The House passed the budget today by a vote of 66 to 44. Like yesterday, the vote was largely along partisan lines. The partisan vote relates to two things: first, the process used to pass the budget and, second, some of the spending or policy in the budget. In recent years, some number of Democrats have been supportive of budgets proposed by Republicans, at least some House budgets. This year, the budget process was not inclusive or very transparent, creating an impediment to garnering bipartisan support.

Some Democratic colleagues have kidded me about apparently becoming the apologist for the budget process this year. I explained to them that I didn’t intend for that to happen, but I was one of the few budget writers willing to comment on the process. It is no secret that I didn’t recommend this process; in fact, I recommended against it. However, once the process was set, I couldn’t step away from my responsibilities since Henderson County and western North Carolina still needed me fully engaged. Moreover, funding and policy on some number of issues, ranging from the Western Medical School to the GenX pollution issue could change based on my engagement.

Technically, this budget is an amendment of the two-year budget we passed last year. Probably 90% of it is the same. However, there are some major spending decisions and some policy decision being made. The inability to amend the budget or be involved in a committee process to develop it was understandably a huge impediment to obtaining Democratic support. Additionally, there were the usual hurdles: differences of opinion as to how to spend money, what taxes to levy, and policy on various issues.

The budget bill is now with the Governor; he now has ten days from when he receives it to either sign it or veto it. If he doesn’t sign it or veto it, the budget will automatically become law. The assumption is that he will veto it, and that the legislature will attempt to override the veto before the end of the fiscal year which ends on June 30. A three-fifths vote by both chambers will be needed to override any veto.

Folks may assume that when the budget is passed the legislature’s work on the budget has ended, but that isn’t true. Almost immediately after passage of the budget, work begins on a Technical Corrections bill—a bill to correct mistakes in the budget. With a document the size of the budget, mistakes can happen. Sometimes, there are just numbers that get transposed or a printing glitch drops a few words or a few lines, and those mistakes have to be corrected.

Sometimes, after passage, it is determined that there are unintended consequences to some funding or some policy in the budget. Legislators and staff will typically move quickly to correct those sorts of mistakes. Sometimes, a funding or policy decision in the budget just doesn’t seem right after legislators hear from the public. It is harder to fix a funding or policy decision that just doesn’t seem right in a technical corrections bill, but that isn’t to say that it hasn’t been done.
When normal processes are used in adopting a budget, some of the “fixes” get done through amendments offered during the budget process. However, the process used this year precluded amendments, so we may be looking at the need for more fixes.

It is still too early to know all of the changes that might be made to this budget, but a few potential issues are already evident:

Suicide Prevention Lifeline. There is no money in the budget to keep a suicide phone line open, a free and confidential service that helps people in emotional and suicidal crisis. A change.org petition says “Republican legislators didn’t include the $350,000 needed to keep the local call center open.” The problem with that narrative is that as a budget writer I was never asked for the money. The monies cut for this suicide prevention lifeline were cut in the federal budget, not the state budget.

Looking at the Governor’s budget, it proposed funding the suicide prevention lifeline as part of a larger request. With the Governor’s budget arriving just before the start of the session, it is not surprising that the item got dropped.

It is much like the monies cut from the Blue Ridge Literacy Council (which was discussed in my last newsletter)—something changed at the federal level. With the literacy council, budget writers worked on a fix to what was caused by the federal government.

One can’t fix something one doesn’t know anything about. Inexplicably, no one brought the suicide hotline issue up—neither lobbyists nor the NC Department of Health and Human Services. People are quick to assign blame, but in this case there was no funding cut made by the legislature. My hope, however, is we can fix the problem before the legislature adjourns.

Broadband. The City of Hendersonville along with several other western NC municipalities have been working to develop a regional strategy to improve high speed broadband in the area. The city raised its concern that a provision in the budget that could be read as prohibiting the municipalities from fronting the cost of the broadband infrastructure. The League of Municipalities agrees with the City’s assessment, and it is among the issues I hope will get addressed before the legislature adjourns.

VW Settlement. There is a provision relating to how the monies from the lawsuit arising out of Volkswagen settlement of the lawsuit over its manipulation of its air quality mechanisms on its automobile. It has been suggested that the wording of that provision could put at risk those funds coming to North Carolina. The issue needs to be further researched.

Triangle Rail. A provision in the budget arguably may cut federal funding for a light rail project in the Durham-Chapel Hill area. Money has been invested by Durham and Orange counties and the provision may block federal funding of the project. Unlike the other issues, this provision seems to be intentionally directed at the light rail project.

Over the coming weeks, lobbyists of all ilk will review the budget with their clients and they’ll probably suggest more changes. In fact, some who were unsuccessful in getting funding for some project or the inclusion of some policy may try to make changes through the technical corrections bill. Local governments or state departments may determine they also need some relief from some requirement in the budget or surprisingly some allocated funds may not be needed or wanted.

