In a bizarre turn of events, the House Committee on Appropriations met today to review and vote on a new spending plan for the upcoming fiscal year. The bill passed in what appears to be along partisan lines, and it heads to the House floor tomorrow. For the most part, the new spending plan leaves in place the second year (FY2015) of the two-year budget that lawmakers already approved last year. The changes are mainly geared toward moving lottery dollars into the General Fund, boosting pay for teachers and state employees, and adjusting the education budget.
See the NC Budget and Tax Center’s statement on the budget here.
The day started with Governor McCrory and Speaker Tillis holding a joint press conference at 1pm to make an education announcement. It was revealed that House leadership planned to unveil a new spending plan that doesn’t rely on raising additional lottery dollars generated from increased advertising. What wasn’t mentioned at the press conference is that the new plan relies on more lottery dollars to finance pay raises, those dollars just aren’t generated from relaxing the advertising rules. Those dollars just happen to be the result of revised lottery projections under current rules. In other words, the budget is still relying on a source of funding that is unstable and regressive.
Once that new plan was presented in the House Committee on Appropriations, it was quickly dubbed as the “mini-budget.” But that’s a misnomer because the new spending plan spends $139.6 million more than the budget the House approved earlier this month. Those extra dollars, as mentioned above, come from moving lottery dollars into the General Fund to finance teacher raises and a pilot program. They’re also able to spend more by sending fewer dollars to the state’s Rainy Day Fund, which is a reasonable step in light of the fact that state spending is failing to keep with the needs of families in the aftermath of the Great Recession. But, with the growing likelihood of a sizeable revenue shortfall by the end of the next fiscal year, those savings are going to be crucial to maintaining stability in future years—unless lawmakers choose to make cuts to offset the chasm between what they have in revenue and what they need to fund.
On the spending side, here are some noteworthy changes in the new spending plan:
- Provides teachers with an average 5 percent pay raise, which is built into a new salary schedule. And, beginning teachers receive a bigger boost in pay as part of a plan to move the beginning teacher salary to $35,000 over a two year period.
- Provides state employees with a $1,000 raise/benefits and 5 extra vacation days. And, retirees get a 1.44 percent cost of living adjustment.
- In line with the budget memo that Governor McCrory issued on Monday, the bill also makes $361 million in cuts to programs and services that were included in each of the Senate and House budget proposals (see full list here). Filled positions that are eliminated in either the Senate or House budgets should be treated as such. Similarly, vacant positions that are eliminated in either of the proposals shall not be filled.
- Restores the salary supplement to teachers who earn an advanced degree in the subject they teach.
- Provides financial aid for military veterans attending the Community College System or the UNC System, as part of the Yellow Ribbon Program.
- Provides $1.8 million to fund 25 positions in DENR and the oversight and enforcement of the coal industry.
- Changes the revenue trigger for the corporate income tax rate reduction, which could reduce the threshold for rate reductions to go into effect.
It’s worth mentioning that today’s committee vote came after less than 1 hour of debate and just days after conferees were appointed to iron out the differences between the Senate- and House-approved budgets. Children, families, and communities deserve a more structured budget process that is prudent, fiscally sustainable, and considerate of the full scope of programs and services provided by the state.