House passes $22.1 billion budget with 93-21 bipartisan vote

by Colin Campbell, The Charlotte Observer, May 21, 2015.

The N.C. House took a final 93-23 vote early Friday morning in favor of Republican leaders’ $21 billion state spending plan, over objections from a handful of Republicans and Democrats.

The vote – which sends the budget proposal to the Senate for its consideration – came shortly after 1 a.m. following nine hours of discussion and last-minute revisions. The 23 “no” votes came primarily from the most liberal and most conservative members of the House, an indication that the plan appealed to moderates in both parties.

Supporters of the budget praised its increase in education funding, including 2 percent to 6 percent raises for teachers – along with 2 percent for other state employees – and more textbook funding.

“I could not possibly be more proud of what we’ve accomplished,” said Rep. Craig Horn, a Union County Republican and education budget writer. “We have set this education program on a track to the future. We are going to continue to raise the bar.”

House Speaker Tim Moore issued a statement praising the plan shortly after the vote. “Prudent, responsible budgeting has already allowed North Carolina to expect a $400 million dollar surplus and pay off our recession debt,” he said. “Because of that success, today’s House budget will allow us to further invest in critical state infrastructure and services. We are affirming our commitment to our children’s future by expanding access to digital resources, textbooks, personalized learning time and quality teachers.”

Rep. Chuck McGrady, a Hendersonville Republican, summarized the prevailing mood in a tweet: “Sounds like the Speaker is leading from the middle – strong bipartisan vote.”

Still, several Democrats spoke out against the budget – though most voted for the spending plan.

“We are still near the bottom in per-pupil expenditures and teacher pay,” said Rep. Paul Luebke, a Durham Democrat. “We are only halfway to where we were three years ago (when budgets were cut). I, for one, am going to vote no.”

Rep. Susan Fisher, an Asheville Democrat, blasted a proposed 30 percent hike in DMV fees. “These are things that continue to put everyday things out of reach for the everyday people in North Carolina,” she said. “My constituents are going to be really surprised to learn about the hidden fees in this budget.”

On the far-right end of the Republican caucus, some voted against the budget because it would increase spending by about 6 percent in the next fiscal year. And Rep. Mickey Michaux, a Durham Democrat who led the budget process when his party was in charge, joined in that critique.

“If your (revenue) projections don’t come true, you’re going to have a problem,” Michaux said, adding that he thinks mid-year spending cuts could be needed. “I cannot vote for this budget, because in my book it’s fiscally irresponsible.”

A total of 116 members cast votes on the final plan, which generally has support from Gov. Pat McCrory.

On the Republican side, 61 Republicans were in favor and 11 were opposed. Three Republicans were absent.

On the Democratic side, 32 Democrats were in favor and 12 were opposed. One Democrat was absent on the final vote after voting yes on a preliminary vote.

Americans for Prosperity, a conservative advocacy group, has been lobbying heavily against the budget plan and issued a critique of the plan’s tax credits that target specific industries.

“This budget is fiscally irresponsible and is a reverse Robin Hood with all of its carve-outs for special interests,” state director Donald Bryson said in the statement early Friday. “Green energy companies and movie productions are benefiting from the fleecing of the average North Carolina taxpayer.”

Over more than nine hours in session, House members added a number of new items to the budget, including $5 million to fund police body cameras and $1 million for a program to put fresh produce in corner stores.

An amendment from Democrats that sought to kill a $1 million grant to an advocacy group to help rural charter schools was narrowly defeated.

A last-minute compromise

Republican leaders had to make last-minute changes to the budget in order to shore up support for its final passage.

The changes, announced on Thursday as lawmakers began debate on the budget that would take effect on July 1, included scaling back the proposed increase in DMV fees and cuts to other tax credit programs. It was all an effort to gain votes from some conservatives who’d opposed those provisions.

The floor debate was repeatedly delayed this week as the Republican caucus spent hours behind closed doors hashing out differences. Lawmakers were slogging through amendments and other debate on the plan late into the evening.

Moore has emphasized a 2 percent across-the-board pay raise for state employees; 6 percent increases in pay for beginning teachers; increased funding for the state courts system; and efforts to stimulate job creation with various tax incentives.

He also announced that the House budget would restore a medical deduction on income taxes – its elimination in a tax overhaul had led to angry responses at tax time this year. At one point, the restored deduction was only going to apply to seniors. Moore said Thursday it would extend to all.

There were other last-minute changes in the effort to secure passage. Budget writers:

? Eliminated a tax credit for companies that hire state universities for research and development work, saving $44 million a year.

? Reduced a credit for film productions from $60 million per year to $40 million per year.

? Shrunk a proposed 50 percent hike in DMV fees to a 30 percent hike, which would take effect in January.

? Cut a tax break on jet fuel that benefits American Airlines and its Charlotte hub. House leaders said that credit doesn’t need to be in the budget because it appears in an economic development bill that passed the chamber in March. That bill, however, is stuck in the Senate.

House Majority Leader Mike Hager noted that he’d voted against the tax and fee portion of the budget bill earlier this week. On Thursday, he stood with budget writers at a news conference and praised the new version.

“These changes make a big difference for a lot of us,” Hager said. “We want to make sure we’re funding the core principles of what we need to do. ... This budget has gotten better and better.”

Several House Republicans had said this week that they might vote against the budget when it reaches the floor Thursday. Hager said he’d polled the GOP caucus with positive results.

“We’re well ahead of where we need to be as far as our vote count,” he said at midday Thursday, offering a prediction that proved true when the vote was held.

After the vote, Hager issued a statement Friday morning that reflected the behind-the-scenes debate among Republicans leading up to the vote.

“This is a good, conservative budget,” he said. “This truly evolved into a better package each time that we met as a caucus.”

Late changes made

Some Republicans sought to make further changes late Thursday on the House floor. An amendment to cut out a solar tax credit extension failed in a 38-77 vote after a sharp debate.

Rules Chairman David Lewis called on fellow Republicans to support a compromise extension of the solar credits. Instead of extending the credit for two years, the current budget proposal would extend it for one year in its present form and a second year as a scaled-back benefit for businesses.

“I believe that the two-year extension of this particular credit allows the industry to complete projects it has underway,” Lewis said, adding that he’ll oppose any additional extensions. “Never again will I stand on this floor and ask the members to extend the credit.”

Rep. Jimmy Dixon, a Warsaw Republican, criticized Rep. Marilyn Avila and other GOP members for reneging on a budget compromise that he said was made in a closed-door caucus meeting that would have led to a scaled-back solar credit. But Republican Rep. Larry Pittman of Concord said he’d be more likely to vote for the overall budget if the solar credit was cut.

A faction of Republicans has been expressing concern that the House’s original plan would increase spending over the previous year by $1.3 billion, or 6.3 percent.

Lewis said scaling back the DMV fee hikes would generate about $580 million less than the original 50 percent proposal. Other changes made Thursday reduce the budget by $225 million to $250 million, “which is substantial,” he added.

Still, the changes made Thursday appeared to have little effect on overall spending in the coming fiscal year. Budget documents showed no change from the $22.1 billion in spending outlined in the initial House budget draft.

Lewis stressed that the 6 percent growth figure isn’t as big as it might seem. “If you look at the 6 percent figure people are talking about, 2 percent of that comes from mandatory enrollment growth in our schools and universities and growth in Medicaid,” he said. “Another 2 percent is raises for our state employees and the benefit costs that go with that. We’re very focused on spending taxpayer dollars as wisely as we can.”