News: CJ Exclusives

Budget on Fast Track As GOP Aims to Skirt Perdue Veto

Compromise lets sales tax expire, restores teacher assistant funding

It’s not a sweeping overhaul of state government, but a compromise budget crafted by lawmakers would make a number of big changes, and it might have enough Democrats on board to overcome a veto.

Unveiled late Monday night, the $19.6 billion proposal (bill and money report) was being rushed through Senate committees Tuesday afternoon, and final votes are expected on Wednesday and Thursday. The House should vote to concur this weekend, sending the spending plan to Gov. Bev Perdue, a Democrat.

The compromise is halfway between a $19.3 budget passed by the House earlier this month and a $19.9 version recommended by Perdue in February. It allows a temporary 1-cent sales tax increase to expire June 30, while renewing unemployment benefits for 42,000 North Carolinians and preserving 13,000 teacher assistant positions.

The budget also removes an additional personal income tax cut included by the Senate at first, and leaves the corporate tax rate at current levels. Perdue had recommended that lawmakers reduce the corporate rate from 6.9 percent to 4.9 percent. The House included the drop in its budget, but the Senate left the reduction out of its version.

“We’ve got an education-friendly, job-creation friendly bill that I’m very proud to be a part of,” said House Speaker Thom Tillis, R-Mecklenburg.

Top GOP leaders say they’ll have enough support in the House to secure a three-fifths majority and override a Perdue veto. Five Democrats joined all 68 members of the GOP caucus in backing the House spending plan in early May.

At a press conference Tuesday morning, Senate Minority Leader Martin Nesbitt, D-Buncombe, compared the revamped Senate budget to “rearranging the deck chairs on the Titanic.” Shortly afterward, Perdue issued a press release calling the compromise “a charade.”

“Instead of taking the responsible course of extending a portion of the sales tax to pay for critical education needs, the Senate seems to have continued to pursue an ideologically driven effort to unnecessarily defund education and other crucial programs,” Perdue said.

But Republicans defended the proposal. “We will have adopted a budget in what is for recent memory record time, and we will have done all of that in a bipartisan fashion, as we fully expect there will be a number of Democrats who will vote for this,” said Senate leader Phil Berger, R-Rockingham.

Key parts:

• Redirects revenue from the Master Settlement Agreement with tobacco companies. Abolishes the Health and Wellness Trust Fund and transfers its $33-million appropriation to the Department of Health and Human Services. Channels $2 million in funds designated for the Tobacco Trust Fund through the General Fund, giving lawmakers more direct control. Golden LEAF only has $17.5 million of its $68 million annual appropriation diverted.

• Keeps the State Bureau of Investigation under the Department of Justice and Democratic Attorney General Roy Cooper. A previous version had transferred the division to a new Department of Public Safety.

• Restores funding for light-rail extensions and toll roads.

• Appropriates $3 million to the N.C. Center for the Advancement of Teaching for the next two fiscal years, about half of its current funding of $6.1 million. The House version would have cut $5.1 million. Initial proposals zeroed-out the organization entirely.

• Sends a one-time appropriation of $500,000 to Johnson & Wales University, a culinary school in Charlotte that received millions in taxpayer dollars due to a personal promise from former House Speaker Jim Black.

• Eliminates around $500,000 in grants for the abortion-provider Planned Parenthood for contraception and teenage pregnancy prevention programs. Also eliminates the State Abortion Fund, saving $50,000 per year.

• Eliminates funds for the Governor’s School of North Carolina, saving about $850,000 in the 2012-2013 fiscal year. Could become receipt-supported beginning with the 2012 summer program.

• Exempts the Ocracoke/Hatteras and Knotts Island ferry routes from new tolls.

• Snags $12 million in nonrecurring appropriations in Jobs Development Investment Grants, a taxpayer-funded pot of money for economic incentives. Perdue’s budget recommended taking $7 million.

• Agrees with Perdue’s proposal to send another $10 million to the One North Carolina fund, an economic incentives account designed to recruit businesses to the state.

David N. Bass is an associate editor of Carolina Journal.