HOW’RE YA GONNA KEEP’EM DOWN ON THE FARM
Subcommittees were still scheduled to meet when the top Republican budget chairs in the N.C. House and Senate filed bills Tuesday that was loaded with surprises and also expectations. House Bill 584 and Senate Bill 500 has the short title “The Governor’s Budget.” The longer titles says the bill is a base budget for state operations “and other purposes.”
Surprises: the bills called for expenditures over of over $19 billion in the upcoming fiscal year and over $20 billion in 2012-2013; cuts to education are nominal, less than 2 percent; the proposal of Gov. Beverly Perdue to maintain a .75 cent sales tax is included; cuts to the Department of Commerce operations approach 35 percent.
Expectations: local school systems will pick up workers compensation insurance costs; local LEAs also will buy school buses; the State Board of Education will be given the flexibility—and the mandate—to impose cuts when and if revenue streams are diminished. More at Four for pre-K children is continued, but moved to public schools.
This appropriations package from the leadership probably is a shock to many new Republican legislators who campaigned on smaller government, lower taxes, and reduced spending. The challenge of the leadership is to keep these members on board as the process goes through committees and the full Chambers. Amendments to the bills are likely to flow from conservatives and liberals from Democrats and Republicans when the committees convene, probably next week.
This is the first time in recent memory when budget bills were introduced simultaneously in both Chambers. It gives the leadership the opportunity to meet their deadline of final adoption of a budget by June 1. The majority party also has insisted redistricting will be adopted before the end of June when the sessions are predicted to adjourn. With teachers protected and the sales tax provision, there is less likelihood of a gubernatorial veto.
REVENUE PLUSES AND MINUSES: The largest sources of revenue for state operations are the personal income tax and the sales tax. The .75 cent sales tax will generate over $850 million, according to Fiscal Research. But corporate income tax will be reduced to 4.9 percent effective January 1. The revenue loss from the lowered corporate tax will be $115 million in the next fiscal year and $303 million in FY 12-13.
The budget also transfers $424 million to the General Fund for education, most of which goes to reduce class sizes. A new feature is $69 million set aside for scholarships for needy students.
ACCOUNTABILITY AND MANDATES: While the costs of government were not reduced as many expected, the language and provisions demand more accountability.
Legislators writing the budget want to track local support for education and if counties are paying a fair share as determined by property values and average personal income of residents. Accountability language flows throughout the document.
The dollars may be close to those used by Democrats over the past decades. But there is a difference in the demands and expectations.
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