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Vajda: Eszter Vajda, Host
McCullen: Kelly McCullen, Legislative Week in Review
Henry: Johanna Henry, Legislative Week in Review
Easley: Governor Mike Easley
Crawford: Rep. Jim Crawford, (D) Co-Chair, House Appropriations
Haire: Rep. Phil Haire, (D) Vice Chair, Appropriations
Clary: Rep. Debbie Clary, (R) Co-Chair, Appropriations
Wainwright: Rep. William Wainwright, (D) Craven Co.
Allen: Rep. Bernard Allen, (D) Wake Co.
Yongue: Rep. Doug Yongue, (D) Co-Chair, House Appropriations
Tolston: Rep. Joe Tolston, (D) Co-Chair, Education Appropriations
Luebke: Rep. Paul Luebke, (D) Durham Co.
Dollar: Rep. Nelson Dollar, (R) Wake Co.
Blust: Rep. John Blust, (R) Guilford Co.
Hackney: Rep. Joe Hackney, (D) Majority Leader
Rhodes: Rep. John Rhodes, (R) Mecklenburg Co.
Glazier: Rep. Rick Glazier, (D) Cumberland Co.
Black: Rep. Jim Black, (D) Speaker of the House
Dalton: Sen. Walter Dalton, (D) Co-Chair, Appropriations
Stam: Rep. Paul Stam, (R) Wake Co.
Clodfelter: Sen. Dan Clodfelter, (D) Mecklenburg Co.
Wilson: Bill Wilson, AARP
Parrott: Steve Parrott, N.C. Telecommunications Industry Assoc.
Barber: Rev. William L. Barber, II, PhD, NCAACP President
Ripley: Al Ripley, N.C. Justice Center
Stein: Josh Stein, N.C. Attorney General’s Office
Frazier: Randy Frazier, Time Warner Cable
Edwards: Bruce Edwards, State Quartermaster, Veterans of Foreign Wars
Reece: Larnell Reece, Vice President, Disabled American Veterans
Smith: Charlie Smith, Director, N.C. Div. of Veterans Affairs
Peedin: Wayne Peedin, Asst. Dir., N.C. Div. of Veterans Affairs
Cooper: Roy Cooper, N.C. Attorney General
Pope: Art Pope, Republican Party Activist
Mooneyham: Scott Mooneyham, Capitol Press Association
Leslie: Laura Leslie, N.C. Public Radio/WUNC-FM
Ingram: David Ingram, Winston-Salem Journal
[BEGIN VIDEO CLIPS]
McCullen: The House passes its state budget version, the Senate says let’s negotiate. Governor Easley issues an ultimatum for failing public schools and could lawmakers open up cable television competition? Details are next.
[INTRO MUSIC]
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[THEME MUSIC]
Vajda: Good evening everyone, I’m Eszter Vajda. Thanks so much for joining us.
McCullen: I’m Kelly McCullen. Tonight we will break down the House budget and explore issues surrounding military personnel’s vulnerability to identity theft.
Vajda: Plus there is discussion about opening the cable television industry to more competition. But we begin tonight with the House budget. The House passes and $18.9 billion budget. Some say it is the best state budget in years, others claim the bill spends too much money. Here are some of the details.
STATE BUDGET
Vajda: The budget sailed through the House on Wednesday but Thursday was a different story. Members spent the better part of six hours discussing the nearly $19 billion budget. So what’s in it? Appropriations chairs say the budget is fat with programs but slim on pork.
Crawford: These funds that we’ve added have filled a lot of holes in a lot of places that we haven’t had money for years. We have not added a lot of new programs and we’ve tried to strip out all of the policy.
Vajda: The adjustment to last year’s budget includes salary increases for state employees and teachers, money to fund school enrollment increases in all areas of education. It also allocates substantial funds for mental health, the environment, and justice and public safety.
Haire: We feel very fortunate this year to have this extra money. We’ve been able to help out the court system by hiring more judges, more assistant district attorneys, and particularly we had some critical needs as far as technology is concerned and replacing a lot of antiquated equipment that was 10 years old or older in the various clerks offices throughout the state. So we feel really, really good about that.
