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House | June 10, 2013 | Committee Room | GOP Budget

Full MP3 Audio File

We want to begin by thanking you all for joining us here today. We want to welcome our budget leadership, our subcommittee chairs and our full chairs, we're going to be introducing them in a few minutes. These ladies and gentlemen have worked mightily for the past several weeks to help craft budget that I think that everyone in the House should but, feel great pride in, and hopefully, we'll be supporting as we move forward this week in the Appropriations process. Obviously, once again, we have crafted a budget that balances state spending with our income, sets priorities and does not raise taxes. Two-years-ago, we crafted a budget that fixed a multimillion dollar deficit, that we had inherited from the previous leadership. We did so by reducing state spending, setting priorities and living within our means. We also did so while cutting taxes by more than a billion dollars. Because of the sound decisions that we made two-years-ago, we are on a more stable financial footing than we were in 2011; therefore, we've been able to craft a fiscally responsible economically sustainable budget for North Carolina. The budget was posted online last night and a number of you have already seen it. We have been, it has been in full view of the public now for at least thirty-six hours, I think, or at least it will be before the first votes are taken on this document. You may have noticed, well, some of, some of the folks, now, I think, and some of the staff are going to be unshaven until the budget passes, or something like that, I don't want to, I'll let the Speaker comment on that if he comes. The Speaker had intended to be here with us, but he's been held up because of the weather, and he hopes to join us before the press conference is over. Let me say this, the House's budget proposal is realistic, it is reasonable and it is responsible, and it places North Carolina's fiscal house on a sound foundation for the future. I'm pleased to be joined today by all of our subcommittee chairs, but in particular, I want to introduce and then they'll be coming up here just in a minute to give you some, more of the details. Representative, Linda Johnson, from Cabarrus county, Representative Bryan Holloway of Stokes county, and Representative Justin Burr of Stanly county. The four of us full chairs have worked mightily on this budget and I want to publicly thank them for all they have done to craft what I think is a very fine document. As I say, they'll be reporting on the very subject areas in just a moment. Let me begin with just a very brief overview of the House Budget. In the first year, we spent around twelve-million-dollars less than the Senate and around a hundred-eighty-eight-million less than the governor, holding the net growth in our budget to about 1.9% over the current year. In the second year, we spent about 1% more than the Senate; however, we are 2% below the Governor in the second year. In the middle, really between those two, and the primary difference is the difference in our tax reform packages between what the Senate provide for and what we have passed in the house. But just like our colleges in the Senate, I would note, that we have had to address a number of mandatory obligations, most notably, Medicaid, which was underestimated in the Governor's original budget, we have had to adjust for that in the House's budget. Now, also, as I have alluded to a moment ago, the House has passed historic tax reform, and that is included in our budget, the ramifications of that tax reform. The House has placed two-hundred-million-dollars in the Savings Reserves Account, and also placed two-hundred-million-dollars in Repairs and Renovations Fund, meeting both the targets of the Governor and the Senate in that regard. One of the things that we wanted to do was bill back a number of funds that have been sorely depleted in recent years and we've been able to do that. We have funded the state health plan, we have not added to the state's debt. We have chosen not to issue bonds or tickets?? of participation in our budget. On the state employee's side and teacher's side, we are providing five-days of leave to save employee's and teachers this year, and these are full days, these are not expiring ones. Much more importantly, we have set aside a reserve of a hundred-and-sixty-million-dollars for compensa-

