Heard on the Street Posted: Thursday, June 4th, 2009 Hackney can’t pass a budget
As we enter the second week in June the House is nowhere near prepared to present and pass a state budget. Why? Speaker Joe Hackney faces a house divided. Conservative (mostly eastern) Democrats have aligned with Republicans and have categorically told Hackney that if the House budget contains a tax increase they will vote against it…and they have enough votes between the two to defeat the budget. On the other side an element of progressive Democrats say that if the budget doesn’t have a tax increase and contains nothing but budget cuts they will vote against it…and they, coupled with moderates, have enough votes to kill that budget.
So, being the expert politician who can also count, Hackney won’t present a budget proposal until he is sure he has enough votes to pass it. That may come next week or it may not. We will know much more after today’s subcommittee votes on key portions of the budget like Health and Human Services. Standing room only crowds are reported. Something has to happen to break the logjam. But will the compromise be something on which the Senate can agree?
Insiders tell us a House budget that contains nothing but cuts won’t pass the Senate. The current conflict in the House could be nothing compared with the conflicts arising from a conference process with the Senate. This may be another one of those long sessions where we are late in the summer before a final budget is passed. But that also presents problems. With no budget to start the July 1 year a continuing resolution will be required. Depending on how long it takes to get a budget we could be two or perhaps even three months into a new year before the new budget can be implemented; two or three months when we are spending at the unsustainable current levels.
All of this points to the imperative for a reform in the budget process. Be sure to catch this week’s NC SPIN for more discussion on both the budget situation as well as budget reform. Also, be sure to read this week’s My Spin, “Let’s treat the state budget like our family budget” for more discussion on the matter.
Another good column for consideration concerning our budget problems comes from the Winston-Salem Journal.
Harrison’s stalking horse proposal
Bill Harrison, the chair of the State Board of Education and the CEO of public schools in our state, released a proposal this week to temporarily increase the sales tax by 1 ½ cents to help fund public education and other agencies of state government. The idea met with instant and strong opposition. But the mainstream media missed the story.
Where did this idea come from? Are we to believe that Bill Harrison, a man who has been CEO of the state’s public schools less than five months, has suddenly become a budget guru?
Wikipedia, the online encyclopedia defines a stalking horse as “…a person who tests a concept with someone or mounts a challenge against them on behalf of an anonymous third party. If the idea proves viable and/or popular, the anonymous figure can then declare their interest and advance the concept with little risk of failure. If the concept is 'shot down in flames', the anonymous party will not be 'tainted by association' and can either drop the idea completely or 'bide their time' and wait until a better moment for launching an attack.”
Bill Harrison likely didn’t come up with this idea on his own. He was a stalking horse. But for whom? We’ve heard rumors that Governor Perdue was trying to broker a budget agreement between House and Senate members that would include a “temporary” 1 ½ cent sales tax. Her press people are denying the story but we’ve heard it from several fronts.
Delicious Irony: Apple is taking a bite out of you
In what has to be the worst kept secret of the millennium Governor Perdue announced that Apple is building a data center somewhere (they haven’t announced a location as of yet) in our state. They are supposedly investing $1 billion in land, building, and equipment and will employ as many as 50 people. In return North Carolina is re-writing its tax code specifically for this company and will be providing them tax incentives and breaks reported to be as much as $1 billion.
Let’s do the math, boys and girls. If the $1 billion price tag is correct, you and I are paying $200 million per job for this Apple. Even if you just consider the $3 million Apple will receive in first year tax benefits we are paying $600,000 per job. O.K., let’s also assume that this behemoth will attract the 250 in additional jobs our Commerce folks say will result from this giveaway. At the $1 billion level we are paying $33.3 million per job. At the $3 million level we still pay $100,000 per job. Even with new math these numbers don’t look good.
Former Supreme Court Justice Bob Orr, now head of the NC Institution for Constitutional Law, says
"We're making draconian cuts in many important state services," Orr said, but at the same time "we're giving a company — a multibillion-dollar profitable company — huge tax breaks for creating 50 jobs."
Representative Jonathan Rhyne (R-Lincoln) has been too long absent from our legislature, returning this year. In classic wisdom he says, “At least we know what our price is. It's a billion dollars, We're not going to look at our entire system and craft a tax policy that is good for everybody, but we sure will listen when one of the big boys comes in and says we want some special treatment.”
