By John Frank
June 26, 2014
RALEIGH — A four-hour span of political theater Thursday illustrated the lingering divide among Republican legislative leaders on how to rework the state’s $21 billion budget.
Senators started the morning grilling State Budget Director Art Pope about Medicaid spending in the House and governor’s budget plans. An hour later, House lawmakers side-stepped the issue with their unanimous approval of a new education-focused spending plan the Senate opposes.
Despite hoping to finish the session this week, lawmakers left Raleigh at the end of the day with much unresolved. House and Senate budget negotiators don’t anticipate significant progress before Monday, the final day of the fiscal year.
“We want to make sure we get it right and if it takes a while to do that then we are prepared to take the time necessary,” said Senate leader Phil Berger, an Eden Republican.
If no new budget bill wins approval before Tuesday, the state’s current two-year budget and its additional spending cuts will take effect.
The roadblock to a new budget bill is a disagreement about how much money to put into Medicaid, the health care program for low-income children and their parents, the disabled and elderly who are poor. The House and Senate plans are $248 million apart – attributed to a difference in how to calculate this year’s costs overruns and the amount needed for next year.
The House numbers essentially mirror what the governor’s office produced and State Budget Director Art Pope, under the threat of legislative subpoena, came to defend them before the Senate Appropriations Committee. The two-hour hearing included a few tense moments.
Sen. Jerry Tillman, an Archdale Republican, said the Senate was taking a conservative approach by putting more money to Medicaid, compared to the House and governor.
“What I want to know Mr. Pope, is with all these unknowns, why would we gamble with a $200 to 300 million deficit coming into an election year?” he asked.
Pope – a top Republican donor and former lawmaker known for his conservative fiscal approach – said if the program is underfunded, lawmakers can fix it next legislative session. And in dramatic terms he outlined the stakes in the budget debate if the Senate pulls too much money from other areas into Medicaid.
“Senator, what is the cost of overfunding Medicaid? The cost in the Senate budget is firing teacher assistants. … If you unnecessarily fire them, you can’t go back and rehire them and put them back in the classroom next spring if we find out, ‘Oh, we overfunded Medicaid,’ ” he said. “The Senate also pays for its budget by changing the Medicaid eligibility laws. That would require not underfunding Medicaid but removing 5,200 aged, blind and disabled low-income residents from the Medicaid safety net.”
Sen. Harry Brown, the Republican majority leader and a top budget writer, appeared to take offense to the comments.
“We have not negotiated a budget,” he responded. “What we are trying to negotiate is a starting point to begin a budget process. Your comments want to dictate what our budget may do. That’s not a final budget and you know that.”
Senate and House leaders said after the hearing it did little to clarify the situation.
“One of the concerns that we have is that for three consecutive years we’ve had numbers put in the budget that turned out to be incorrect numbers,” Berger said. “If we make a wrong assumption this year, as to what the Medicaid spending number will be, it puts into jeopardy a lot of things that we’ve been working on.”
Plan ‘a gimmick’
A few hours later, House lawmakers unanimously passed 117-0 an education spending plan introduced Wednesday afternoon. The bill separates key priorities from the larger House budget bill approved earlier this month.
Under the plan sent to the Senate, teachers would receive an average 5 percent pay hike, most state employees would received $1,000 pay hikes and the state would add 25 new coal ash regulators.
It also would maintain teacher assistant positions and allow current teachers to maintain their tenure – both of which the Senate wanted to eliminate in its budget proposal.
Rep. Nelson Dollar, a Cary Republican and the House’s chief budget writer, cast it as a “fulfillment of the top priorities of this General Assembly and as a fulfillment of our commitment to education in this state at all levels.”
Democratic lawmakers supported the measure with reservations. Minority party leader Larry Hall of Durham called it a “Band-Aid” and suggested the numbers may not balance.
“It’s not a budget, it’s a spending plan,” he said.
Senate leaders have called it a “gimmick” and suggested it doesn’t give teachers a big enough pay raise or provide enough money for Medicaid.
“We think we need to adopt a budget, and a full budget. This … mini-budget does not accomplish what we came here to do,” Berger said.
Rep. Craig Horn, a Weddington Republican and budget writer, acknowledged the back-and-forth did little to shift the landscape.
“I don’t think it changes where anyone stands,” he said.
But he said the House “wants a full budget, too” and is holding out hope for a compromise.