The fiscal staff provided members with a February Revenue outlook on Tuesday. NC has lost 154,000 jobs, and the decline in employment will continue through the second quarter of 2010. Historically, the revenue shortfall in 1981-1982 was 9.2 percent, in 1990-1991 it was 8.1 percent in 2001-2002 it was 10.8 percent. Personal income growth is forecast for 2.1 percent, where as in prior years the state planned on a 5, 6, and even 7 percent increase in growth. The hope is that the economy will begin to turn around by the end of 2009. The 2008-2009 budget gap is expected to be close to 10 percent or $2 Billion. The Federal Stimulus package is anticipated to provide $934 Million to NC and with the Governor’s budget reductions the 2008-2009 budget gap may be closed. The Federal Stimulus package is still having problems in the Senate as they continue to work this week.

The General Assembly Budget for 2008-09 was $21.4 Billion. Assuming there is no growth, no balances, keep reversions and no overcollections, the budget would be at $18.8 Billion, however if you add recurring items, it will increase to $20.9 Billion resulting in a $2.1 Billion shortfall. Major budget concerns yet to be addressed for the 2009-2010 include: $800 Million shortfall to the State Health Plan over the Biennium, increased enrollment costs for community colleges and universities $200 Million, Public Schools $110 Million, ABC Bonuses $100 Million, and Medicaid payments ranging from $150 Million to $300 Million. Other major budget issues include: funding for capital projects, biomedical obligation $172 Million, repairs and renovations $100 Million, salary increases for state employees (1 percent increase equals $125 Million), retirement COLAs (1 percent equals $33 Million), decline in the retirement fund, expansion of SCHIP (state matching funds) and the Highway Transfer Funds (phase out $39 Million). The above issues would total $1.5 Billion, depending on the projections and decisions (salaries and cola) to be made by the legislature.

On Tuesday, the House and Senate Republicans held a Press conference calling for Education Reform. Several of their initiatives include: using national tests, reward teachers with merit pay, enhance career tech programs, and eliminate the charter school cap.

On Wednesday, February 4, the staff reviewed the State Health Plan. The General Assembly will need a $300 Million infusion of cash by March 31, 2009 to continue to meet payment obligations. They are talking about taking the funds from the Rainy Day Account ($787 million balance). In addition, they may need to budget for another $1.2 Billion over the next two years. The options to filling the hole include: benefit changes, premium rate increases and other operational changes. There are 500,507 active employees and 166,302 retirees in the plan. Public schools and higher education account for most of the members. The plan expects a 9 percent growth. If the premium for family coverage is increased by 30 percent as some have suggested it would increase from $489 to $640.  Any premium increase would occur on October 1, 2009. The Health Plan will require major budget considerations by the legislature for the 2009-2010 budget.

The Senate released their Committee membership list on Thursday. The Appropriations/Base Budget Chairs are Senator Garrou, Senator Dannelly, Senator Albertson, Senator Swindell. The Appropriations Education/Higher Education Co-chairs are Senator Malone and Senator Stevens. The Education/Higher Education Committee is also Chaired by Senator Malone and Senator Stevens.

The House is expected to name their Committee Chairs by Wednesday next week. A bill summary document will be provided next week for key education bills introduced to date.

Bills Introduced:

House Bills

HB 9  No Texting While Driving

HB 18 Speech Language Pathologist Qualifications

HB 21 Eugenics Program-Support and Education

HB 37 Pay Teachers the ABC Bonuses They Earned

HB 42 Science Safety in the Public Schools

HB 43 School Board Members/Failure to Discharge Duties

HB 56 Funds for Center for Advancement of Teaching

HB 57 High School Pilot Program/International Studies

HB 65 Students Under 16 May Attend Community College

HB 68 Prohibit Use of Electronic Devices/Driving

HB 71 Four-Year Terms

HB 72 Four-Year Terms Implementing Statute

HB 74 Spend 65% of School Funds in Classroom

HB 76 School Board Candidate Filing Fee

HB 79 Extend School Formula Study Committee

HB 88 Healthy Youth Act

Senate Bills

SB 19 Use of Additional Technology Prohibited

SB 22 Ban Texting While Driving

SB 32 Employers Must Use Federal E-Verify Program

SB 35 Early Organizational Session

SB 46 Internet Libel/Civil and Criminal Offense

SB 65 Amend Computer Solicitation of Child

SB 66 Require Arts Education Credit for Graduation

SB 68 No ABC Establishments Within 1,000 ft. of School

SB 70 Construction Standards/Manufactured Housing

SB 72 Wake School Board Elections



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