Vajda: Appropriations chairs also included about $50 million to help relieve counties of the rising cost of Medicaid.
Clary: So many of our rural counties are suffering from the high cost of Medicaid and it continues to increase. In my counties alone it has been $1 million plus every year. So we have looked at that and that is just crucial that we give them some relief on that. We are the last state in the country to give the Medicaid relief to our counties.
Vajda: Dozens of amendments were introduced during the bill’s first public discussion on Tuesday with many on the floor Wednesday. They include an amendment that would add $26 million to the disadvantaged supplemental student fund.
Wainwright: This is the only money that holds us accountable to help the least of these in K through 12. Providing this money will help us to meet our Leandro mandate and make sure that those at risk get what is morally and legally required.
Vajda: The amendment spurred debate between Democrats and regular supporters of public education. The House did set aside funds to low-wealth schools and restored discretionary funds cut from schools during tough economic times. But members were torn on which one to fund first.
Allen: When I read these reports about the disproportionate number of Afro-American males and females being in a penal institution, when we are in fact funding those institutions and those individuals far more than we are individuals in the public schools. I think this issue has the potential of polarizing this body; I hope that is not the case. But I ask each one of you as a colleague of good judgment and wisdom to vote to support this amendment for the young boys and girls back in your district.
Yongue: The discretionary cuts and the low-wealth funding were the two of our top priorities and this is going to make a lot of folks happy in a lot of areas and make a big impact on the funding of our education system.
Tolston: We fully funded low-wealth. Now I’d love to have the money available that we could fund this as well. But we have tried to address the needs that the LEAs have indicated would best help them to meet the needs. They could use some of this low-wealth money or some of these cuts. They probably will come back and make some of the cuts that will hurt some of your districts.
Luebke: This is a small way that we can provide that funding. We do say that it is our priority to deal with disadvantaged, at-risk children. I don’t see how, I don’t think it is right for us to put off until the next year the question of giving priority to the at-risk, disadvantaged children.
Vajda: The amendment failed but the issue is sure to come up again. Another hot button issue is the state employee pay. The 5% increase is less than the approximately 8% for teachers. Some members say the state is in danger of losing good state employees to corporate competition. One amendment would give a 6.4% across the board raise to teachers and state employees.
Dollar: No group has suffered more from our budget distress in the last five or six years than state employees. They have taken it on the chin.
Vajda: State pay raise supporters say 5% is a step in the right direction and the fight for more money has just begun. The amendment also failed.
The budget includes a cut on the sales tax and the tax on the upper-income wage earners. The two temporary taxes were raised in 2001 when the state was in rough economic waters. But the provision only rolls back the taxes partially; it does not restore them to their original rate.
Blust: This budget is raising spending close to 10%. Think of compounding that you learned in school. When you compound that certainly you understand that at that rate the revenues aren’t going to catch up and that there will come a time again when you either have to slam spending or raise taxes.
Vajda: Republicans say budget writers over-spent. Democrats say they spent wisely.
Dollar: When I woke up this morning thinking about my vote on this bill and I said to myself what is a working, middle class family, the folks who pay the bills, who don’t qualify for a lot of programs, they are the ones who are paying the taxes. What is really there in this budget that benefits them come July 1st? And sadly I find very little in that regard.
Hackney: What is in it for the average family in North Carolina? It is exactly what they want; they want education, education, education, teacher pay going up. They want more teachers because there are—I looked it up—38,000 new students coming to our schools and so we grow government. We hear that we grow in government because we hired school teachers, new school teachers for 38,000 new students.
Rhodes: This is an election year budget. In this budget you’ll be able to go out and tell that you cut taxes possibly; that is arguable in this document, that you did this for schools and education and all of these other programs. But it is an election year budget. But it does increase spending. And it is an irresponsible budget by virtue of the fact that it increases spending and it funds programs with non-reoccurring funds that are going to have to be funded later. You know what that means, folks, that means a tax increase.
