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Senate Advances Budget Proposal & Prepares for Final Floor Votes
The Senate’s $19.4 billion budget proposal passed out of the Senate Appropriations Committee this past week and is scheduled to receive the first of two required full floor votes Tuesday (5/31). The Senate’s proposal spends $129 million more than the House and $473 million less than Governor Perdue’s spending plan for the upcoming fiscal year.
While key differences exist between the Senate and House proposals, budget leaders are indicating that a compromise to the budget has been reached. In the potential compromise, the Senate would amend its budget plan to include $300 million more in spending primarily for public schools and would agree to some changes by the House budget writers, including significant transportation provisions. These provision changes came at the request of the five House Democrats who voted with the majority of the House and who are critical to override a veto by the Governor. If a compromise in fact is reached the budget would avoid going to conference committee and could potentially be passed by both the House and Senate in the next week.
House vs. Senate: Highlights of Spending Differences:
- Education
The Senate budgeted $10.7 billion for education, over $62 million more than the House proposed, which would provide higher spending for public schools and the UNC system. The Senate cut the university system 12.5% versus the House cut of 15.5%. The Senate’s proposal seeks to begin reducing class size to the targeted ratio of 1 teacher for 15 students in early grades by hiring over 1,100 teachers. The plan would eliminate funding for teachers’ assistants in all grades except kindergarten, which accounts for 13,000 positions. The Senate budget also includes $1 million to research and develop a performance-based pay model for teachers and $115 million for district school construction.
- Transportation
The Senate’s budget proposal focused on bridge repair and highway maintenance while reducing drastically spending on transit and turnpike projects. The Senate’s plan eliminates funding for the Mid-Currituck and Garden Parkway toll projects, along with the funding earmarked for urban transit projects over the next two years. The Senate’s proposal also requires the Department of Transportation (DOT) to gain legislative approval on any federal grant that costs the state more than $20 million in matching capital funds and in annual maintenance and operation costs. The DOT would also have to begin collecting tolls on the four state ferry routes under the Senate’s plan, while the House exempted two ferries from toll collections.
- Health & Human Services
The Senate’s proposal cuts a wide array of services under Medicaid coverage, including physical occupational, speech, and respiratory therapy, and limits dental care to emergency cases unless the patient is pregnant. Additionally, the Senate plan dissolves the NC Partnership for Children, the central office for Smart Start, and moves supervision of Smart Start to the state Department of Health and Human Services.
- Tax Reform
The Senate tax package reduces the rate for all individual income tax brackets by a quarter-percentage point, dropping the rates to 5.75, 6.75 and 7.5 percent. Additionally, the measure would exempt the first $50,000 of net business income of small and start-up companies whose gross receipts do not exceed $825,000. The plan also repeals the tax deduction for severance wages, the tax credit for recycling oyster shells, the sales tax holiday on energy-efficient appliances, among others.
Review all comparisons between the House and Senate budget proposals.
Workers’ Comp Reform Passes Significant Hurdle
The House Select Committee on Tort Reform has passed HB709: Protect and Put NC Back to Work. After extensive negotiations between parties on both sides of the issue, the committee approved a consensus bill that would be the first significant workers’ comp reform in the General Assembly since 1994. One of the primary objectives of this legislation was to bring North Carolina’s indemnity costs in line with surrounding states by limiting the duration of temporary total disability (TTD) benefits. The proposed legislation would place a 500 week cap on temporary total disability benefits, increase the cap on temporary partial disability benefits from 300 weeks to 500 weeks, improve the structure, operation and accountability of the Industrial Commission, improve communication between the employer and the doctor to better facilitate employee’s return to work and ensures that both parties have equal access to medical information. A key part of the committee negotiations was creating an opportunity for an injured worker to make the case to the Industrial Commission that they are unable to go back to work and that their benefits should be extended beyond the 500 week cap.
The measure now moves to the full House for a floor vote, which could happen as early as this week.
House Moves Health Benefit Exchange to the Senate
This past week the House approved HB115: North Carolina Health Benefit Exchange with a vote of 83-34. The bill creates an online marketplace for individuals and small employers to purchase qualified health care plans. The 2010 federal health care overhaul law requires all states to have an exchange and the federal government will create health exchanges in any states that have not implemented their own by 2014. Democratic opposition argues that the exchange plan does not offer enough consumer protection, favoring insurance companies. However, co-sponsor of the bill, Rep. Tom Murray (R-Wake) purports that the bill is pro-consumer and upholds the insurance market outside the exchange. The bill now heads to the Senate for their consideration.
North Carolina Remains a Pivotal Battleground State for 2012
It’s looking like North Carolina will yet again be a “purple state” come the 2012 presidential election. With the 2012 Democratic National Convention coming to Charlotte, President Obama’s administration seems to be gearing up for visits in the state. The President will be in North Carolina in the coming week to discuss how the government can promote economic growth in the private sector. Republicans are also are showing their strength in NC, with Reince Priebus, Chairman of the Republican National Committee speaking this week at state Republican headquarters in Raleigh for a “Take Back NC” grass-roots fundraising event.
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