Senate Bill 13, the first legislation the Republican-controlled General Assembly will send to Gov. Bev Perdue, also may be the first bill she vetoes in the 2011 session. The divisions between the legislature and the governor were so pointed that they could not agree publicly on whether, or to what extent, they negotiated with one another as the Balanced Budget Act of 2011 moved forward.

S.B. 13 passed the Senate 31-16 last week and the House 66-51 Thursday. It could reduce the state’s 2011-12 deficit — estimated by Perdue at roughly $2.7 billion earlier this week — by another $800 million. Half the reductions would come from giving Perdue more leeway to cut spending from executive departments. She supports that portion of the bill. It also, however, shifts to deficit reduction an additional $400 million from priorities Perdue and legislative Democrats hold dear. And that’s the source of the confrontation.

Former House Speaker and current Minority Leader Joe Hackney, D-Orange, argued that Democrats were shut out of the process crafting the bill. Several Democratic amendments to restore various business incentive funds were voted down in committee and on the House floor.

“This should have been worked out in committee. This should have been worked out with the governor,” Hackney said on the House floor Wednesday. “I will plead with you for cooperation, not confrontation.”

Perdue spokeswoman Christine Mackey said late Thursday that the governor had no direct contact with Republican leaders as the bill moved through the House — contradicting Speaker Thom Tillis, R-Mecklenburg, who said earlier Thursday that every effort was made to create a bipartisan compromise. Tillis said Republicans tried to work with the minority party and the governor’s office and that Perdue refused to negotiate. “We were in contact with the governor’s office during the debate,” Tillis, said, “and the answer was, ‘No can do.’”

Mackey would not say if Perdue would sign or veto the bill. The governor will give her State of the State Address Monday night. It is expected to outline her budget priorities and may signal whether she will veto the bill.

Priorities for Perdue, Democrats

The contentious reductions include diverting to the General Fund much of the annual payments due April 15 from tobacco companies as North Carolina’s share of the Master Settlement Agreement — $67 million from Golden LEAF and $3 million from the Tobacco Trust Fund. The bill also shifts $8 million in economic incentives from the One North Carolina Fund and Job Development Investment Grants.

Democrats and the administration say this spending is necessary to create jobs and attract businesses to North Carolina. “The proposed cuts to North Carolina’s jobs and economic development funds will damage our ability to recruit new jobs and to expand existing businesses in the state,” Perdue said in a news release earlier this month.

Legislative Democrats offered dire predictions if the bill became law. “If we declare unilateral disarmament, then we will be left out in the storm with no coat,” said Rep. Kelly Alexander Jr., D-Mecklenburg. “This is a gesture, and if you vote for this gesture it may have consequences of lost jobs and people who don’t live through the biennium.”

Republicans argued otherwise, saying these cuts were necessary to balance the budget without raising taxes. Speaker Pro Tem Dale Folwell, R-Forsyth, said the economic development funds did not help “the 500,000 businesses that are already in North Carolina” expand.

Other Republicans said any essential economic incentive packages could be folded into the General Fund. Tillis asked for anyone to point to a single business deal adversely affected by the bill. “I’ve challenged the chamber as late as this morning, bring me the specific job creating propositions that will not go forward as a result of this bill, and I have to tell you I’m not having to clear my calendar to hear it,” he said.

If Perdue vetoes the bill, Tillis would have to get unanimous support from his caucus and find at least four Democrats to buck their leaders. Republicans need 72 votes — a three-fifths majority — to override a veto. With a 31-19 majority, Republicans can override a veto with a straight party-line vote.

Whether or not S.B. 13 becomes law, Tillis said the bill sets the tone for how the Republican majority plans to govern.

“We needed to move quickly on [S.B.] 13. If the governor chooses to veto it, then we’ll have to figure out what our other options are,” Tillis said. “If nothing else, the departments understand the legislative intent. We expect them to revert as much [spending] as possible.”

Anthony Greco is an associate editor of Carolina Journal.