Glazier: It has been argued my three years here at least in every one of those speeches that the budget is irresponsible. Well last year’s budget was so irresponsible that we ended up with a $2 billion surplus this year. And this year, this year we are saving in this budget $323 million into savings for the rainy day fund and the total deal with this state’s future problems on top of the $312 million already there. And so the appropriations chairs on both sides and the speaker and the leadership have planned over $600 million to take care of the future needs of this state.
Vajda: At the end of session Speaker Black praised members on the floor for their work and speed in which they crafted the bill. He says this is one of the best budgets he has seen in years.
Black: I have a passion for education and we’ve done more for education this time than ever before. The $850 million or more that we spent last year, we could only do that because our economy improved and some of the things that we’ve done in the past made that happen.
Vajda: The final vote on the budget is 91/23 with a majority of Republicans voting in favor of that bill.
McCullen: Senate and House negotiators will begin working out their differences beginning next week. Some Senate members say they have issues concerning the House tax cuts, capital funding, and some House provisions giving counties financial relief for Medicaid costs.
Dalton: They did a one-time fix for Medicaid that freezes it. We have been looking at an approach and working with the County Commissioners’ Association trying to find a long-term fix to Medicaid. So I think there will be a significant debate about that and hopefully we are going to resolve all of these differences and be completed with the budget process by June 30th.
McCullen: As a matter of full disclosure, 45% of UNC-TV’s budget comes from the General Assembly. For more reaction on the House passing this budget Eszter sat down with Appropriations Chair Representative Jim Crawford and Republican representative Paul Stam.
HOUSE PASSES BUDGET
Vajda: Representative Stam, many of the Republicans have argued that the appropriations process has not been fair. In other words there hasn’t been that sunlight. Do you think this year has been different?
Stam: Well no it is not and this is no reflection on Jim because this is not his problem but unlike other years when every member was on either House or Finance, you know we have five Republicans who are not appointed to any budget committee. Subcommittees used to work the bills up to the committee level and the floor level and basically now the subcommittees make no decisions. So it has not in fact been more open to amendments. Most amendments of any substance are just ruled out of order.
Vajda: Representative Stam, Representative Crawford, thanks so much.
Crawford: I need to rebut that one.
Vajda: Uh oh—okay.
Crawford: I think it was much more open. We didn’t change what the subcommittees did in terms of substance much at all. We added some big issues like the low-wealth funding and brought some money from other areas but we basically took what the subcommittees handed to the chairs on our level and worked with what they had done.
Stam: Well our subcommittee chairs told us they were ordered what to put in their subcommittee report. So I guess they did accept the subcommittee reports.
Crawford: I don’t know about that ordering. I didn’t make the ordering. I was chairman of the committee.
Vajda: Representative Stam, Representative Crawford, thanks so much.
Crawford: Thank you.
Stam: Thank you.
McCullen: To see more of this interview watch Legislative Week in Review where Eszter will continue her discussion with the two representatives.
LOW-PERFORMING SCHOOLS
Vajda: The governor wants low-performing schools to clean up their act. Schools that did not meet 60% proficiency on end-of-grade tests for the past two years will be redesigned. The governor along with the State Board of Education sent turnaround teams to 44 high schools. Their findings worry the governor.
Easley: What they found is not good and not particularly encouraging. They found a significant challenge in leadership in the schools, a significant challenge in instruction and in organization. Dramatic and fundamental change is going to be necessary in each one of those high schools and we are going to have to provide that. No tinkering around the edges is going to work.
Vajda: Principals and teachers in these schools will be required to take part in programs to improve their performance.
DEREGULATING CABLE TELEVISION
McCullen: Lawmakers discussed deregulating the North Carolina cable television industry this week. Supporters say spurring competition will lower cable rates and offer consumers more choices. Opponents say deregulation could actually hurt local customer service and could leave poor and rural customers left out of the reform benefits.
