A conservative solution to the state budget impasse

First – and this piece is critical — North Carolina’s state government is not experiencing a budget crisis.

From a national perspective, going into this year’s state legislative season, we knew at least six states – Arkansas, Illinois, Nebraska, Pennsylvania, Rhode Island, and Wisconsin – would have revenue shortfalls. North Carolina, thankfully, is not among those shortfall states. According to the State Controller’s General Fund Report from May, the state was poised to have a $688 million revenue surplus.

However, the fiscal year ended on June 30, and the state government still does not have a new state budget. Why? Because on June 28, Governor Roy Cooper vetoed House Bill 966 – 2019 Appropriations Act – the General Assembly’s $24 billion budget.

Fortunately, North Carolina law has a budget continuation provision and so the spending levels which were in place for Fiscal Year 2018-19 will remain in place until the General Assembly and the Governor pass any new spending provisions.

Now the conversation on Jones and Blount Streets has turned to whether the General Assembly will vote to override the Governor’s veto, or will they negotiate with him on a new budget proposal.

The problem is that both approaches will end up fleecing taxpayers. Either Republican leaders will have to offer enough special appropriations to legislative Democrats to facilitate an override, or the General Assembly will have to pass a budget which the Governor will not veto because it adds Medicaid Expansion to the mix and guts tax cut provisions from the original budget legislation.

I propose a third option that we will call the “Conservative Solution.” Due to the budget continuation provision, recurring spending for government departments (e.g., Environmental Quality, Public Safety, Transportation) will remain the same whether a new budget is passed or not. Even the Opportunity Scholarship program, which provides thousands of families with better educational choices, is a part of recurring spending. Only non-recurring expenditures, which are generally pork and special projects, will not be funded without a new budget.

However, there are some government programs which are part of recurring spending that do require increased spending due to the growing population of our state – things like public education, universities, community colleges, and the current Medicaid roles (without expansion).

So, what is the Conservative Solution to the current state budget conflict? Simple. Instead of bargaining with other legislators or Governor Cooper to buy support through increased government spending, conservatives at the General Assembly should pass a smaller spending bill, which accounts for increases in required government services.

Passing legislation that funds only these priorities does three things:

• Focuses government spending on areas of real growth and ensures taxpayer money is spent more efficiently.
• Ensures that funding for core and required government services, like public education, account for larger populations.
• Places progressive lawmakers in a tighter political box. No one wants to vote against (or veto) these increases to state government spending – especially twice.

Other items also need to be addressed. First, the increased K-12 education spending suggested above does not increase teacher salaries, as they were seen in House Bill 966. Teachers have received salary increases for five consecutive years, which far outpaces the private sector. And since House Bill 966 included raises for teachers and the North Carolina Association of Educators (NCAE) supported the Governor’s veto, (see NCAE President Mark Jewell to the left of Governor Roy Cooper at the veto press conference) it appears that taxpayer-funded teacher raises are not an urgent need.

Finally, there is the issue of federal matching funds. Sometimes the federal government will match funds from state governments to fund needs such as disaster recovery, education, or infrastructure. If the case arises that the General Assembly needs to appropriate funds to maximize federal matching, then that can be done in a special session or the regular session when it reconvenes in 2020.

Conservatives at the General Assembly should stop looking to “buy” their way out of the current political impasse. It can’t be done, and if it can be done, it won’t be a political win for conservatives. The best course for conservatives is to remember your principles and protect taxpayers. The Conservative Solution does just that, and in a much tidier package than what we’re currently seeing out of the General Assembly and the Executive Mansion.

[i] “Joint Conference Committee Report on the Current Operations Appropriations Act of 2019.” North Carolina General Assembly. June 25, 2019. https://webservices.ncleg.net/ViewBillDocument/2019/5051/2/H966-BD-NBC-5888.

[ii] Ibid.; Matches Revised Net Appropriation for Public Instruction as seen on page A3, less teacher salary increase items 36 and 37 as seen on page B21.