Greetings, friends! The last two very busy weeks have been filled with budget meetings in committees. I anticipate that next week will be just as busy as the budget is debated on the House floor prior to a vote.
On Wednesday, our Appropriations committee spent nine hours to hear 105 proposed amendments to the budget. Many people involved in the budget process have commented on the efficiency of this year's process, and attributed the overall expediency to the groundwork that had been laid in the various subcommittees. By the end of April, we are where the process usually is in June. We started early, and have worked hard throughout the session.
This year's budget process has been the most honest, transparent and open one that has been seen in the last decade. From the onset of our budget meetings, decisions have been made with openness and transparency. The House budget has been built from the bottom up in an effort to "right size" state government. We absolutely must reduce spending, reduce the tax burden and shrink the scope of government and this budget turns us in that direction.
After a decade of tax increases that have given our state the highest tax burden in the Southeast, this budget offers the single-biggest tax cut in North Carolina history. By balancing the budget without increasing tax rates, we are restoring over $1.5 billion into the private sector.
This is all about improving jobs and the economy. After the last tax increase, unemployment and bankruptcies in our state went through the roof. The Tax Foundation lists our state among the ten worst in the nation regarding how taxes and regulations affect the jobs climate. This budget is a step toward reversing that ugly distinction.
For the first time in many years, members and the public have had the budget for almost a week to study, rather than receiving it late night prior to the day of floor debate. I applaud our leaders for doing this. The budget is available to the public on-line and you may go to the NCGA website at www.ncleg.net to view the entire budget.
Some of the highlights of the budget bill to date are as follows:
We have funded teaching positions in K-12 to the fullest level - every teaching position in the state has been funded. Our budget also accounts for projected enrollment growth, whereas the governor's proposed budget did not. We funded every position in K-12 except for some of the teacher's assistants. Many superintendents across the state have already made priority decisions to remove many of the TA positions. However, in our budget we have also given superintendents the flexibility to save dollars where they can, rather than making every local spending decision from Raleigh. This budget avoids the huge unfunded mandates to the counties that the Governor's budget had proposed. Such mandates could have likely added three to four cents to our county's tax rate. I personally told her budget director that this was unacceptable. Among other things, her budget would have shifted responsibilities from the State to local education agencies for workers compensation, tort claims, and school bus replacement. These mandates alone would shift $74.5 million of state operating responsibilities, and our county taxpayers cannot afford this. This budget shifts emphasis from the bureaucracy to the classroom. It reduces the Department of Public Instruction agency budget by 16%. For years, legislative leaders continued to believe that throwing money at education is the only necessary solution. This is about more than money; this is about reversing the trend of continued increased spending, fueling more bureaucracy, and decreasing outcomes. This budget requires that at least 65% of “education” money actually be spent toward the classroom.
Health & Human Services
Over half of all budget reductions in HHS have been achieved through savings, including swapping federal block grant funds to replace state funds to the extent possible. This will cause no loss of services. All HHS treatment facilities, schools, mental health hospitals and contract beds have been preserved. We have laid the groundwork for future healthcare innovation and reform; better management and utilization of services; and made substantial progress toward the goal of bending the cost curve for medical and mental health services in North Carolina. We also recognize the cost savings when people use community public health centers when possible rather than hospital emergency rooms. For this reason, we restored the funding to Public Health centers that the governor’s proposed budget had cut.
Justice & Public Safety
The budget creates a new Department of Public Safety, which combines the Departments of Crime Control and Public Safety, Juvenile Justice and Delinquency Prevention, and Correction. A net reduction of 7% was achieved by eliminating over 800 vacant positions and reducing administrative costs in all six agencies.
Funding for maintenance and construction of the existing road system has been increased by $670 million over the biennium. The neglect of road maintenance as the Highway Trust Fund has been raided has been a sad commentary, as our state used to be known as the "Good Roads State". The budget begins the process of removing politics from transportation funding by removing all urban loop projects from statutes and moving them to the Mobility Fund.
The budget achieves savings through reduction of operating costs, administrative reductions, and elimination of vacant positions. It fully funds the building reserves for new DHHS buildings. It eliminated 17 positions from the General Assembly and 13 positions from the Governor's office.
Natural & Economic Resources
We have reduced operating budgets across agencies and eliminated programs to achieve almost 23% in savings. We also provide nonrecurring funds to promote job creation and economic development.
The budget includes some reasonable fee increases which only help to recoup the costs for state government providing a service. The fees are not designed to generate a profit for government. Fees are, by definition, only applied to those who use the service. Most people believe this is only fair, rather than increasing taxes on everyone to further subsidize these services.
Just the Facts
There will of course be those liberal detractors of the budget that are pushing for a continued policy of tax increases and higher spending. Our budget spending is up almost 50% in only seven years! This is unsustainable, and we were not elected to continue such irresponsible spending. But, here are two items of misinformation that we hear.
1) Liberals in Raleigh are saying this budget hurts jobs by laying off state employees. For many reasons, this is not true. The budget downsizes some areas, and eliminates approximately 18,500 positions (thousands of which are vacant). The normal attrition rate of state positions is 30,000 per year... read this again, we lose 30,000 jobs a year through natural turnover and attrition. It bears note that North Carolina's state government jobs are reported to be well above average in number, and have grown considerably at a time private sector jobs have considerably declined.
2) Liberals in Raleigh are saying this budget cuts too much and will ‘take our state back to the dark ages’. One legislator said ‘it is draconian’. This is also not true. This budget is equivalent per capita in real, inflation adjusted dollars to the budget from fiscal year 2003. That means that if the budget had simply grown annually based on inflation plus population growth, this is where we would be. If this budget is 'draconian', the same must be said for the 2003 budget (which was passed by a Democratic House, Senate, and Governor). Clearly, any hysteria is all political in nature.
We cannot continue on the spending path we have been on. Many of our dedicated funds (Highway Trust Fund, Rainy Day Fund, etc.) have been borrowed, and our State Treasurer says we cannot continue to borrow more. Our State Health Plan is insolvent, with a shortfall of $515 million (and a actuarial shortfall of $33 billion). There are many responsible choices restored in this budget - too many to list. One is that we are once again fully funding the "Rainy Day" emergency fund as it was designed. The recent barrage of tornadoes has reminded us that we need to be ready for such emergencies.
In short, we cannot continue to spend what we do not have. This budget represents a step in the right direction as we attempt to get North Carolina’s fiscal house in order.
Finally, as mentioned, our state has seen devastation over the past two weeks in the aftermath of storm damage from widespread tornadoes. Major damage and destruction barely missed the legislative complex but is very evident in downtown Raleigh. I want to encourage each of you to do what you can to help our tornado victims, no matter how small. Many of these victims lost virtually all their belongings. We are very fortunate in our district to have been spared from the total devastation these storms produced in other parts of the state.
Thank you for allowing me to serve you in Raleigh. With all of the death and damage we have seen in North Carolina and through the southeast, let us all remain thankful for all we have and for the blessings that have been bestowed upon us. I encourage you to remember the National Day of Prayer on Thursday.
Take care and God bless. Bert