and salary increases in the second year of the budget. We are fulfilling our obligations as we live within our means. Our plan is a common sense approach to providing the services our citizens need in the areas of education, healthcare, public safety and job development, and with that, what I would like to do is bring up the full chairs to go over some of the details of some of their budget areas, some of the highlights, and what we’d like to do is have all three of them talk about their highlights, and then we’ll come back and entertain questions. So with that I would like to turn it over to fellow Chair, Representative Linda Johnson. [SPEAKER CHANGES] Thank you. Hi, I’m Representative Linda Johnson and I represent Cabarrus County. Representative Dollar was explaining that each full chair has areas that they work on, and my three areas are education and general government and IT. We work with the sub-chairs; some of my sub-chairs are here today. Let’s start with education. The House budget focuses on education by stressing the need of for innovation in schools and protecting dollars that directly impact the classroom. The House budget proposal provides 11.5 billion for education. It includes 7.9 billion to the K-12 system, a cut much smaller than the Senate’s cut and similar to the Governor’s proposal. It funds several initiatives that focus on school choice, technology, innovation and school safety. The education budget restores the funding for the teachers’ fellows program and reduces the LEA flexibility adjustment. We provide 26 million in lottery funds for digital learning initiatives in the K-12 budget. The community college system receives 1 billion in the House budget. The House planned budget’s 2.6 billion for the UNC system, which is only a reduction of 5.5, it is larger than the Senate’s but smaller than the Governor’s. The House education budget recognizes the importance of education in the success of North Carolina. One other area I handle is general government. The House budget on general government focuses on efficiencies in state government, and do that by setting priorities. The budget directs the Department of Cultural Resources to seek non-state resources to fund historical sites and museums, while funding historical sites appropriately. It fully funds the House plan for voter identification. The other area I handle is IT, and of course we know this is the first time we’ve had leadership in this item, that it stands alone, and what we are doing in this budget is investing in the security and safety improvements and efficiencies. Now I’ll turn it over to Representative Burr. [SPEAKER CHANGES] Thank you, Chairman Johnson. The two areas that I oversee is the Health and Human Services Subcommittee and the Justice and Public Safety Subcommittee, and we’ll run through those with you. First, the Health and Human Services budget takes steps to protect our most vulnerable citizens and ensure that critical services continues, such as the alcohol and drug abuse treatment centers, protecting our psychiatric beds and improving the ways those are funded locally, funding a new statewide tele-psychiatry program and funding additional Medicaid assistance programs. The Health and Human Services budget, as mentioned by Chairman Dollar, funds the Medicaid rebase and takes steps to continue to reform and ultimately fix our Medicaid program in North Carolina. The Health and Human Services plan establishes a short-term assistance for group home recipients until a payment solution can be implemented statewide. Under the House budget, we also fund an additional five thousand pre-K slots, bringing the total to around thirty thousand, and it also changes

The eligibility due to the 130% of the federal poverty level that is house bill 935 that has passed a part of that house bill. And the JPS section of the budget, the JPS budget, continues the houses commitment to ensure the safety and security of all north Carolinians, the JPS budget provides an additional 25 million needed for the viper system so that can continue to be implemented across the state. our plan restores 16 natural positions that were eliminated to ensure that those rural counties have a minimum of 4 masterites where needed. We increased the funding to expand electronic monitoring for probationers. Fund additional probation and parole positions to meet the requirements of the justice reinvestment act. We add an additional 19 scholarship positions, and the state crime lab and we expand existing programs to fund a substance abuse treatment for high risk offenders. And those are the 2 areas and some of the highlights for those that we have covered, and i think we have some of the sub chairs here as well, and i want to thank JPSM they teach us sub chairs for all there work they have done, and at this time turn over to chairman holiday. [SPEAKER CHANGES]Thank you chairman bur, the 2 ares that i work primarily on in the budget were transportation and NER. And i would just briefly go through those and we will start with transportation. The transportation budget the house transportation streamlines government by eliminating 631 vacant positions working to implement government quarries transportation plan and conforming to house bill 817. Transportation budget focuses on funding projects associated with economic development, opportunities to increase job development potential. The plan maintains the fair structure and rates for currently told ferry routes. The house provides more than 300 million dollars for resurfacing. Now on to NER. NER budget includes funds for a new program focused on growing a bio energy sector in north Carolina., The house budget funds a clean water trust fund. Our plan funds wildlife resources commission at a 11% reduction. NER budget also funds the rural center, biotechnology center, grass roots science museums, High point market authority, Johnson and wells, and RTI, and ill turn it over to chairman dollar [SPEAKER CHANGES]Thank y'all very much and again i want to thank our full chairs and our subcommittee chairs for all the very fine work they have done, we will be pleased to entertain any questions you may have.No we have factored into our budget the cost of the tax plan that passed the house last week and is up for final consideration tonight, that is factored into this budget, its more or less revenue neutral or close to being revenue neutral in the first year, and in the second year we have been able to sync that up with our available resources, and im very pleased to see that we are going to have historic tax reform this year in the general assembly [SPEAKER CHANGES]Well since both you and the senate both have different tax grants. don't you have to sync up your ideas for the tax plan first before you get together and work out the budgets? those spaces have to be the same right? [SPEAKER CHANGES]Well well leave the tax plans to the finance committee and well focus on the appropriations, but we do have space in the budget, i believe, to harmonize and make sure that we are all in sync by the time we close session in a few weeks. [SPEAKER CHANGES]Few weeks, that's good to hear. We learned about a month ago that we would have a surplus tax collections over 4 million dollars this year, but we still don't have, you still don't have state employee raises or teacher raises, what would you say to people who say, we have tax collections that are over what we expected, but again for the fourth time in 5 years no pay raises [SPEAKER CHANGES]Most of those over collections were actually non recurring dollars, so in other words they weren't actual increases in ongoing dollars, recurring dollars. So in the budget at the end of the first year we have roughly 110 million dollars recurring coming out of the first year and around 162 million dollars recurring at the end of the bi-enium, and of course.

