Pricey Harrison

Friday, June 17, 2005

Greetings From Raleigh 6-17-05

A goal was reached early Thursday morning when we passed the House budget, leaving for upcoming weeks the larger goal of finding agreement with Senate members on all aspects of the proposal so that Governor Easley can sign the package - ideally before the beginning on the new fiscal year on July 1.

The House approved a $17.1 billion spending plan for 2005-06 that will respond to North Carolina's increasing needs in education, health care, and public safety programs. It restores important funding that the Senate proposal cut from the Medicaid program and such public safety programs as the Drug Treatment Court and SBI services. In addition, it provides tax relief to small businesses that provide health insurance to their employees, ensuring that more workers will have access to affordable health care.

A comparison of the House budget with the Senate budget will note that the temporary sales tax increases that the Senate would have made permanent will be extended for only two years if the House decision prevails. The House also extended the temporary increase of the income tax on upper income taxpayers, the Senate would have cut this tax. The House also declined to go along with the Senate-suggested corporate tax rate drop. Another major difference - on the tax side - is that the House passed a 25-cents per pack increase on cigarettes. House members' suggestions on this issue ranged from zero to 75 cents per pack, but a decision at 30-cents would keep North Carolina far below the national average of 84.5 cents.

Other major differences between the two versions of the budget are:
1. Health and Human Services programs - a House proposal to close one of the four mental retardation centers and a $15 million provision to offset counties' Medicaid costs
2. Public Schools - increased funding of $9.4 million for 28,309 new students and millions more for low-wealth schools, teacher bonuses and Governor Easley's "Learn and Earn" high school initiative
3. The University System - increased funding for project enrollment growth on campuses and growth in the distance education programs.

An item that the House and Senate agreed to include in the budget would increase the level of the lowest salary for state employees to $20,112 per year, an increase of $1,420. Fulltime state employees would then be paid a minimum of $9.67 an hour, compared to the federal minimum wage of $5.15. This would affect many state employees in custodial and cafeteria jobs.

Another important aspect of the budget proposal for the Department of Education, our largest state agency, is that it used some of the principles of zero-based budgeting. In this instance, education subcommittees examined line items and heard staff in the Department of Education explain and justify expenditures. Speaker Jim Black has said he plans to set up a select committee this year that will look at the concept of zero-based budgeting with the hope that programs can be eliminated or consolidated to make them more efficient. He added that the committee's recommendations can be evaluated and considered next year while adjusting the budget for the second year of the biennium.

Some highlights of the House budget bill that, if included in the final budget, would directly affect Guilford County are:

* a $500,000 allocation to the International Home Furnishings Market in High Point
* a $100,000 allocation to a civil rights museum in Greensboro
* a $1.5 million allocation to the Charlotte Hawkins Brown Museum
In addition, an amendment that I proposed during final House budget negotiations was approved and will shift $40,000 in each year of the 2005-2006 biennium from the Natural Heritage Trust Fund to the North Carolina Farmland Preservation Trust Fund. If it is included in the final budget, it will help farmers keep their land in agriculture.

The budget bill has returned to the Senate and we expect that House changes will not be accepted. The procedure then will call for a conference committee - comprised of House and Senate members - to work out the differences and create a final budget. After the budget compromise is approved by the House and Senate, it will go to Gov. Mike Easley for his signature into law.




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