It seems as though every week is a busy one here at the General Assembly, but I’m sure that’s true at your home as well.
This week we will be discussing Governor Purdue’s budget proposal as well as two local events that I attended last week and the issues that we brought up at each.
Governor Perdue’s Recommended Budget
Last week, Governor Perdue released her proposals for the state budget for 2009-2011. In 2008-2009, the authorized budget for the general fund was $21.356 billion. As previously reported, there has been close to a two billion dollar shortfall as revenues have declined due to rising unemployment. The Governor’s budget proposes to spend $20.981 billion in fiscal year 2009-2010. There are 3 key strategies employed by the Governor to present a balanced budget that do not result in massive cuts to education, for the time being.
Use of Stimulus Money
It is clear that without the stimulus money provided to the state over the next two years, there would be massive layoffs of state employees including teachers in the classroom, based upon current economic projections. The Governor’s budget projects an increase in spending in public education by over $350 million over the next fiscal year. However, her budget contains a $144 million negative reserve for the 115 school systems across North Carolina. A negative reserve is a budgeting strategy whereby the state allocates a certain level of money to an agency and then requires that agency to return a percentage of the money back. This method puts the onus on the agency to decide where cuts are made. The Senate has serious problems with this approach to budgeting as it reallocates the responsibility to make difficult cuts from lawmakers to the agencies. This decreases the public’s say in how cuts are made, as the heads of agency’s are not elected, but appointed. We will review the negative reserves that are contained through out the Governor’s budget and we will try too make the cuts more explicit in the budget. From the local agency point of view, negative reserves also shift “blame” to the local leadership for the choice of cuts made. It is likely school systems will not have to make cuts that effect the employment of public school teachers over the next two years because of the stimulus money, but such cuts will certainly come if the economy does not grow or if there is no further federal intervention.
Tobacco Tax and Alcohol Tax
There is no question that taxing alcohol and tobacco poll tests well as a source of revenue to avoid massive cuts in education and health services. Nonetheless, such an approach arguably singles out two industries unfairly. The tobacco tax being proposed by the Governor follows a recent increase by the federal government. The alcohol tax is problematic because North Carolina already ranks 5th in the nation on taxes on beer. The Senate will be examining a fairer approach to tax policy in this budget.
Spending Cuts
The Health and Human Services Budget, which I oversee as a Co-Chair of the Health and Human Services Subcommittee on Appropriations, is reduced by approximately $250 million. The federal stimulus package increases the Medicaid match from two dollars to every dollar spent by the state to approximately three dollars to every dollar spent. The savings produced by this increased match have kept the Governor from cutting overall spending in the education budget. There are three main areas where the Governor proposes cuts in Medicaid. First she proposes reducing expenditures of prescription drugs by attempting to increase the number of generic drugs used by Medicaid recipients, in addition to other strategies to lower these costs. Second, she proposes to freeze reimbursement rates to healthcare providers. Dentists, physicians, and hospitals, among others, will not see their Medicaid payments for their services increase from what they received last year. Third, personal care services are significantly cut. These services are non-medical in nature and constitute services such as preparing meals, bathing, etc., for the elderly and disabled. Such services help keep the elderly out of nursing homes and give respite to families with developmentally disabled dependents, but it is a service that has been a source of waste and abuse. These services supplant the role that some families would provide to loved ones if the state did not assume it.
Norlina Recovery Home
In 2001, the state government made a commitment to try and deinstitutionalize the Mental Health system and deliver mental health care at the local level. Last Friday I attended an open house event for the Lake Area Counseling Recovery Home in Norlina, a community project that demonstrates the states intentions. Norlina is a small town in Warren County, and my expectations for turnout at this event were not high. I was taken aback by the amount of people who came to this event to show their support, particularly the elected officials who were in attendance. The Recovery Home project was started by Dr. Ken Blackman, a retired professional and a recovering alcoholic. When Dr. Blackman and his wife retired to the Lake Gaston area, they became cognizant of the huge problem that their new community had with drugs, alcohol, and poverty. Dr. Blackman set out to help his new community, and with the assistance of a retired psychologist, he started this recovery home.
The recovery home can support up to 16 people. It is housed in an old bar that was well known for its rowdiness, and the face lift that was given to that old bar is symbolic of the type of result Dr. Blackman hopes to achieve with this project. The residents of this home would stay for periods of 4 to 6 months. Potential residents must first complete a drug or alcohol rehabilitation program at an appropriate facility. The recovery home is meant for patients who are serious about returning to a drug free life and would otherwise be unable to escape an atmosphere filled with drug and alcohol use. One of the hardest parts about recovery from substance abuse is not the initial rehabilitation, but the resistance to relapsing. The purpose of the Norlina Recovery Home is to aid in that fight. I am proud to lend my support to this laudable endeavor. It is the kind of altruistic work that buttresses a community by helping those who need it the most.
Vance County Association of Educators
Last Saturday I attended an event in Vance County that was held by the local Association of Educators to discuss funding for education, and in particular the Governor’s proposed cuts to teacher longevity pay. A video recording of this meeting can be viewed here. There were forty or so teachers and educational personnel in attendance, and I was asked to speak and give my opinion on some of this issues that teachers face in the current economic environment. I have strong reservations about cutting longevity pay, but I understand why it was put on the table. The simple fact is that the state does not have as much money as it did last year. We have to cut spending somewhere. I do not like the idea of cutting longevity pay, but to avoid it we have to find some other way of cutting the budget to replace this $170 million cut proposed by the Governor. One possible way to do that is to increase class size, a proposal which Governor Perdue opposed. By increasing class size, across North Carolina, we can save the state hundreds of millions of dollars. By increasing class sizes by just one student in each class, we would save to state approximately $170 million. If they were increased by two students we would save approximately $320 million.
I was a teacher in Kinston, NC for 3 years, so I understand how teachers feel and how under appreciated they are. But in an economic environment where all other state employees are having their raises withheld, it is difficult to justify that teachers should keep all of their pay raises. Under the Governor’s Proposal, each teacher will still get their step pay raises, or the raises that are given when a teacher meets a certain time maker, such as three years of service. Those raises are separate from the annual pay raise that all state employees are eligible for, but that are likely to be withheld this year. Unlike teachers, state employees do not have built in steps for their career development. It is a serious question as to whether teachers should receive a pay raise, when other state employees are not, particularly when the state is facing such high rates of unemployment. Our state faces tough choices and the discussion over what should or should not be cut is still ongoing. The important goal is to be as fair and balanced as possible in how we spread out our spending cuts.
As always, I welcome your comments, suggestions, and any input you can provide. By working together, we can find solutions to problems facing us every day. I consider it an honor and a privilege to serve you in the North Carolina General Assembly.
Sincerely,
Doug Berger