you know, you can put this together. We've reserved 160 million in the second year for compensation and potential compensation and salary adjustments. You know, you have to really pay attention to the recurring dollars because that's what you have to use when you're looking at salaries. [SPEAKER CHANGES] Follow up ??. How much do you know how much of what it costs to have 1% raise for state employees? [SPEAKER CHANGES] 1% ?? is $165 million. [SPEAKER CHANGES] Percent employees and teachers. [SPEAKER CHANGES] That's correct. [SPEAKER CHANGES] Okay, thank you. [SPEAKER CHANGES] And that does not, and let me just add, it's more than that if you look at DOT, the highway fund, you have to account for that as well. [SPEAKER CHANGES] Thank you. You include the ?? opportunity scholarships in, could you talk about what the price tag is on that, on ?? out of the ledger on how much it's gonna cost the state, and I guess how much it would save the state on the other end? [SPEAKER CHANGES] Well we have to get to the dollars. I think the net of that is somewhere in the range of $10 million one way or the other, but it's relatively small peas, it's almost the size of a pilot program, as it is in the House budget. Land. [SPEAKER CHANGES] Could someone talk about higher ed and the NC gap program and increase in out of state tuition, is there a lawsuit behind those things? What are you trying to do with higher education and the UNC system? [SPEAKER CHANGES] ?? [SPEAKER CHANGES] The NC gap program is a program that we will take the last group to come into the UNC system, which has unfortunately not a good track record of attaining a graduate degree. So we're going to suggest that they attend and get their A degree from a community college, and then guarantee access back into the university that has accepted them in the first place. It's gonna raise the graduation rates for everybody, it's going to allow those kids that may well have not finished their undergraduate degree to at least obtain an aa degree, and improve our workforce education I think quite a bit. [SPEAKER CHANGES] With that and the tuition increase, is this a way to try to control admission to the university? [SPEAKER CHANGES] No, presently UNC system is among the lowest best values in education in the country, and it's going to continue as one of the best values in education in the country. But we've got to be able to sustain the costs, the ever increasing costs of textbooks and teachers, facilities, etc. So we're trying to get the best bang for our buck and especially North Carolina residents. [SPEAKER CHANGES] ?? how many people how many students might use that NC gap and will they be told you can't come in, or we suggest you go someplace else. [SPEAKER CHANGES] No we're not gonna be telling anyone they have to do anything, we're going to afford them an opportunity to improve their chances of getting a quality degree. So and from the numbers frankly from the top of my head, I don't recall. [SPEAKER CHANGES] I just want to say one thing. Last year we attended a conference with 13 of the major states in that- the 13 states that have the most universities. And during that, we discusses how can we help students reduce the amount of money they owe after they graduate and how can we help them stay on a 4 year course? And we came back to North Carolina and looked at our numbers and looked at the different universities, and looked at East Carolina university who has a program similar to ?? and saw what successes they were having, so we did it this way in the budget. [SPEAKER CHANGES] The house budget includes the same provision, the Senate budget about the lottery funds, and it basically strikes out language from back when the lottery was created to provide a percentage of the revenues to certain areas, what's the impetus of striking out that language and [SPEAKER CHANGES] There's been a lot of that language that has been not withstood in the budget for a number of years, so we're actually just making conforming changes to how we have actually operated those funds for the last number of years. And there's some differences in that between the House and the Senate version, so we're obviously going to be talking with out counterparts in the Senate, that should come up in the final version of that. [SPEAKER CHANGES] Could you look forward to conference and negotiations with the Senate