Cable companies currently negotiate individual contracts with each town they serve. They are called local franchises. Cities get bargaining leverage through them and cable companies get a monopoly. Some lawmakers now say local franchising is outdated, isn’t serving poor or rural areas like theory suggests, and digital satellite is already creating competition. So why not allow more?
Clodfelter: If the current system is the right way to go, we should already have better service than we have, we should already have complete coverage of the state, all the rural areas, all the lower-income areas. It hasn’t produced that.
Wilson: While competition may reduce rates in competitive areas where the consumer has a choice, cable companies and other video providers may increase rates in those areas without competition, low and middle-income consumers who need cable rate relief the most are likely to be the ones left in non-competitive areas.
McCullen: Proposed legislation would replace the hundreds of unique local agreements with a uniform, statewide franchise managed by the North Carolina Utilities Commission. Some say this streamline process would lure competitors and end the monopolies. The telephone industry is a looming potential competitor; it isn’t allowed currently to offer cable TV.
Parrott: The only thing we are asking today is that you support a bill that allows our industry to invest in this state and allows us to get into a business to provide video and entertainment services as part of our bundle of services with voice, high speed data, and wireless. The cable companies are able to do that today and provide all four of those things to their customers.
McCullen: Many say cable TV deregulation requires some strong legislation protecting low-income and rural areas from service discrimination. Both chambers’ proposals carry this anti-discrimination language but the wording is being scrutinized.
Barber: We ought to take the time that is needed, put this into a commission, deal with it in the long session, and make sure that we don’t end up increasing a digital divide.
McCullen: Cable providers could choose markets where they will compete under this legislation. Some worry these companies would choose only the wealthier, more populated areas leaving others under monopoly situations with no pricing protection.
Ripley: How are we going to ensure that people in rural areas and low-wealth citizens have the benefit of increased competition, lower prices, and improved quality of service?
McCullen: Deregulation supporters say cable television companies had decades under monopoly protection to solve service problems.
Clodfelter: We need to open that market up and let the innovators out there say, “I can figure out a way to serve that community. I can figure out a way to make it work.”
McCullen: The state and not the cities would handle customer complaints if the Utilities Commission begins franchising all cable companies. The attorney general would likely field consumer complaints statewide. There are an estimated two million North Carolina cable TV customers.
Stein: We estimated that we would need one specialist for every 95,000 customers; that is about the size of Cary. They have a person dedicated to dealing with cable customers. Localities receive 50,000 to 60,000 complaints a year about their cable business.
McCullen: City representatives from Raleigh and Greensboro told lawmakers deregulation and state control of cable franchises is not what consumers need. But one Time Warner Cable executive told lawmakers, “Competition isn’t necessarily a bad word.”
Frazier: We are not opposed to competition. We have not resisted that movement at all because it has been a part of our culture, part of our history. We’ve gone through the ’84 Cable Act, we’ve gone through the ’92 Cable Act, we’ve gone through the ’96 Cable Act; we will adapt and go through whatever the General Assembly decides is the best policy for this state.
McCullen: Government and public access channels would be funded by city or county governments under this bill. A cable company would only be required to air the content produced, otherwise the cable provider could reprogram that channel as it sees fit. Which brings us to our question of the week.
QUESTION OF THE WEEK
McCullen: Do you think cable television should be open to competition? Log onto our website, unctv.org/legweek, vote for the survey, and email us your opinion.
Vajda: A smoking ban for the General Assembly’s building sits one vote from reaching the governor’s desk. A final vote is scheduled for Monday evening. The smoking ban takes effect immediately upon becoming law. Legislative smokers could smoke outside the General Assembly building and could carry their tobacco in their offices with them as well. The House previously passed this bill [House 1133].
McCullen: Should children be required to take mandatory eye exams before entering kindergarten? That was our question last week. You voted on it and 60% of you said, “No, mandatory eye exams should not be required.” Thirty-five percent of you did say “Yes.” Five percent are undecided about this issue. Thanks so much for voting in our poll. An appeal bill is scheduled for the Senate calendar next Thursday.