The flooding in western North Carolina could result in some change to the budget. Beginning next week, assessments of the flood damages will be made. Perhaps a federal disaster proclamation will trigger federal funding. It is just too early to know whether additional state funding relating to the flooding will be needed.

Another way to amend the budget is in a separate bill, and there are a number of bills filed that could make changes to the current budget. It is unclear how many of these bills will be able to run the gauntlet of passing both chambers before the legislature goes home in a few weeks.

The budget bill totals 267 pages, and its accompanying Money Report which lists all the various appropriations for programs, projects and salaries runs an additional several hundred pages. Therefore, any effort to summarize what is in the budget will inevitably only hit the highlights. This article will provide budget highlights, with some emphasis on projects affecting Henderson County and western North Carolina and my work in constructing this budget.

Here are the highlights:

Investing in Teachers and Schools

• 6.5% average teacher pay raise
• $3,150 average raise for principals
• $700 million increase in public education funding
• Fully funds enrollment growth and maintains the per-pupil allocation for textbooks

State Employees Compensation

• $31,200 sets a baseline salary for all permanent state employees — the so-called “Living Wage.”
• All state employees will receive a 2% raise and state retirees will receive a one-time 1.0% cost of living supplement

Disaster Relief

• $60 million earmarked for disaster relief, focused primarily on Hurricane Matthew victims, bringing the total to $336 million
• Funding to avoid damages of future floods, hurricanes or fires, by mapping landslide areas in the mountains and the relocation of buildings in flood-prone areas
• Funding additional equipment for emergency management equipment

Supporting Law Enforcement and Correction Officers

• $15 million for security and safety improvements in NC prisons
• 4% pay raise for all corrections officers
• State troopers can reach the top pay of $64,202 in six years with significant pay raises starting for cadets in training to become state troopers

School Safety

• $35 million for various safety initiatives that school systems can access
• $241 million in lottery funding to build or upgrade school facilities

More Money in Your Pockets and More Money Saved

• 99% of North Carolina families will pay less in state taxes or pay no state income taxes at all
• The new state income tax rate will be lowered to 5.25%. Very recently, the rate was 7.75%
• $2 billion in the so-called “Rainy Day” fund which, if needed following natural disasters or tough economic times, will fund needed governmental programs

There are other items that are noteworthy. The budget provides a $10 million investment in broadband access for rural communities. The budget also provides money for “Raise-the-Age,” moving 16- and 17-year olds from the adult criminal justice system to the juvenile justice system. $155 million will be spent on various capital projects and $65 million for repairs and renovations, including funding to pull down $58 million in federal funds for Water Resource projects.

Again, these are only the highlights. I can provide additional information on the Salaries and Benefits provisions and a more exhaustive outline of spending in the various sections of the budget, e.g. Education, Human and Human Services, Agriculture, Natural and Economic Resources, Justice and Public Safety, and Transportation. If you want more detail, drop me an email at Chuck.McGrady@ncleg.net.

---

Henderson County and Western North Carolina Investments

As a full Appropriations chair, I work on the budget in its entirety but I am also the senior appropriator in western North Carolina and represent a Henderson County district. For that reason, programs and projects affecting Henderson County and western North Carolina are my responsibility. Here are some of the items that relate to Henderson County and western North Carolina.

• Western Medical School. The budget includes $4.8 million to continue funding for the medical school housed with MAHEC in Asheville. After starting their education at UNC-Chapel Hill, students complete their education in western North Carolina, hopefully producing doctors who will remain in western North Carolina.
• Landslide Mapping. Part of the disaster relief package includes $3.6 million for completing landslide mapping in western North Carolina.
• Hemlock Restoration. $225,000 will continue the operation of the hemlock restoration program.
• Leader In Me. A $200,000 grant-in-aid will go to Henderson County Public Schools for a pilot program, a grant proposed by Senator Chuck Edwards (R-Hendersonville).
• Stop the Bleed. A $126,950 grant-in-aid to Transylvania County Schools for the purchase of bleeding control kits in 250 classrooms, a grant sought by Rep. Cody Henson (R-Rosman).
• Funding of Literacy Councils. Because of a change in a federal funding area, the Blue Ridge Literacy Council was going to lose its federal funding passing through the state. The budget will restore most of that funding and give Blue Ridge Literacy Council a glidepath to raise monies to replace the loss of federal funding.
• Muddy Sneakers. $400,000 goes to this western North Carolina program that helps get kids out of the classroom and out to our parks and forests to learn science in the field. The program is expanding across the state.
• Pisgah Legal Services. $100,000 to continue funding for a legal aid program for veterans.
• Justice Academy. Funding for a second firearms instructor to be housed at the Western Justice Academy in Edneyville.
• Cybersecurity Regional Training Center. Montreat College will get $2 million for the creation of a center and a curriculum addressing the need for cybersecurity.
• Western North Carolina University. $16.5 million is appropriated to start on the replacement of the power plant at WCU.
• UNC-Asheville. $2,770,000 goes to the school to complete work on the bond-funded repairs to Owen and Carmichael renovations. Senator Edwards and I worked together on this funding.

