Reading the state budget gameboard: knowns and unknowns
As we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns—the ones we don’t know we don’t know.
United States Secretary of Defense Donald Rumsfeld-February 12, 2002
The North Carolina General Assembly has reached the end of the line when it comes to enacting a new two-year state budget. The budget is already four months late, but of course, the state has not enacted a full revised state budget since 2018, just before Democrats won enough seats in the General Assembly to block veto overrides beginning in 2019. Five years into his time as governor, Cooper has refused to sign a budget presented to him from the GOP-led General Assembly.
In honor of the great Donald Rumsfeld, two-time secretary of defense under President Gerald Ford, and President George W. Bush, (both the youngest and the oldest secretary of defense) we examine the “knowns” of the great State Budget Stalemate of 2021.
State Budget “Known knowns” (things we know we know)
After passing new legislative and congressional district maps, The General Assembly is not taking votes this week of November 8-12. The legislature intends to pass a final budget and present it to the governor on or around Thursday, November 18. The Legislature will stay “in session” for the next couple of weeks. A few days will be needed to finish various bills that have not been completed but remaining in session gives Cooper 10 days to decide to sign the budget, veto the budget, or allow it to become law without his signature.
Should Cooper veto the budget, the legislature could attempt an override that last week of November or right as December begins.
State House Speaker Tim Moore and Senate Leader Phil Berger spent months working out a budget agreement between the two GOP-led chambers after both passed different versions of a $25.7 billion budget — nearly $2 billion less than Cooper’s budget proposal from earlier this year. The state Senate budget had larger tax cuts and the House had higher raises in their proposals, along with other expected and routine differences in spending levels. Berger and Moore have reached agreements on areas of difference but have not released the details.
Berger and Moore for weeks have been trading proposals with Cooper, hoping to secure his signature on a budget.
Berger is advocating reaching an agreement with Cooper for some limited expansion of Medicaid in exchange for Cooper’s support. However, it has become clear there are not enough votes among Republicans in the State House for expanding Medicaid, which would require a major policy change in direction for the GOP.
Republicans have offered larger teacher and state worker raises to Cooper to try and win him over and have offered flexibility with some federal Covid-19 dollars to give Cooper some one-time “walking around money.”
Republicans will certainly have to drop any changes to Cooper’s emergency powers to avoid a veto but could include efforts to reign in these powers starting with the next governor.
While the General Assembly will continue to negotiate with Cooper, they are also talking with various Democrat members of the General Assembly and offering them various “sweeteners” to try and get them to support the final budget and stick with Republicans on a veto override, bucking their own party.
Both House and Senate budgets previously contained record investments in historically black colleges and universities, a priority for the Democrat members of color in the General Assembly.
The State Senate proposal has one provision clearly designed to earn the support of Democrat State Senator Don Davis, D-Pitt with a new Brody School of Medicine at East Carolina ($75.25 million over two years; total project cost of $215 million).
When the state Senate passed its budget, Davis voted with the Republicans, as did Senators Ben Clark, D-Cumberland, Kirk DeViere, D-Cumberland, and Paul Lowe, D-Forsyth. Two of the four would need to stick with the GOP for Republicans to override a Cooper budget veto.
With a massive $6 billion surplus, GOP leaders have substantial leverage to offer legislators pet projects in exchange for budget support.
In August, nine Democrats voted for the House version of the state Budget.
The GOP will need three of those Democrats in the State House to stick with the GOP to complete an override.
If the governor blocks a budget, and Democrats fail to join GOP members in overriding Cooper’s budget, GOP legislators will pass several mini-spending bills that must pass for the state to have full access to available federal funds, but mostly the budget that has been in place for three years will stay in place.
State Budget Known unknowns (things we know we don’t know)
Will Cooper sign a budget that does not expand Medicaid?
Would Cooper allow a state budget to be enacted without his signature? If Cooper allowed 10 days to pass without signing or vetoing a budget, it would become law. It is an option never yet exercised on the most important piece of legislation a General Assembly ever considers, a state budget. And what exactly would that get Cooper?
Will a minimum of three Democrats in the State House and two Democrats in the State Senate join the GOP in overriding a Cooper budget veto? We believe the answer is yes in the state House. Speaker Tim Moore only needs to keep three of the nine that voted with him before.
We are less sure about the state Senate. Four Democrats already voted for the Senate version of the State Budget, and the final compromise will likely be more favorable to Democrats than the one they already voted on before. How would any of these four Democrats explain to their voters being for the first version of the Senate budget and against a version that funds more Democratic priorities, including infrastructure and higher state worker pay?
Did the state teacher’s union and Cooper learn their lesson in 2019-2020? Both Cooper and the teacher’s union gambled and lost two years ago. The teacher’s union supported Cooper’s 2019 budget veto, believing they could force the GOP into even larger pay and benefit increases than the GOP was offering. They lost and cost rank and file teachers considerable money. Cooper failed in his efforts to flip either chamber of the General Assembly in 2020, and overall, the Democrats lost seats despite there being no teacher raises and no full budget enacted.
Do the Democrats realize this could be the last chance at the best deal they are going to get? After Virginia, it appears as if Republicans are on track to win supermajorities in both chambers of the General Assembly in 2022. They might then enact the tax cuts and other spending priorities without Democrat’s help.
State Budget unknown unknowns (The things we don’t know, we don’t know)
Well….we just don’t know.