...the key differences about the budget and tax reform. Seems to me it's going to be a big player here. What is your message to them? Do you feel realistically that you can reach an agreement that's gonna be okay for both sides and our Speakers here now in terms of the timetable? Do you feel like you can beat the timetable to get out of here how you planned? [SPEAKER CHANGES] We always meet the Speaker's timetable on the House side. But, do our best, right? I would say if you look back at last year, where the total hole in the budget was somewhere in the range of two and a half billion dollars, and we didn't have a governor that was helping us out in the process, and we were able to get that done even with a veto mixed in. So, we are confident that we will be able to work with the Senate work with the governor and between us, craft a budget that I think North Carolinians will be very pleased with. [SPEAKER CHANGES] Why did you decide to repeal the Child Fatality Task Force, I guess would be next July. What's the logic behind that? [SPEAKER CHANGES] There had been some discussion from Committee members and the sub-chairs and others to look at that. That was a Task Force that was put in place, a temporary task force at one time that had been extended over time. And, it has made some good recommendations, some we've accepted, but I know recently a number of the things they've continued to recommend are proposals that we have eliminated in the the general assembly, printing presses and things that fund local nonprofits here in Raleigh. But we want to make sure that our Chairs of the subcommittee, they're going to continue to work on those issues. The local Child Fatality Task Force is left in place, so that when there is a fatality they can continue to look at that. It's simply removing a layer of that process here in Raleigh, and we'll continue to focus on those issues. [SPEAKER CHANGES] Laura? [SPEAKER CHANGES] Of course the eugenics funding is in the budget, and this eugenics funding conversation. This has been a sore spot between the House and Senate for a couple of years, has anything changed? Will we see this come through in the conference report? [SPEAKER CHANGES] Well, we are going to do our best. And the Speaker may want to speak to that a little bit later when he comes up. Mr.Kent? [SPEAKER CHANGES] [??] my questions as well. Where that ranks on the priority of getting things done, a bargaining chip that will fall out by the wayside down a way. [SPEAKER CHANGES] Well, I think generally speaking, they are almost done in this state. Unfortunately, there is no way for those living victims to receive compensation for that in the court system. What the provision essentially does is afford individuals who are still alive, who are victims of some rather heinous liberal policies, to be compensated. Other questions on the vote? [SPEAKER CHANGES] In regards to supplement for teachers who have advanced degrees, could you explain? It sounds like there might be some confusions. Is that totally maintained? Is that changed? Is it different from the Senate's doing away with that? [SPEAKER CHANGES] The House budget continues to supplement for those teachers that go through the National Board Certification process. We will be discontinuing the supplement for Master's degrees. We've had a difficult time and, fact is, nearly an impossible time getting data to support teaching outcomes as a result of advanced degrees versus that hands on experience one gets with National Board Certification. Laura? [SPEAKER CHANGES] I was struck by the budget provision that gave almost a half a million dollars [??EEFMT] to expand the charter schools in rural areas. I'm wondering if you're interested in also setting up a charter school board, but wouldn't that be the job of the charter school board to the [??] charters in rural areas? [SPEAKER CHANGES] Wait a minute with Chairman Horn to comment on that. [SPEAKER CHANGES] As you know, there are a number of very rural communities, rural LEAs throughout our state. And often, those LEAs are really not enough people that can easily come together to possibly look at or form a charter school option. So this is some money that will help them get organized...

The produce significant or a mime districts that have been a tough time has had gotten the land and 28 era, when people together a few quick and the public and the rage and ensure that there is a need to be a time, the work, we believe that it would make sense of George foreman at the time when the day. Phony time left corner of the few time that phenomenon recovering from one day after two defeat get a charge for option makes time to time to organize any of the two that meant that were below that of money there a long way from recurring it's a long time to a question??(SPEAKER CHANGES) the speaker, and let the force of his wife and four lifetime prices are referring to the article that they have been the dollar home in time for delay, the study when the assets as the budget that there were some of the stand for more time and again that the house version and a window in one of his son, giving the body back to the senate that would accomplish that and get the government bowl and telecom cable to fill, before the end of two timeout and say, settling the issue tax reform measures , the data for their work at the little city is suddenly a full committee tomorrow, house leaders time, yet there is the falcons said would be a with the minority that I'm not a leadership we may consider taking the very early on Thursday morning to get on the Thursday night with a stab at Richard Holden, geological Commander David of all the bills and time is the members wanted and then the next that label time to work out-of-the way you were optimistic about the method will be able to get done as quickly as we get into the final, and the league ?? (SPEAKER CHANGES )time copy of the people engage the government employment losses said that the one had the opportunity to review and receive the body of law and Wendy a lifetime is that the haves and have only been two time I think they're running concurrently of moore's law that two of the daytime tax reform cars because of the potential impact it has unveiled only said they did in terms of time for the day of the tax plan was most likely, but felt a good fit for the final decision on the timetable it'll be very close when , that your tax plan time from what they've been talking about it for my daddy, indeed, in time to write all things of that the defendant is the added tax reform is a very difficult process that's why this day has made a mental block grants and tax reform for decades to get within each day timely, and am proud to work on the house plan that the defendant has good ideas to question the timing and then went into this process to pay for benefits of separation when a public statement and others-fed tax reform is not a single than that in ?? .. We implement this week we see what word from the guest of the intimate may be causing some problems time: that the defense committed to the depression figure much ??...................