Tentative Budget Deal

WRAL’s Bruce Mildwurf reports on this evenings activities:

More on the Budget Agreement Here

Click here for the WRAL Video

WRAL on Budget

Tax plan restores some budget cuts

Posted: Today at 3:38 p.m.

Updated: 16 minutes ago

RALEIGH, N.C. — As legislative leaders tried to hammer out a final budget proposal Friday, they agreed not to increase class sizes through the sixth grade and to keep schools for the deaf and blind open.

After cobbling together a plan Thursday to raise $990 million in new taxes over the next year, lawmakers began restoring some previous cuts to the state budget. Top budget negotiators said they expected to have a final spending plan in place by late Friday, meaning it could be voted on next week.

Previous proposals called for increasing the average class size in public schools by two or three students, eliminating thousands of teaching jobs. Lawmakers said Friday they would hold the line on classes from kindergarten through sixth grade, but local school districts would have to make cuts in grades 7 through 12 to make up for lower revenue.

Lawmakers also agreed to keep open the Gov. Morehead School for the Blind in Raleigh and schools for the deaf in Wilson and Morganton. Parents of students at the schools rallied against earlier plans to close one or two of the three.

The Wright and Whitaker schools for emotionally and psychologically challenged children also would remain open under the budget plan, lawmakers said.

The budget negotiations were stalled for much of July, requiring lawmakers to approve three stopgap spending plans to keep state government operating without a budget in place. Gov. Beverly Perdue signed the third into law Friday afternoon to prevent the government from shutting down over the weekend.

The House and Senate made a breakthrough last week when they agreed to a tax plan, but it quickly collapsed after Perdue complained about a proposed income tax increase.

Senate negotiators left Raleigh after that and suggested a budget could take weeks to approve. But leading Democrats in the House and Senate agreed in principle to a second tax plan late Thursday.

The new deal includes a similar income tax increase but exempts most state residents by using a tiered structure.

Budget negotiators returned to the bargaining table Friday to go through a list of differences between House and Senate proposals, and they had reached an agreement on most by Friday evening.

It remained unclear whether Perdue would sign the budget as it now stands. She previously called for up to $1.6 billion in new revenue to avoid deep cuts to education and then balked at the idea of an income tax surcharge.

“I am certain the General Assembly understands the need to protect education, and as critical negotiations continue through the weekend, I must have confidence they will end up doing what’s right for North Carolina’s children,” Perdue said on Friday.

N&O – Tax Plan

Budget deal raises income tax

Increases of 2%, 3% for wealthiest

BY MARK JOHNSON – STAFF WRITER

RALEIGH — Legislative leaders on Thursday moved within reach of a deal on a tardy state budget, partly by increasing the income tax for North Carolina’s highest-paid residents.

The plan, however, still lacks Gov. Beverly Perdue’s approval and faces a handful of potential defections among House Democrats.

Legislative leaders hope to vote on the full budget next week. That would be more than a month after the new fiscal year began July 1.

Democratic leaders in the House and Senate settled on a plan that would tack a 3 percent surcharge on the income tax liability of North Carolinians who report income of more than $250,000 a year. Taxpayers who report between $100,000 and $250,000 would get hit with a 2 percent surcharge. Those levels are based on the taxable income of married couples filing jointly

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WRAL on Tax Package

NC Democrats still aren’t on same tax page

By GARY D. ROBERTSON

Associated Press Writer

Posted: Tuesday, Jul. 28, 2009

RALEIGH, N.C. Democratic leaders at the General Assembly still weren’t on the same page on taxes Monday night as lawmakers tried to regroup after Gov. Beverly Perdue balked on their revenue deal.

House Democrats want to get back to the bargaining table on taxes with Senate Democrats as soon as possible by modifying a $982 million tax package hammered out with the Senate last week, rather than start from scratch.

Perdue rattled fellow Democrats when she announced last Thursday she wouldn’t accept the plan because it contained a 2 percent income tax surcharge paid on all wage earners with tax bills, not just the wealthiest.

House Speaker Joe Hackney, D-Orange, said his chamber’s preferred option is “try to see if we can resurrect that (plan) in some way.”

Working out a tax plan nearly all Democrats and Perdue can support is a key element in passing a permanent two-year state government budget that’s already four weeks late.

“We’re going to present the Senate with a new proposal and try to be flexible and try to figure out something so we can get this thing finished up,” Hackney told reporters.

But Senate leaders seemed content with going their own way – for now – by seeking to revive their own plan to overhaul the tax system that would expand dramatically the number of services subject to the sales tax, while reducing tax rates overall.

A bipartisan coalition of business and former government leaders have pushed the idea for years as a way to tap into a tax base that has shifted from manufacturing to services.

