Tuesday, July 1, 2014

State Republicans fail to fix budget

Posted By on Tue, Jul 1, 2014 at 4:30 PM

That deafening silence coming from Raleigh as the clock struck midnight on Monday night, closing out the month of June — and with it North Carolina's 2014 state budget fiscal year — was the result of something we haven't seen in this state in recent memory: a break down, for the moment at least, in negotiations between leading Republicans in the House, the Senate and the governor's mansion as to how to close a nearly half-billion dollar hole in the state's coffers.

Having captured complete control of the levers, many observers expected the current special session, focusing on the budget shortfall, to be a relative walk-in-the-park for Republicans to pass the necessary legislation to rectify the situation, given that there was no need to compromise at all with their Democratic counterparts.

But that's not what's happened. In fact, the effective deadline for such changes to have been made — the close of business on June 30 — came and went with barely a whimper, other than a few fairly snarky public remarks, which may have been a sign of a more tense struggle among leading Republicans hidden just barely out of sight. That night, a bill developed and supported by Gov. McCrory — with the help of his Budget Director Art Pope and approved by House Speaker Thom Tillis, which had already passed the House — was tossed out the window by an unimpressed and divided Senate that refused to give its contents any real consideration. Senate Rules Chairman Tom Apodaca told reporters after the evening session ended, "We're serious about getting a budget done, and it's time to stop playing games."

Besides dealing with the shortfall, that proposal was to have raised teacher salaries across the state an average of 5 percent, something McCrory has said is a top priority in his agenda, even after word surfaced several months ago that the state was facing an estimated $445 million gap in this fiscal year's budget — with an even larger hole, possibly approaching as much as $665 million, coming for fiscal year 2015, which began July 1.

The core problem was caused by last year's lowering of taxes, which critics say most benefitted the wealthy and large corporations, at the expense of "average" people. The situation was made much worse by the legislature's failure to cut enough out of existing programs to balance the budget, let alone to make allowances for increases in teacher pay, or to accommodate an increasingly expensive Medicaid program.

But Mecklenburg Republican Rep. Bill Brawley disputed this interpretation of what's been happening in Raleigh, telling me, "There is no budget deficit. The revenue forecast was lower than expected due to the changes in the federal capital gains tax," adding, "I expect that the [General Assembly} will raise teacher pay, will address the coal ash issue, and make other adjustments to the budget. As to infighting, there are 120 members of the House and 50 members of the Senate. There are always differences about priorities."

His party mate in the Senate, Mecklenburg County's Bob Rucho, doesn't see it quite the same way, telling me that the Senate is committed to increasing teacher salaries, even if that means some cutbacks to Medicaid, which he says has been increased in each of the past two years.

The Democrats in Raleigh, including Sen. Jeff Jackson of Charlotte, see this as a definite rift among Republicans. "This is a purely Republican show at this point; they're doing a good job of cloaking their infighting, but you can see it spill out here and there."

The end result is that the state can go on spending as it has been, as the current budget was established as a two-year package — though the longer the deficit is allowed to continue, the tougher it will be to correct. McCrory has already informed state agencies to be prepared to continue their business at a streamlined rate until a deal is finalized.

Until then, we'll have to keep an eye out to see if these are true signs of discontent within Republican ranks unaccustomed to wielding such total power until very recently — or if it's much ado about nothing.

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