The governor's budget, second preview
Gov. Mike Easley gave an early look at his budget by way of a news release last week.
(Click here for the legislative preview story from the dead tree edition.)
(Update: Other legislative/budget previews from Charlotte, Raleigh and Fayetteville.)
Easley's budget advisor Dan Gerlach sat down with some of us scruffy media types on Friday to give a further glimpse. As he described it, Easley's budget would have three themes:
- * providing help to the less fortunate - "the least of these" in the in vogue parlance of Raleigh.
- * education. Expect Easley to make the case that his budget raises teacher salaries to the national average.
- * fiscal responsibility. You'll see him put more money in the rainy day fund and project a budget surplus at the end of the fiscal year. Basically, he aims to leave the next governor in better financial shape that was the case in 2000 when he took office.
For those who need it, here's the 90-second budget primer: The state writes a two-year budget in odd-number years. So in 2007, the state wrote a $20.7 billion budget. In even number years, the General Assembly gets to "tweak" the budget, making adjustments, adding new programs, perhaps phasing in or out a tax. Actually, the "tweak" can end up looking like a wholesale rewrite. This year, because of a cruddy economy, tax revenues are down and what gets done this summer is likely to be more in the mold of a tweak - if you can call a few-hundred-million-bucks a tweak.
At any rate, the tweaking begins on Monday when Gov. Mike Easley puts his budget on the table. Then the House goes to work, with the formal "short session" beginning on Tuesday. After the House writes its budget version, the Senate gets a crack. And finally, the House, Senate and governor sit down to negotiate a tax and spending plan that makes almost nobody completely happy.
One last note: technically, there's a budget in place until June 30, 2009 and there aren't any taxes expiring. Therefore, we don't have the prospect this summer of getting into one of those fabulous showdowns where everyone threatens to shut down state government and we have continuing resolutions and there's all that gnashing of teeth. However, the cities and counties who all have to have their budgets done by July 1 and depend a great deal on the state budget, would really like things to wrap up ASAP.
So what does the governor have in the offing? We'll find out in detail at 11 a.m. Monday. However, here are the notes from Gerlach's Friday briefing, in no particular order:
- * The overall budget will go up 4 percent, about half of the increase from the year before.
- * Even though the budget overall will increase, Gerlach said there will be "substantial" cuts in some departments. The reason for this is that the governor wants to do some things - like expand teacher pay - that will cost money. But tax revenues haven't grown fast enough to keep everything in state government as it is and do the expansions.
- * The cuts will not affect classrooms or social services, Gerlach said.
- * Agencies will be given some specific marching orders and in other cases just general guidelines on what to pare back.
- * It is business taxes and sales taxes that are projected to fall off the most.
- * Enrollment is expected to be up in public schools, universities and community colleges. Community college enrollment is particularly seen to be "spiking."
- * The governor will propose no changes to lottery distribution or policy.
- * There will be more funding for support programs that serve military families.
- * There will be a comprehensive package of mental health reforms and funding proposed. In addition to increases, the governor's budget anticipates reducing Medicaid funding for community support programs.
- * For years the state has transferred money from the Highway Transportation Trust Fund to the general fund, basically subsidizing state spending on education and social programs. With the highway fund in dire straights, the General Assembly last year said they were going to stop those transfers. The governor's budget will begin the phase out, meaning less money will go from the trust fund to the general fund this year. Gerlach did not say how much.
- * The governor will designate money that stays in the trust fund to build either urban loops or to jump start construction by the turnpike authority (read: build toll roads).
- * The governor does not plan to offer transportation or other big bond package.
- * There will be some borrowing in the governor's budget, all in non-voter-approved mechanisms and all aimed at finishing projects in process. ("We're trying to wrap things up and not start obligating future governors and legislatures to costs," Gerlach said.)
- * Teacher pay will go to the national average. State employees and community college workers will get pay raises - though it didn't sound like they would be as big.
- * There will be more staff for probation and parole.
- * The governor will propose a sales tax holiday for October on energy efficient appliances.
Now remember, none of this makes it into the final budget with out the legislature sticking it in there. Easley has had a fairly good record of getting his big ticket items in the final budget, but the tighter money gets the harder the honorables tend to scrap - and this year money seems to be on the tight side.
I'll have my own session/budget preview story up online in the morning (I think). (Click here for that.) For now, click on the jump for the Associated Press' budget preview.
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From our friends at the Associated Press:
- By GARY D. ROBERTSON
Associated Press Writer
RALEIGH, N.C. (AP) _ Gov. Mike Easley on Monday will propose increasing state government spending by less than half as much as last year, aiming to provide for his signature education programs while at the same time leaving his successor a sound budget.
Easley's spending plan will make suggestions for adjustments to the two-year budget's final year, which begins July 1. The governor will propose making "several hundred million dollars" in spending cuts to keep the growth to about 4 percent, said his budget adviser, Dan Gerlach. By comparison, spending was up more than 9 percent to roughly $20.7 billion in budget's first year.
Gerlach said the targeted spending reductions wouldn't hurt classroom education or access to human services.
"There will be concerns about the reductions," he said, but "there's not a lot of things that we're eliminating."
Spending also will be tempered because the state isn't collecting revenue at the same breakneck pace as it has in the past two years.
Senate Minority Leader Phil Berger, a leading critic of the Democrats' spending habits, said Easley and the Democratic Legislature will be hard pressed to keep up with spending that has grown nearly 30 percent since 2004.
"We forget the other side of this equation," said Berger, R-Rockingham. "The revenue is a direct result of the (high) tax rates we've got."
For years, Easley has talked about leaving the budget in decent shape for the next occupant of the Executive Mansion. He entered office in January 2001 and within a month was forced to use emergency powers to plug a budget hole that reached $1.6 billion the following year.
Many potential culprits have taken the blame for that budget crisis: a recession that ultimately costs the state more than 200,000 manufacturing jobs; tax cuts passed by the Legislature in the late 1990s; lawsuits lost by Easley while he was attorney general that led to hundreds of millions in damage payouts; or inaction by then-Gov. Jim Hunt.
Gerlach put the blame on the economic downturn early this decade, which decimated the state's traditional industries of textiles and furniture.
"What the governor's not going to do purposefully to the next governor what was done unpurposefully because of the timing of the recession," Gerlach said.
Easley's budget attempts to keep improving access to quality education from prekindergarten to college by building on programs started in previous years, Gerlach said. Those programs have included the More at Four early childhood program, class-size reductions in primary school grades and giving high schoolers more opportunities to take college classes.
Easley has said those initiatives will better prepare students for the global economy by teaching them the skills need to perform high-tech, high-paying jobs that aren't as likely to be eliminated.
Gerlach said the budget proposal will also:
- fulfill Easley's 2005 pledge to raise the average salary of public school teachers above the national average.
- spend $20 million to expand children's health insurance and child care subsidies and help homeowners at risk of foreclosure.
- increase staffing for the state's probation and parole system.
- restore money to the state's Juvenile Crime Prevention Councils, whose $22.7 million had been the subject of scrutiny by the General Assembly this year.
- propose a sales tax holiday in October for energy-efficient appliances and other devices.
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