The Senate Finance Committee will meet Tuesday to talk about “why we really need to fix the tax system rather than raise just a lot of taxes,” said Sen. Dan Clodfelter, D-Mecklenburg, one of the architects of the overhaul plan.

Hackney said it’s too late in the legislative session to work on such a dramatic change to the tax system, but Clodfelter said it was the House that had delayed discussions.

“We’ve been waiting for the House folks to sort of pick up the challenge with us,” he said. “If it’s late, it’s because we’ve been waiting on them.”

The $982 million package agreed to by legislative Democrats, who have the majority in both chambers, also contained a one-cent increase in the sales tax and higher taxes for cigarettes and alcohol.

Pearce on Education

Gary Pearce, of  TALKINGABOUTPOLITICS.COM, writes

Last week I blogged that Governor Perdue was doing a better job than her poll numbers suggest. But I’m starting to think she’s snake-bit.
Her signature action, her big bold idea of appointing a state education CEO, got thrown out by a judge. Now Bill Harrison has graciously retreated from the battlefield.
Predictably, well-meaning editorial writers suggest that the governor fight the good fight and spend what little political capital she has changing the education governance system.
That would be dumb. That’s about nothing but process. And she would probably lose. Read my lips: Voters are not going to give up their right to vote for the state superintendent.

You can see the attack lines: “Let the Governor appoint the head of the schools? Like how Mike Easley appointed the head of the N.C. State Trustees?”
So what does she do now?
Here’s a suggestion: Come up with a big idea that is about education, not governance.
Like Jim Hunt’s Smart Start or raising teacher pay to the national average (whichNorth Carolina did in the 90s).
Something substantive that gets people’s toes tapping, something that would actually improve the quality of education.
Yes, education governance is a disaster in North Carolina. Always has been. Maybe always will be.
So it was for Governor Hunt. Back in the 1970s, he had to resolve a running feud between the Superintendent (Craig Phillips) and the Chairman of the Board of Education (Dallas Herring). Hunt replaced Herring.
Then Hunt’s arch-enemy, Lt. Governor Jimmy Green, tried to get himself elected board chairman. Hunt beat that.
When Hunt came back in 1992, Bob Etheridge was state superintendent. Hunt didn’t really care. He had his own education priorities, and he made them the state’s priorities.
Perdue has now wasted her first six months on a losing cause. It’s time to find something progressive – and popular – to fight for.

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Bev Blows It Up, says Pearce

Gary Pearce of http://www.talkingaboutpolitics.com writes…

“What do you do when your poll ratings are as bad as any governor’s in the country, somewhere down in Bush-Cheney territory? When you’ve been outfought and outfoxed by June Atkinson, for Pete’s sake? And when fellow Democrats are calling you a lame duck in your first year?

Well, you could find something more unpopular than you are – and attack it.”

Read the Post Here


2009 LEGISLATIVE SESSION MEMO #26

On Monday, the Appropriations Chairs did not return until late in the afternoon and then they caucused in the House, went to Session, and left for the evening.

On Tuesday, the day began slowly again with a few committee meetings here and there. Then after lunch the House Democrats were called to caucus and rumors spread quickly through the building that a deal had been struck on the Finance Package, at last. After an hour behind closed doors the House Democrats came out and the report was they were CLOSE, but not there. The details being discussed were 1-cent increase to sales tax, 3 percent tax on utilities, 2 percent surcharge to income tax paid for personal and corporate entities and an increase in sin taxes: tobacco (10-cents per pack), alcohol (5 percent), wine (4-cents per bottle), and beer (5-cents per six pack). The House went into Session and came out after an hour and the Appropriations Chairs left to go back and work on the budget, while the remaining House Democrats caucused again. After another hour the House Democrats came out and there was still no agreement on the Senate proposed Finance Package. The Appropriations Chairs continued to meet to work on the sections of the budget, though the largest section of the budget, Education, has not been discussed yet. Education has as many as 52 items flagged in controversy so there is much work yet to be done. Meanwhile, Speaker Hackney was flying back and forth to Philadelphia for the National Conference of State Legislators, everyday. As President of NCSL, he has had to preside over various meetings so the frequent flyer miles are adding up for the Speaker.  Back and forth to the airport and he will return again Wednesday in hopes of getting an agreement on the tax package. The Governor’s people have been roaming the halls too, advocating for $1.2 Billion in funding. They are worried things will be worse next year and there won’t be any will to increase taxes further. They also are pushing hard for more money in public schools. The Governor is against the class size increase.

