their budgets. Beginning early this week, each chair of each subject-matter committee came before the Appropriation co-chairs with their proposals — first on their money recommendations, and then on proposed rules and restrictions governing how money could be spent. Some decisions that were left with the so-called “Big Chairs” involved portions of the budget that then got put back into the subject-matter budgets.
For example, money for reinstating funding for drivers education for high school students was added back into the Education budget, while the Natural Resources portion of the budget got monies for buffers around military bases. Some monies that were added back weren’t surprising, since they reflected proposals put forward by Governor McCrory relating to job development. Some monies that were added, like the monies to provide grants to help fund capital projects for hospices in rural counties, had received almost no public discussion.
What funding is being proposed for economic development? The answer to this question is already fairly clear. The House is proposing to fund a wide-range of projects and programs relating to economic development through several state departments, although most of the money flows through the Commerce Department. Under the proposed House budget, the Job Maintenance and Capital Development Fund (JMAC), one of the economic incentive programs, will receive additional funding, while $60 million was proposed for the Film and Entertainment Grant Fund. State aid in the amount of $5 million was proposed for the Biotechnology Center, while millions of dollars were proposed for a small business fund and a rural economic development grant program. A new $40 million venture capital fund was also proposed.
The House budget increases funding for tourism advertisement by $2 million, and it also increases funding for rural economic development grants. Additionally, $5 million was proposed for the One NC Small Business Fund that would offer early-state technology development grants for small businesses.
The proposed House budget includes some major investments in infrastructure, with monies going to roads, ports, and airports. Money was set aside from water and sewer infrastructure and improvements to the state parks during their centennial celebrations.
Are teachers and state employees getting pay raises? The answer to this question will become clear early next week. This is a “Big Chair” issue.
Are retired state employees getting cost-of-living increases? Again, this question will be answered early next week. Everyone should realize that whatever the House might propose is only a proposal; the Senate will also have to pass its budget, and the Governor will have to take action on whatever budget is finally passed by both chambers.
What about education funding? The House budget fully funds school enrollment growth. It also maintains teacher assistants while adding about $50 million for textbooks and digital resources. Moreover, several public school initiatives were funded, including a digital learning plan at $21 million, a teacher recruitment and retention loan scholarship program at $3.2 million (over two years), a program for principal development (at $10 million over two years), and $15 million for an initiative intended to move towards differentiated pay (pay-based on performance rather than on longevity).
As for higher education — community colleges and the university system, the House budget would fully-fund a summer term for the community colleges. It also creates the NC Guaranteed Admission Program (NCGAP) to provide deferred admission to a UNC campus to students at high risk of not graduating provided they complete an associate’s degree at a community college. In the UNC system, the budget fully funds enrollment growth, and reduces the management flexibility reduction proposed in the Governor’s budget.
What else is new in the budget? As proposed by Governor McCrory, the House budget creates and funds a new Department of Military and Veterans Affairs by pulling in veterans’ service programs from various departments and the Governor’s Office. The House budget funds technology projects relating to “e-Courts,” including electronic filing, citation processing and e-compliance. The budget also installs dashboard cameras in every state highway patrol vehicles.
Are we hurting environmental protection efforts? I don’t think so. While cuts were made in staffing at the Department of Environment & Natural Resources (DENR), those cuts were to positions that have been open, in most cases, for over a year. More importantly, funding for the Clean Water Management Trust Fund has been increased and $23.8 million over two years was appropriated for water and wastewater infrastructure grants. The latter will primarily be given to municipalities to repair and replace failing sewer systems. Additional monies were also provided to eliminate the backlog of cleaning up noncommercial, leaking, underground storage tanks.
Is Medicaid funding stable? And how about funding of human services generally? While the number of people seeking Medicaid funding continues to climb, the good news is that the costs related to medical care seem to be leveling off. What is exciting about the budget is that my colleagues seem focused on the health outcomes for children. Funding for pre-K programs have been maintained, while there is an increase for the child care subsidy that helps with child care costs so parents can work. There are no reductions in the direct service of critical mental health and public health services.
Overall, I’m pretty happy with this budget. We haven’t gone on a spending spree— even though our revenues exceeded expectations. When the complete budget is released and sewn together over the next few days, my expectation is that folks will see that we’ve made some targeted investments — but that we’ve also made sure that we’ve prudently put monies towards long-needed repairs/renovations and savings. Parents should like monies put toward education at all levels, and state employees — including teachers — should be happy with both the overall pay package and the targeted compensation changes that have been made.