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Second extension offered for state budget vote

The N.C. General Assembly could head into a second overtime on budget negotiations after the House Appropriations Committee on Tuesday approved another measure to keep state government funded at current levels through the end of the month.

North Carolina’s Senate passed its budget on June 18, four weeks after the house. North Carolina’s budget was due on July 1, but legislators passed a measure to keep funding government at last fiscal year’s levels until this Friday — the first overtime.

On Tuesday morning, State Rep. Carl Ford, R-76, expressed doubts in a phone interview that legislators would reach an agreement by this Friday. Legislators could keep funding government at the same level until September or October, Ford said. Hours later, the House Appropriations Committee was considering a second continuing resolution, which it ultimately approved.

The resolution keeps state government funded until Aug. 31 without major changes to expenditures. The extension would effectively extend the General Assembly’s deadline to come up with a budget until after the Rowan-Salisbury School System starts its 2015-2016 year. As a result, changes in expenditures such as a statewide increase in teacher pay wouldn’t go into effect until after the school year starts.

The newest continuing resolution still requires more approvals before it becomes final. It next heads to the full North Carolina House for a vote.

As senators and representatives debate the state’s budget, they’ll need to close a $500 million gap. North Carolina’s House proposed a $22.2 billion budget. The Senate’s version was $500 million less.

Despite the large gap in spending between the House and Senate budgets, State Sen. Andrew Brock, R-34, said he feels confident the two chambers can come to an agreement in a relatively speedy manner. In fact, Brock suggested the two chambers may simply go with Gov. Pat McCrory’s original proposal, as it sits between the House and Senate versions.

Whatever the solution, Rowan County’s legislators likely won’t have a significant say in the budget’s details.

Three of four Rowan County legislators are budget conferees, who are appointed by legislative leaders to help sift through budget negotiations. In total, there are 114 conferees. Ford, who voted against the House version of the budget, is the only one not to be appointed as a budget conferee. Discussions, however, aren’t occurring amongst the large group of conferees, according to local legislators. Instead, a select group of the top leaders of both chambers are sorting out the state’s spending in private meetings. Budget conferees haven’t yet met as a group.

State senators previously tried to speed budget negotiations by dropping sales tax redistribution and Medicaid modifications from the budget. The Senate on Tuesday passed both proposals.

Sales tax redistribution was first introduced by Republican Senate Majority Leader Harry Brown as part of its own bill — The Sales Tax Fairness Act. It was later folded into the Senate’s budget proposal with other policy measures. Now, Brown’s plan is part of a bill — HB 117 — originally intended to modify the state’s main incentive program. The Senate gave final approval to HB 117 on Tuesday. It still requires a House vote.

The newest version of sales tax redistribution is still a net positive for Rowan County. At one point, Brown’s proposal more sharply favored rural counties. In its present form, the sales tax redistribution plan returns distributions to a 50/50 split.

Starting in 2007, sales tax distributions gave 75 percent to the counties where purchases occurred and 25 percent to counties based on population. Previously, the formula gave 50 percent of sales tax returns to counties based on where purchased occurred and 50 percent to counties based on population. Brown’s latest proposal returns sales tax distributions to the pre-2007 model.

Rowan would see its sales tax revenue jump from $16.7 million to $21.15 million by the 2020 fiscal year, according to legislative estimates. The estimates predict tax revenue growth across the state. Without Brown’s proposed changes, tax revenues would increase in Rowan, but at a slightly smaller rate. Municipalities receiving tax revenue from Rowan would see similar increases with and without the change, according to legislative estimates. More urban counties such as Cabarrus, Mecklenburg and Forsyth would see sales tax revenue losses under the proposed changes. The 50/50 distribution change would also continue to negatively affect counties with tourism-based economies, such as coastal Dare County.

Sales tax redistribution largely pits rural counties against urban areas.

Ideas about Medicaid changes put the House and Senate at odds.

The state Senate’s budget, for example, sets up a new organization to oversee Medicaid. Medicaid would be managed mostly by for-profit organizations under the Senate’s plan. The House seeks to allow nonprofit groups of hospitals and doctors to manage care.

By a 34-10 count, the Senate on Tuesday gave final approval to its version of Medicaid overhaul. The bill still requires a House vote.

Even though Medicaid is no longer included in the state’s budget, Brock said it’s important for legislators to address the program before this year’s session adjourns.

“For as long as I’ve been here, Medicaid has been the biggest driver in the budget,” Brock said. “For years it’s been pushing our budget up and up. Honestly, we’re just trying to get our hands around the cost of it.”

Contact reporter Josh Bergeron at 704-797-4246.

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