Vajda: There are a couple of identity theft bills winding through committee. One addresses times when the law enforcement officers request your driver’s license or learner’s permit and you don’t have it [House 2881]. The bill would authorize the taking of photographs and fingerprints if DMV identification can’t be produced. Any violations of state laws regarding possession of driver’s licenses or learner’s permits would trigger the fingerprint and photograph provisions. These are laws regarding fake or falsified IDs. It would take effect December 1st of 2006.
North Carolina’s 700,000 veterans and 90,000 active duty personnel are vulnerable to identity theft. A Department of Veterans Affairs computer was recently stolen.
McCullen: That computer contained information on 26 million American veterans. Johanna Henry learns how North Carolina is trying to help our veterans stay secure. Johanna?
IDENTITY THEFT AND MILITARY PERSONNEL
Henry: Eszter and Kelly, this is a letter from the secretary of Veterans Affairs alerting veterans, their families and active-duty military personnel that a laptop computer with their personal information was taken from the home of a Washington, D.C. employee last month. And the computer hasn’t been recovered. The North Carolina veterans have a way to protect themselves.
The veterans came from around the state to meet, discuss concerns, and eat with their local lawmakers. One concern, identity protection, since the name, birth date, and Social Security numbers of these men and women may no longer be secure.
Edwards: It has such terrible possibilities for all of the veterans that it simply stunned us all when we heard it.
Henry: Bruce Edwards is a retired Army lieutenant colonel and the state quartermaster of the Veterans of Foreign Wars.
Edwards: We absolutely have to demand that VA institute a system to make sure that this can never happen again and make it known to the veterans that this has been done and how they are going to do it.
Henry: But until that happens, Larnell Reece isn’t taking any chances.
Reece: I have already gotten in touch with the three credit bureaus and locked my credit.
Smith: The inspector general has warned the VA for several years that there was a problem with their security of data, sensitive data.
Henry: Charlie Smith is a veteran and director of the Division of Veterans Affairs for North Carolina. He says if this information fell into the wrong hands not only could finances be ruined, lives could be in danger.
Smith: But there is also a security threat by having the name, Social Security number, and data-of-birth of persons who are on active duty and who might be in a combat zone at the present time. So you know, if they’ve got that information they can get the address. The families of those individuals could be in danger. So it goes a little further than identity theft when you look at it that way.
Henry: North Carolina is one of a handful of states that gives consumers the ability to put a security freeze on their credit report. That is thanks to an ID theft bill passed last year. It cost $10 to build this wall around your credit report and it must be done with all three credit reporting agencies. That is $30 that not every veteran can afford.
Peedin: I know it is not significant to a lot of people but it is to people that are living month-to-month.
Henry: Wayne Peedin, Assistant Director of the North Carolina Division of Veterans Affairs, says his office has received many calls from irate veterans who don’t know what to do.
Peedin: Veterans are angry. They don’t’ know what to do. They are looking to the VA for help. The VA doesn’t give them a lot of information.
Henry: That is why legislation being drawn up in the General Assembly would require the three credit bureaus, Experion, Equifax, and TransUnion, to waive their fee for veterans and active duty military personnel.
Cooper: The federal government is putting our military personnel and federal employees at risk by continuing to use the Social Security number.
Henry: Attorney General Roy Cooper pushed the ID theft bill [Senate 1048] through the General Assembly last year and is calling on the legislature to exempt veterans from the security freeze fee as quickly as possible.
Cooper: So we need this legislation as quickly as possible so that veterans and military personnel can take advantage of it quickly to protect themselves.
Henry: There is a down side to putting a security freeze on your credit report. If you decide to go out and finance a new car like this Passatt or anything else, you will first have to unfreeze your credit report at all three credit bureaus.
Cooper: You’ve got to contact the credit reporting company and say, “Hey I am going to do this, lift the freeze.” And then put it back on after you have finished.