Point of clarification: Nobody blames Apple and we certainly are delighted to have them as neighbors, but there is an overwhelming opposition, especially when we face $4 billion dollar deficits, to this action. We especially recommend the editorial in The Charlotte Observer.
Look for more discussion on this topic on next week’s NC SPIN.
Video poker story grows
Last week SpinCyle reported on the new campaign by the NC Entertainment Group for video poker, giving the address for the web site started by the group www.ncdontgobroke.com. Evidently this story sparked real interest from our readers because 7,700 of you visited the site in the fist few days. TV ads for the effort will continue on NC SPIN this week.
Reaction has been mixed throughout the state. The most serious objections link video poker with the Jim Black scandal and corruption problems that arose from previous laws many believe were flawed. The NC Entertainment Group, formerly known as the North Carolina Amusement Association, is reportedly pleased at the response to the campaign thus far, recognizing that nothing will likely be done in this legislative session, but planting a seed for next year.
Legislative shrinking
This week’s announcement by Representative Bonner Stiller (R-Brunswick) that he is resigning next week highlights problems within our legislature. Stiller’s reason for leaving is to devote more time to his family and his business. This is the traditional response given when a public official leaves office suddenly, prompting many to question whether or not this is the real reason.
We’ve done some investigation and have learned that this is really the case. Stiller is a lawyer in a small firm in Southport and when he’s in Raleigh the first isn’t generating revenue. Further, as a father, he devotes many days in Raleigh.
The resignation, coupled with recent reports indicating that one-third of our legislature consists of people over the age of 60, should stimulate some serious discussion about the way we do the people’s business in our state. Sessions get longer and longer. Unless a legislator is among the handful of elite lawmakers in each House who really make decisions they find themselves spending endless hours doing very little. The low pay, coupled with lengthy sessions, don’t make it possible for working folks to be able to serve.
Bottom line: North Carolina’s model for a citizen legislature isn’t working and needs fixing. Next week’s NC SPIN will discuss this issue in depth. Be sure to catch it.
Press skits bring relief
With all the concerns around the recession and the effects it will have in our state it was only fitting that our legislators and ranking government leaders have a night to laugh. We are told the Capitol Press Corps was in rare form last night in presenting their annual skits.
Governor Perdue and husband Bob were present, as was Lt. Governor Dalton, Speaker Joe Hackney and House Minority Leader Skip Stam. An SRO crowd laughed and enjoyed the pokes and jabs.
Easley Air was prominently featured. Tag line: "On EA, children fly free, and so do adults. So, bring your family, friends and cronies." At one point Mary Easley (portrayed by WUNC Radio’s Laura Leslie) tells Mike, “Sweetheart, why don’t you go to your woodshop.” The reporter playing UNC President Erskine Bowles kept gushing over Mary, telling her he wished he could vote for her.
Governor Perdue, the Green Governor, is growing education pot.
A futuristic “Senate 2030” points out an obviously aged and addled Marc Basnight, Tony Rand, and the other traditional players. There was Andy Griffin doing an inaugural rap. A takeoff on “The Apprentice” featured Blue Cross CEO Bob Greczn.
A Skip Stam designee held a press conference to report what the new Sex Ed bill would mean to the state. A video demonstrated a third grade sex ed class in which the teacher was demonstrating condoms, only she reported that since President Pro Tem Basnight had outlawed latex the new condoms were paper.
This annual event gets bigger and funnier every year. Maybe next year it should be filmed.
Recession will continue
The latest Duke University/CFO Magazine Global Business Outlook Survey of chief financial officers confirms that the world, the U.S. and North Carolina are likely to experience recession through the end of this year, reporting that the CFO’s believe the prospects to be “fairly dismal.” The 1,300 CFO’s polled expect unemployment to continue to rise and capital spending to decrease by as much as 10 percent. They do have optimism that a recovery will be evident in early 2010.
Water Forum coming in August
Continuing news stories concerning clean water highlight the need for our state to focus on this subject. NC SPIN will be holding a Water Forum, now scheduled for August 18th at Sandhills Community College. Presentations by acknowledged experts and advocates, along with a free-flowing panel discussion will be included in the event.
Underwriting sponsorships are available now and going quickly as they are limited to one sponsor per industry, so please contact Suzannah Higby at 919-832-1416 or shigby@carolinabroadcasting.com for more information on these unique opportunities to send your message statewide.
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