What Happens When We Don’t Have a State Budget?

Of all the ways political dysfunction is impacting North Carolina, one of the most frustrating is the inability of the General Assembly and Governor to enact a budget for 2019-20. Normally, the state’s two-year budget is passed by June 30 of the odd numbered year. But today, the Republicans adjourned the legislature until April 28 without coming to any agreement on the budget for this biennium.

Political disagreements should never result in an impasse of this magnitude. Whenever this comes up with constituents, people have lots of very reasonable questions. I want to address some of the main questions that people ask me in depth.

Q: What happens when we don’t have a State Budget?

The consequences of not having a state budget in North Carolina are quite different than when the federal government does not have a budget. We have a State law that maintains the prior year’s level of spending if no new State budget has passed. So there are no shutdowns, no closed parks, or other severe disruptions to public services that we can see when the federal government has no budget.
Yet it is still a big deal (and a bad idea) to not have a State budget. No budget means no pay raises for state employees. It means no new investments or new services. It means no updating of priorities from the previous year. Additionally, every budget includes one-time (or non-recurring) funds for special purposes grant funds for a range of items including afterschool programs, homelessness intervention, supporting seniors, and the startup funds for developing a Thomas Day Historical site in Caswell County. These non-recurring funds cannot be spent without a State budget so right now those funds are just sitting in the state’s coffers.

Q: Why don’t we have a State Budget?

Republicans control both the State House and the State Senate, but thanks to the 2018 elections they no longer have supermajorities to override Governor Cooper’s veto. That means that now a State budget needs a consensus from both parties to pass, unlike in the past several years when the Republicans could dictate whatever it was they wanted.
Governor Cooper’s proposed budget focused on three major initiatives:

-Medicaid expansion to use Federal funds to close the health care coverage gap and provide healthcare for more than 600,000 North Carolinians.
-A teacher pay raise of 9.1 percent over two years.
-A $3.9 Billion bond to capitalize on low interest rates to invest in upgrading and modernizing public school facilities and provide clean water infrastructure.

When the Republican-controlled General Assembly passed its State Budget, they included NONE of these three major items. They refused to follow the lead of other states and expand Medicaid. They refused to pass a statewide bond. And their teacher pay raise was only 3.7% over two years – a smaller raise than what all other state employees would receive.

Plus the Republican State Budget included more money for truly objectionable programs like private school vouchers, virtual charter schools, and anti-choice “pregnancy centers” that discriminate against the poor and people of color and infringe upon women’s reproductive rights. So Governor Cooper vetoed the State Budget and that veto still stands.

Governor Cooper and legislative Democrats have made repeated attempts to compromise, but Republican legislative leaders refuse to do so. Instead, they want it all and have resorted to outrageous abuses of power to override the veto. Ultimately, we’re stuck because Democrats have refused to fold against the Republican pressure.

Q: Isn’t there anything you agree upon?

Sure. We agree on a lot of things. That is why our state law that provides a stop-gap budget to go into effect when we cannot agree on a State budget makes a lot of sense.

In addition, we have passed “mini-budget” bills to update our spending on areas where there is bi-partisan agreement including pay raises for some state employees like corrections officers and State Highway Patrol (but not for teachers or public school employees), public safety, disaster relief, juvenile justice, and transportation.

Q: What’s next?

After Republicans failed to override the budget veto today and adjourned until April 28, it’s not clear if we’ll ever have a budget. Democrats have offered to negotiate a “mini-budget” bill that provides teachers and public school employees a pay raise but Republicans refuse. And Democrats’ broader budget counter proposal from July 9th is still out there with no Republican response.

Meanwhile, $2.25 billion remains available for appropriation at the end of Fiscal Year 2019-2020 and $3.59 billion available at the end of the Fiscal Year 2020-2021. Think of all we could do with those funds and all that taxpayers expect us to do with the tax money they pay.
And, of course, we could become the 38th state to expand Medicaid. The costs of expansion would be paid with federal funds and by a fee charged to hospitals. The funding would create 43,000 jobs across the state. Those of us who currently have health insurance would see savings because the amount we all pay to cover unreimbursed care at hospitals and emergency rooms would go down.

Q: Will teachers and other public school employees ever get a raise?

Teachers did receive a step increase raise if they were eligible for one based on years of service. That was included in one of the “mini-budget bills.”

It really hurts to know teachers are going without. But a friend from my years working in Chapel Hill Schools, Michael Irwin, sent me this note today, “As a teacher paying childcare costs for two kids who desperately needs every dollar I can find these days, I wholeheartedly endorse and support a veto. I’d rather have integrity and future fairness than a minimal raise now. Don’t let them strangle us.”

The bottom line is this, if Republicans finally start negotiating with Governor Cooper and legislative Democrats, there is plenty of money available to give teachers and public school employees larger raises through a compromise budget, and those raises could even be retroactive.

Q: So where do we go from here? How can we make progress?

It’s possible that behind-the-scenes negotiations could lead to a resolution and Governor Cooper could call us back for a special session to patch a budget. Unfortunately, I think that the Republicans’ stubbornness makes that unlikely. If nothing changes, we will go through 2020 and head into this year’s elections with no budget in place. This will and should be one of the major issues of this year’s elections. Needless to say, I hope that the Democrats secure majorities in both houses and retain the governorship so that in 2021 we can enact the kind of budget North Carolinians need and want. If the 2020 elections result in a divided government, it will be critical that we come together to meet the needs of our residents. I know that I’m willing. Republicans, we’re waiting.

Graig Meyer is the State Representative for House District 50, serving Caswell and Orange Counties.
He can be contacted at graig.meyer@ncleg.net.