Henry: Until the late 60s the VA and the military used service numbers and VA file numbers, not Social Security numbers to track members. Some say it is time to go back to that. Larnell Reece is confident the organization that has taken care of him so long will continue to do so.
Reece: It wasn’t an intentional situation. It was an accident that happened. Hopefully it will never happen again but we have to be proactive along with the VA.
Henry: This is a question and answer sheet that was sent along with the letter from the secretary of veteran’s affairs. It says if the information was misused, veterans are likely to see suspicious activity during the month of May. All of the veterans we spoke with said they received their letter only a few days ago or they haven’t received one at all. Back to you.
McCullen: As part of our investigating to get this story on the air Johanna called all three credit reporting agencies. TransUnion and Equifax did not return our telephone calls. Experion did answer and said it does not comment on pending legislation.
Vajda: A Senate committee is holding legislation banning disorderly conduct at military funerals or memorial services. Repeat offenders would face felony charges. The bill [Senate 1833] prevents people from making loud or reckless noises, using threatening language and gestures, or disturbing a service’s progression. It sets a 300-foot boundary around buildings where these events occur. The proposal would take effect one hour before a service and last until one hour after that service ends.
Sad note tonight, former state legislator Jim Speed has passed away following an eight-year battle with John Hodgkin’s lymphoma. He spent 19 years in the Senate and 10 years in the House. Senator Speed was known for his agricultural ties. He is survived by his wife, three children, and one grandchild. Senator Speed was 91.
McCullen: Art Pope was a former Republican legislator and founder of the Republican Legislative Majority, a 527 organization. He joins us tonight to discuss allegations raised on last week’s Legislative Week in Review.
ART POPE INTERVIEW
Vajda: Art Pope, thanks so much for being here.
Pope: Thank you for giving me the opportunity.
Vajda: It has been alleged that you used corporate funds to help influence the primary elections back in May, specifically to defeat Representatives Julia Howard and Richard Morgan. What is your response to that?
Pope: That is not true. North Carolina law prohibits corporate contributions and union contributions on the other side to be used to elect or defeat a candidate. I did not engage in that. I have supported organizations involved in issue advocacies, to educate the citizens of this state about legislative votes by incumbent legislators. That is fully protected by the First Amendment and fully allowed by North Carolina statutory laws.
Vajda: Now the State Board of Elections is investigating claims by Representative Morgan that Wholesalers, which is your company, helps fund the legislative—the Republican Legislative Majority of North Carolina which is allegedly responsible for some of these ads. What is your response to the legality of that?
Pope: I don’t think investigation is the right word. Representative Richard Morgan filed a complaint and the board has to receive that complaint. By the way, there have been two complaints filed against Richard Morgan and Joe Sinsheimer of JimBlackMustGo.com. There has been a complaint against Speaker Jim Black and Richard Morgan involving their 527s. That hasn’t received as much publicity. The State Board has received those complaints. I am looking forward to them taking action and dismissing the complaint against the Republican Legislative Majority.
Vajda: There has been a lot of talk about your group The Republican Legislative Committee of North Carolina—no committee—of North Carolina. What exactly is the committee about?
Pope: In 2003 Richard Morgan, Julia Howard, and several Republicans went against the Republican caucus to elect Jim Black speaker again. Republicans won a majority but they turned and opposed the citizens who elected that majority to keep Jim Black in power. Many Republicans including Representative Michaux, former Senate minority leader as a co-director, Representative Billy Creech who is the other co-director, are opposed to Republicans running, getting re-elected as Republicans, and supporting the Democrats. We think Jim Black’s leadership has been corrupt. It is full of scandal. We disagree with his policies, including the billion dollar tax increase for sales and income tax. What RLM is trying to do is educate the citizens that there are a group of Republicans who are supporting Democrat Jim Black, voting for Jim Blacks’ billion dollar tax increases.
Vajda: But still some have called these ads slanderous and false. I have one of them here with me. What is your allegation? What was the intent behind these ads and pamphlets?