As a full Appropriations Chair, my responsibility is for the Agriculture, Natural and Economic Resources portion of the budget. I also get involved in a range of issues brought to me by organizations, like United Way or Conserving Carolina. Here are some of the funding issues on which I’ve worked.

• Funding for the Clean Water Management Trust Fund, Parks & Recreation Trust Fund, and the Agricultural Development and Farmland Preservation Trust Fund was maintained or expanded. These trust funds are used to acquire easement and buffers to protect water quality, fund state park and local park improvements, including funding for DuPont State Recreational Forest, or acquisition of easements protecting farmland.
• 2-1-1. This grants provides money to support the 2-1-1 system which provides information to callers on how they might access government services and local resources. The system worked well in response to the Hurricane Matthew disaster.
• Children’s Digital Library. Librarians sought additional monies for the statewide Children’s Digital Library, and I obtained the $200,000 in the budget for this program.
• Child Care Subsidy. This program provides money to help families obtain quality child care. More funding was obtained to provide market rate increases for child care providers and more money was allocated to address the waitlist for the child care subsidy.
• Department of Environmental Quality. A cut scheduled for the DEQ was reversed. Moreover, for the first time in recent years, more funding will be going to support its regulatory work, particularly related to the GenX water quality issue affecting water in the Wilmington area.
• Natural Resource Center Dinosaur Project. Notably, the most enjoyable budget project was getting $1.8 million to expand the Natural History Museum’s dinosaur exhibit, “Dueling Dinosaurs.” The museum has one of only two fossils discovered where two dinosaurs were fighting when they both apparently died of their respective injuries, probably while fighting in a shallow lake. Their bones and injuries were preserved in the lake sediment.

---

My Disagreements with the Budget

In a budget of this size, it is not likely that one can support everything in the budget bill. That is certainly true for me. Here are some of the things that concern me.

• GenX. While we’ve turned the corner on addressing the GenX pollution issue. The provision giving the Governor more authority to address the issue is simply political theater. He doesn’t need more authority, and the provision is a transparent ploy to pin the Governor with the GenX issue. My hope was that we’d put more money towards regulating the issue, by giving more funding to DEQ. I also think it was unwise to fund a spectrometer that wouldn’t do everything that DEQ would like done with its spectrometer. We’re buying a Chevrolet when we can buy a Cadillac (or a Tesla).
• Acquiring Permanent Dredging Capacity. Providing $15 million to fund the purchase of a dredge that apparently will be used to keep Oregon Inlet open is a waste of money. Over time, sand moves along the cost, and this money is being put to dredge sand that will just keep shifting.
• Jordan Lake and Falls Lake Rules. We’ve got to begin to clean up both Jordan Lake and Falls Lake rules, and extending the time to start that work is a mistake.

If I were king and not just one on the people putting together the budget, I’d like to reverse the cuts made to Legal Services in last year’s budget. I’d also like to completely eliminate the waitlist for the child care subsidy and give full market rate increases for Tier 3 counties, like Henderson County. I’d also put more state monies toward school nurses.

But I’m not king. The budget reflects compromises between other legislators’ priorities. We represent different districts with different problems, so it shouldn’t surprise anyone that even those of us who worked closely together on the budget still have things we’d like to change. I’m supporting the budget because it funds the State’s primary needs, particularly education.

---

The Governor’s Budget…and the Vote

Some ask what was wrong with Governor Cooper’s budget. Directionally, I don’t have a huge disagreements in terms of his priorities — education, environmental protection, disaster relief and infrastructure.

My disagreement is with the spending he proposed. I arrived in Raleigh when we had a huge deficit, owed a lot of money to the federal government for unemployment compensation, and had minimal reserves to deal with natural disasters and financial downturns. Right now, the economy is good and unemployment is low. North Carolina is consistently rated as among the best states in which to do business.

We don’t need to roll back the scheduled tax cuts and spend down our reserves. We can tackle the needs in education, public safety or public health incrementally. With this budget, teachers will get pay raises for five years in a row, and I think we need to continue to provide raises until we reach the national average.

We don’t need to raise taxes by half a billion dollars. In listening to the debate on the budget yesterday on the House floor, my colleagues on the other side of the aisle constantly used the phrase “not spending enough” when talking about various governmental programs. It left me thinking whether they would think we’d ever spend enough.

We should save some of our excess revenues. We need to continue building state reserves for the time when a natural disaster or an economic downturn forces state government to provide services when our revenues may not be sufficient to address the needs.

Of the budgets I’ve voted on during my time at the legislature, this is the one of the best because I think it addresses the the state’s needs while not throwing money at every problem. We seem to have found the right balance.

In its first vote on the budget yesterday, the House approved it by a vote of 72-45, almost a party line vote. The second vote, held just a few minutes ago, was 66-44 due to the fact that 10 legislators were not present on the floor to vote. The Senate has already approved the budget, so it should be on the Governor’s desk today.