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Originally published: 2013-07-22 17:20:56
Last modified: 2013-07-23 17:25:18

Update: House OKs NC budget deal

by Anna Oakes

The N.C. House of Representatives voted 66-52 Tuesday to pass a compromise state budget bill on second reading. The bill will remain on the House floor for a final vote on third reading.

The $20.6 billion state budget plan would incorporate tax cuts, end tenure for public school teachers and fund $1.5 billion in unexpected Medicaid costs. Leaders said the budget represents a 2.5 percent increase in overall spending.

The Republican-led General Assembly on Sunday published the conference report for Senate Bill 402, the two-year state appropriations bill for fiscal years 2013-14 and 2014-15. The state Senate was scheduled to take up the compromise state budget bill later on Tuesday. 

The budget plan incorporates tax cuts from the Tax Simplification and Reduction Act approved earlier this month, with the effects realized more fully in 2014-15 than this fiscal year due to effective dates. According to the budget, the tax plan will cost the state $86.6 million in tax revenue in 2013-14 and $437.8 million in 2014-15.

"Together, members of the House and Senate have carefully crafted a plan that smartly invests in key priorities like education and public safety while fulfilling our shared commitment to fiscal responsibility and accountability in state government," said Senate President Pro Tempore Phil Berger (R-Rockingham) in a statement.

A statement from House Speaker Thom Tillis' office indicates the budget agreement fully funds enrollment growth in K-12, community colleges and the public university system, but all three educational categories will see net spending reductions. Higher education takes the biggest hit under the plan, with a 4.7 percent decrease from current levels, while K-12 public schools would see a 1.5 percent cut.

The budget does, however, provide $150 million for repairs and renovations to state buildings, with 40 percent of the amount designated for the UNC system.

No pay raises for teachers or state employees are included in the budget.

In addition, the budget plan would institute significant changes to educational policies, including an end to teacher tenure and the creation of a voucher program for private school students, proposals long favored by conservatives.

Instead of a tenure system that ensures certain due process rights for teachers who have taught for at least four years, the budget agreement would employ teachers through contracts of up to four years based on job performance. The budget plan includes $10.2 million in 2014-15 to fund pay raises "for the most effective teachers," Tillis' statement said.

According to the bill, the voucher program would provide "Opportunity Scholarship Grants" of up to $4,200 per year for eligible students to attend non-public schools, beginning in 2014-15.

The leader of North Carolina's largest teachers organization on Monday blasted the budget bill and said the group would take the fight to the courts.

"The elimination of class size caps, the firing of thousands of teacher assistants, investment in a private school voucher scheme that will only enrich those who seek to profit off of public schools and the devaluing of education as a career will position our state as a model in what not to do in education," wrote Rodney Ellis, president of the N.C. Association of Educators, in a letter to legislators Monday.

Ellis said the NCAE would immediately pursue legal challenges to the voucher system, the loss of teacher tenure rights and cuts to public education.

Under Health and Human Services, the budget allocates $12.4 million in education lottery funds for an additional 2,500 Pre-K slots and establishes regional rates for payment of hospital inpatient services to eliminate disparities in how hospitals are paid for the same service.

The budget supports the Strategic Mobility Formula for transportation in the North Carolina Highway Trust Fund, which is separate from General Fund operations. The formula consolidates various funding streams to prioritize and accelerate transportation infrastructure projects at the state, regional and local level.

The plan also provides one-time compensation to living victims of a state-sponsored eugenics program that ended in the 1970s.