On Wednesday, the Senate Democrats caucused in the morning to review the latest tax package that the Finance chairs had worked out late Tuesday night. The House was not happy about the utilities tax, they had already cut out the tax on social security so a new plan was back on the table. The Senate Democrats met for more than 1 and 30 minutes and when they came out they avoided the press and walked off with rather resigned somber faces. They had reluctantly, it appeared, agreed to go along with the latest proposal. The House Speaker returned in the afternoon and the House convened their Session at 2:00 PM. They worked their way through bills for an hour before recessing to determine if the Democrats could support the newest version of the tax package. After about 45 minutes into the caucus the House Democrats came out of the meeting and headed back to the floor with what appeared to be consensus on the tax package. The Appropriations Chairs did not meet at all on the budget on Wednesday. In addition to working on budget issues, the Senate finally appointed conferees for SB 804 the bill to expand the Personal Education Plans in public schools. The other news on Wednesday was the Press Release from Bill Harrison to resign as CEO of the Department of Public Instruction following the Friday court decision to give June Atkinson the authority to run the DPI.  Bill has decided to retire on August 31 from his position as head of the Department, but maintain his Chairmanship of the State Board of Education. Senate leadership and others around the building were not particularly happy with the court decision and there is talk of making further deep cuts to DPI or requiring a complete overhaul, to leave little for Dr. Atkinson to manage. The new dynamics will be interesting as the State Board makes policy and delegates authority to the State Superintendent, who took off for Colorado to attend meetings immediately following the court decision. She returned to her new role on Thursday (where she was seen roaming the halls of the legislature.)

The Appropriations Chairs, Rand, Garrou, Michaux and Crawford worked by themselves on Thursday to resolve the outstanding issues in the budget, except for Education. The Senate Democrats went behind closed doors to caucus after they finished their Session. The hallways crowded with lobbyists, they emerged after approximately 1 hour 30 minutes only to announce the finance deal with the House was off the table. They decided they will have to start over again.  The Governor is still pushing for another $200 Million in revenue for public schools, beyond the $982 Million agreed upon earlier in the week. She wants to eliminate the class size increase. In addition, she opposed the 2 percent income tax surcharge, saying this will impact the poor and middle class people in the State. Governor Perdue appeared on the evening news scolding the members and telling them they need to be working all weekend. Needless to say, the House and Senate members left Thursday afternoon and are not expected to return until late Monday afternoon. A Continuing Resolution will need to be approved next week since the existing CR expires Friday, July 31st.  The train is off the track again and it is either going to be a long haul these next few weeks or maybe they will miraculously find the right combination of revenue and appropriations to finally pass the budget. Either way it is going to be a tough fight to get this done. Hopefully the weekend will give way to cooler heads and a budget before Labor Day. Here’s Hoping!!!

House Committees:

Education

SB 894 UI/School Teachers Related Amendments Favorable Report to PCS and re-referred to Finance.

Judiciary III

SB 38 Municipal District Elections 2011/Census Favorable Report and sent to the House Floor.

Senate Committees:

Finance

HB 311 Continue School Construction Funding Favorable Report

Economic Recovery

SB 960 Ensure Accountability RE: Stimulus Funds Favorable Report as amended.

Commerce

SB 849 Repeal Motor Vehicle Safety Inspections Rescheduled July 28.

House Floor:

HB 1255 Sex Offenders/Permanent No Contact Order House Concurred and Ratified.

SB 509 Revenue Laws Technical, Clarifying, and Administrative Changes Passed third reading and sent to the Senate for Concurrence.

SB 931 Commercial Drivers License Changes Passed second and third reading and sent to the Senate for Concurrence.

SB 658 Modify Supplemental Retirement Board/Furloughs Conference Report Adopted

SB 863 Purchase Service/Certain Employment Conference Report Adopted

SB 38 Municipal District Elections 2011/Census Passed second and third reading and sent to the Senate for Concurrence.

HB 385 Public School Activity Bus Use/Stecoah Valley Center  House Concurred, Ratified, and signed by the Governor.

HB 589 Insurance/Cover Hearing Aids Passed second and third reading as amended and sent to the Senate.

HB 1078 Report School Violence to Superintendent/Required Notification Policy House Concurred and sent to the Governor.

Senate Floor:

HB 1289 Lottery-No Check Cashing Sites/High School Ads Failed second reading.

HB 1452 Local Government Code of Ethics Passed third reading and sent to the House for Concurrence.

SB 658 Modify Supplemental Retirement Board/Furloughs Conference Report Adopted

SB 863 Purchase Service/Certain Employment Conference Report Adopted

HB 311 Continue School Construction Funding Passed second and third reading and Ratified.

SB 368 Various Changes in Motor Vehicle Laws Passed second and third reading and Ratified.

Bills in Committee Next Week:

HB 1274 State Health Plan Blue Ribbon Task Force
HB 1261 Protect our Kids/Cyber Bullying a Misdemeanor

Hearing on State Purchasing and Contracting Practices (August 3 meeting date)

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