Don’t despair North Carolina, despite continuing cries the state is without a budget — even after months of consternation, frustration, accusations, political wrangling, and dead–end negotiations.
We do, indeed, have a budget.
Granted, it’s not one either side — the governor and General Assembly — necessarily wanted, but it works. And it will continue to work until they’re more inclined to work together.
For now, the budget we have is legal, fully funded, and leaves a surplus of $2.4 billion.
The N.C. Constitution requires that the governor prepare and recommend a budget to the General Assembly for consideration. On March 6, Gov. Roy Cooper proposed a $24.5 billion general fund budget plan that increased spending more than $1.3 billion, or 50% faster than the 3.6% expected growth in population and inflation. He called for expanding Medicaid to 643,000 additional North Carolinians, which would cost $6 billion over the first two years and create new taxes to pay for it. Cooper proposed an average 9% pay increase for teachers after two years. He also proposed borrowing $4.1 billion for school construction. It was the growth in spending, teacher pay, and Medicaid expansion that set the stage for the next 10 months of often–heated discussion, ending in a stalemate.
The General Assembly passed its $24 billion budget in June. It included a 3.5% increase in spending — within the fiscally responsible measure of inflation plus population growth. It included tax cuts, an average 4.9% salary increase — plus $1,000 bonus for teachers — funding for the current Medicaid program to transition from a fee for service model to managed care, and a way to provide $4 billion for construction without new debt. Legislative leaders also offered a special session to discuss health care issues, including Medicaid expansion.
On June 27, the final compromise budget passed the General Assembly with bi-partisan support. The House voted, 66-51, in favor; the Senate, 33-15. It was sent to the governor.
On June 28, Cooper vetoed the budget plan with this objection: This is a bad budget with the wrong priorities. We should be investing in public schools, teacher pay and health care instead of more tax breaks for corporations.
Because there was no new budget enacted at the start of the fiscal year July 1 — pursuant to a 2016 amendment to the State Budget Act — last year’s budget continued, and spending stayed at 2018-19 levels, saving taxpayers more than $2 billion.
On Aug 1, the General Assembly began a series of “mini-budgets,” pulling provisions out of the big budget. Many of these received bi-partisan support, and Cooper signed them into law, including bills to increase the standard deduction for even more taxpayers (Session Law 2019-246), provide pay raises for most state employees (S.L. 209-208, 209, 210,211), and fund school and prison safety (S.L. 2019-222, 223), disaster recovery (S.L. 2019-224) and Raise the Age (S.L. 2019-229).
The General Assembly passed additional mini-budgets between August and November, which would have increased teacher pay (Senate Bill 354), Community College and University of North Carolina pay (House Bill 231), lowered the franchise tax (S.B. 578) and funded Medicaid transformation implementation (S.B. 578). Cooper vetoed them all.
Olive branches and offers were extended. Bojangles’ biscuits were brought in. It seemed no matter what lawmakers offered, the governor dug in, unwilling to negotiate health care issues separately and calling the sixth and seventh consecutive teacher–pay increases “paltry.” Cooper was unwilling to move on the budget without Medicaid expansion or larger increases for teachers — it was never clear how much would be enough. As meaningful negotiations stalled, legislative leadership’s efforts turned to an override.
Because the budget originated in the House (House Bill 966), the effort to override the veto started there. Three–fifths of members present are needed to override. On the morning of Sept 11, Speaker Tim Moore, R-Cleveland, took advantage of a scarce crowd and few Democrats, calling for a vote and overriding the budget veto, 55-15.
Attention turned to the Senate and weeks of behind–the–scenes negotiations and alleged threats by the governor, including introducing members of his caucus to their primary challengers. The veto override was on and off the Senate calendar Oct. 29, 30, and 31, with no luck getting the one Democrat vote the Republicans needed. The Senate called for a Jan. 14 session, after the filing period for the 2020 election.
With the Senate’s required 24 hours’ notice, three vetoed bills were calendared: 2019 Appropriations Act (H.B. 966), Strengthening Educators’ Pay Act (S.B. 354) and Regulatory Reform Act of 2019 (S.B. 553). As lawmakers gaveled in, it was clear the one necessary Democrat vote was missing. Votes to override the other two vetoed bills weren’t there, either. Both failed along party lines, 28-21. Lawmakers adjourned late Jan. 13.
They’ll return for the short session April 28, about two months before the end of the fiscal year. The budget veto remains eligible for override consideration until the end of 2020. If the legislature and governor fail to agree on a new budget bill before the next fiscal year begins July 1, the current budget, as revised this session, remains in force.
Despite claims to the contrary, North Carolina has a full and legal budget, which just happens to be the same budget as last year, with some modifications from the “mini-budgets.” The General Assembly has exercised its constitutional authority to enact revenue and appropriations bills. Our constitution says, “The budget as enacted by the General Assembly shall be administered by the Governor.” It may not be the budget that many wanted, but it’s the budget we’ve got. It’s fiscally responsible, reins in spending, and fully funds core functions of government.