A version of this editorial appeared in the June 2019 print edition of Carolina Journal. To sign up for a free subscription, visit here.
A week ago, the state Senate passed its version of a $23.9 billion General Fund budget for the next fiscal year. The Senate and House still must resolve their differences in a conference report, pass it, and send it to Gov. Roy Cooper.
Who probably will veto it.
None of this is surprising. The Democrat Cooper vetoed the last two budgets he got from the Republican-led General Assembly. But the 2017-18 legislature had enough Republicans to override the vetoes.
Last November’s election results flipped the odds to Cooper’s favor. Republicans lost their veto-proof supermajorities in both the House and Senate. And yet each chamber passed its budget along party lines. Since Cooper has rejected the GOP’s priorities, the simplest way he could enact his vision is by refusing to let any new fiscal plan take effect without concessions from lawmakers.
Cooper could have chosen to sit down with legislative leaders and make deals. But he hasn’t. And the plans passed by the Senate and House show such negotiations aren’t likely.
The governor is treating the budget fight as the unofficial launch of his 2020 re-election campaign. Legislative leaders are plenty happy to contrast their vision of the role of government with his. As a result, we have a budget stalemate which could last for months. Neither side seems inclined to compromise, as each offers a different set of priorities for governance.
If a new budget isn’t in place by July 1, the current tax and spending programs will stay in place until a fresh budget becomes law. With plenty of money flowing into the state treasury to cover spending obligations, state government will stay open.
The likely standoff might last a long time.
While we take issue with some of the legislature’s choices, lawmakers clearly have a better idea than the governor does of managing state finances and public policy.
The fight is worth it.
For instance, Cooper insists on expanding Medicaid coverage under the Affordable Care Act. Doing so in the budget appears easier than moving a separate bill. Set aside the problems with expanding Medicaid coverage primarily to people who are single, childless males, as Obamacare expansion would do. And the evidence that Medicaid patients often get worse care than uninsured people who rely on clinics and emergency departments for their treatments.
Cooper’s budget doesn’t pay for Medicaid expansion.
John Locke Foundation Health Policy Analyst Jordan Roberts has noted that Cooper’s budget has expansion costing an extra $6.3 billion over two years. Federal taxpayers (including North Carolinians) will pick up 90% of that spending. Since Uncle Sam already has run up more than $23 trillion in public debt, the money really will come from today’s young workers.
Even so, N.C. taxpayers would remain on the hook for $631 million over two years. Cooper’s budget proposal covers $78.2 million — a mere 12% of the cost. The rest would require spending cuts or higher taxes.
Cooper also would leave less than $80 million of his $24.5 billion General Fund plan unspent. (The House and Senate leave unappropriated $619 million and $743 million, respectively, allowing more flexibility in case of emergencies or other unanticipated problems).
And the governor wouldn’t cut taxes. The General Assembly’s plans raise the standard deduction or “zero tax bracket” — the amount of money you can earn without paying income taxes. The increase is a tax cut for every working North Carolinian. There’s also a solid business tax cut in the legislative proposal, a reduction in the franchise tax, which businesses must pay whether they’re wildly profitable or barely able to make payroll.
Legislative leaders have been eager to call the governor’s approach a return to failed policies of the past, and they’re not far wrong. The General Assembly’s agenda — cutting and simplifying taxes, streamlining regulations, expanding school choice, and boosting infrastructure repair and upgrades — has made North Carolina a better place to live, learn, work, raise a family, and operate a business.
The governor’s plans would reverse many policies which spurred that progress.
There’s some room to compromise, but only if Medicaid expansion is off the table. If Cooper won’t relent, then each side seems happy to stand by its goals and let North Carolina voters decide next year.
If so, here’s hoping they choose wisely.