N.C. Sen. Tom Apodaca, R-Henderson, listens to state Sen. Martin Nesbitt, D-Buncombe, on the Senate floor in April 2011. Photo by Travis Fain.

RALEIGH — Democrats have called the Republican-built state budget a “charade” and a Titanic-level disaster that will cause “irreparable harm” to public schools. Republicans call it a responsible plan that saves teacher jobs, and they convinced enough Democrats to vote for it to send it to the governor with a veto-proof margin.

The truth probably won’t be known for weeks because local school systems need time to implement the new spending plan and tell teachers and other school employees whether they have a job next fall.

Estimates on just how many people that will happen to differ by the thousands.

Taken from the bottom line, the legislature’s $19.7 billion state budget doesn’t differ much from the $19.9 billion proposal Gov. Bev Perdue put forward in February. But past the surface, there are major differences.

Some $200 million of the House/Senate budget total comes from an accounting shift — moving the highway patrol from the transportation budget to the general fund. The budget no longer specifically eliminates teaching assistants in second and third grades, but it includes enough in flexible school funding cuts that the governor’s office says systems will be forced to cut those jobs, and regular teaching jobs as well.

“They’ve done more with less for two years…” Perdue said last week. “And there is nothing else left for them to cut but warm bodies.”

Medicaid, policy shifts and trust funds

The budget calls for an unknown number of Medicaid services to be cut or fully defunded if various savings targets can’t be met in other ways within the health-insurance-for-the-poor program. That could cut or end subsidies for hearing aids, hospice care, dental care and a number of other services considered optional by the federal government.

There are also several of policy shifts included in the budget, including strict new rules meant to keep the state’s environmental and labor arms out of business’ way. Both agencies would generally be forbidden from making new regulations beyond what the federal government requires without permission from the General Assembly.

The budget also includes some new fees, though not the full $100 million worth contemplated by the House budget earlier this month. For example, local schools would be able to charge $45 for a driver education classes instead of the $75 previously discussed. Those classes are currently free.

The budget also raids a number of trust funds, meaning they’ll be used to help balance the budget instead of being earmarked for specific functions, such as farming grants and clean ups for illegal dumping sites.

N.C.’s bond rating, sales taxes, deductions

Altogether, Andy Willis, the governor’s budget director, said there are a number of “unachievable” goals buried in the House/Senate budget, and they could ultimately endanger the state’s lauded AAA bond rating, which helps keep borrowing costs low. That includes $200 million in “technical mistakes and overestimating of savings” built into the legislature’s Medicaid budget, according to the governor’s office.

Republican budget writers dispute these things, and state Sen. Tom Apodaca, a Henderson County Republican and part of the Senate leadership team, said he expects this budget to improve the state’s rating. Republicans note that the budget avoids extending a penny sales tax put in place two years ago, which is the main sticking point between Perdue and the Republican majority.

The governor wants to keep 3/4 of that penny in place, raising more than $800 million in the next fiscal year, which starts July 1.

The legislature’s budget doesn’t include a corporate tax cut the governor had called for, or all of a tax-cut package House leaders had discussed over the last two months. But it does exempt the first $50,000 of a taxpayer’s business income while getting rid of a number of specific deductions, which will amount to a tax break for many people, budget writers have said.

State Rep. Mitch Gillespie, R-McDowell and a House Appropriations chairman, said he challenges anyone to find an important government service cut in the legislature’s budget. He also said the budget language, which includes various flexible spending cuts for public schools, is “drawn so tight that (local superintendents) can’t touch a teacher or teacher’s assistant.”

They can cut vacant positions, Gillespie said. They might lay off assistant principals, clerical staff and janitors, he said, but not teachers or teaching assistants.

Education and other state jobs

Brian Lewis, the North Carolina Association of Educators’ chief lobbyist, scoffed at that.

“I don’t think Mitch Gillespie understands his own budget,” he said. “…(Republicans) are living in a fantasy.”

The NCAE predicts that 9,292 public school employees will lose their jobs under the legislature’s new budget. Of that number, 4,574 will be certified teachers and 2,246 teaching assistants now staffing kindergarten through third-grade classrooms, Lewis said. These are not vacant positions that would simply be eliminated, Lewis said, but “actual filled positions.”

Republicans worked off a much lower set of predictions as they built the budget. State Sen. Pete Brunstetter, R-Forsyth and a Senate Appropriations chairman, provided numbers this week showing 4,866 jobs lost in the state’s public K-12 schools, though it wasn’t clear how many of those are vacant. Like Gillespie, Brunstetter said teaching jobs would be protected.

Beyond education, the Senate Republican numbers included 2,692 jobs lost in general state government, with 1,591 of those vacant. In universities and community colleges, 3,810 jobs would be lost, with at least 1,300 of those vacant, the numbers show.

Comparing this budget to the governor’s, and to last year’s budget, “there ain’t a real big difference,” Brunstetter said.

Both sides also point to real-world examples. Several top Republicans said they talked to superintendents in their districts before finalizing this budget, and that the superintendents said cuts could be absorbed without firing teachers.

Apodaca said he talked to two of the three superintendents in his district, “and both of them thanked me, saying they can work with what we sent them.”

But Lewis said termination notices are already being handed out by various systems across the state. He pointed to Lee County, southwest of Raleigh, which announced more than 50 teacher layoffs this week. Most systems are still crunching numbers, and Republicans predicted that the way they’ve written the state budget, combined with leftover federal stimulus money, will protect every K-12 teaching job in the state.

The real impact of this budget should become clear enough as it’s implemented in the coming months, and Senate President Pro Tem Phil Berger said it won’t be nearly as dire as Democrats predict.

“Everybody to a certain extent can predict this is going to happen, or that’s going to happen,” he said. “Let’s just see.”


North Carolina budget bill (House Bill 200) ratified 6.6.11.

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Travis Fain is a contributing reporter for Carolina Public Press. Contact him at ctfain@yahoo.com.

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