Pope: If you look at that mailer it has seven legislative votes, Julia Howard’s vote for Jim Black as speaker in 2003, in 2005, her vote for the billion dollar tax increase, her vote for the Democrats to stop budget reform, to stop pork barrel spending. That is information that is actuality, absolutely true. Your show, you have on your website legislative bills and how legislators vote on them. You have the right to do that. Other groups have the right to that. The United States Supreme Court in Buckley v. Vallejo held that the Congress and states do have the right to regulate campaign finance to elect or defeat a candidate. That is called express advocacy. When that same decision the U.S. Supreme Court carefully said that that cannot go into issue advocacy; you have to use express words to elect or defeat a candidate, support or oppose a candidate for election to office. Otherwise it is such a gross restraint allowing incumbents to keep people from knowing how they voted and restricting our free speech. This is pure issue advocacy, there is no express advocacy, no words to elect or defeat any candidate.
Vajda: Political observers say that the House Republican Party is divided, not only because of the co-speaker ship between Richard Morgan and Speaker Black but now even more because of some of the targeted ads against some of the Republicans. What is your view of the Republican Party right now in the state?
Pope: Well the Republican Party is moving forward off alternatives to the failed budgets, the tax-and-spend deficit budgets of the Democrats. Richard Morgan who led the coalition with Jim Black, the Democrats, has been defeated in his primary. A few legislators who supported Jim Black are still here like Julia Howard. But most of the Republican House caucus and the Republican Senate caucus believe that the people deserve alternatives to the failed policy of the Democrats and they are going to work on that. And the voters are the ones who are going to decide that issue in the primaries and then there is November and the general election.
Vajda: But Speaker Black among others have said that a lot of Republicans are now concerned or afraid of working with Democrats. How do you feel about bipartisan work?
Pope: I support bipartisan work. Ninety percent of the legislation in the past of the General Assembly is bipartisan. As a legislator I supported bipartisan work as part of a bipartisan coalition for reformed speaker Joe Mavredick. What the voters want though, what the incumbents are afraid of, are the voters at home who disagree with the current policy, all the pork barrel spending, corporate welfare, favors for special interest. Julia Howard took $8,000 in contributions from the office of S&M Brands Tobacco report. She was helping hold up the bid which cost them millions of dollars. What they are afraid of is not Art Pope, what they are afraid of is the voters back home, the constituents back home, will know their record and act accordingly.
Vajda: Art Pope, thanks so much for coming in and talking with us.
Pope: Thank you.
McCullen: We contacted Speaker Jim Black to hear his response to Mr. Pope’s comments. A spokesperson for the speaker responds by saying, “Under Speaker Black’s leadership we’ve had an extremely successful session for the people of North Carolina which this week included passing a budget with bipartisan support.” We also called Representative Julia Howard. She has no comment.
Eszter discusses the House budget with Appropriations Committee Co-Chairman Representative Jim Crawford and Republican Representative Paul Stam.
INTERVIEW WITH REPRESENTATIVES JIM CRAWFORD AND PAUL STAM
Vajda: Representative Stam, Representative Crawford, thanks so much for being here after a very busy week.
Crawford: It’s been a little busy this time around.
Vajda: Representative Crawford, $18.9 billion budget, you said on the floor you were worried people, members wouldn’t recognize the bill it was so slim. What is in it?
Crawford: Well it’s got all the funds in it but we took out all of the policy and tried to have a good, slim budget that everybody could vote for. We still missed a few but not many.
Vajda: What are some of the key highlights?
Crawford: Well our people I think are the most important thing. We’ve given raises to state employees and to teachers. For state employees it is a 5% raise and a $300 bonus, which the $300 amounts to another 1% overall. And then the teachers got a raise that will amount to 8%. They have a schedule and 1.8% of the 8% was built into the schedule and then every teacher gets a $2,250 raise. And that also applies to the principals. They have a little different schedule. But I think that is the most important item.
And then what we’ve done for education. I am real excited that we have been able to plug a hole that we had for $44 million. We asked the schools when we had tight times to make some cuts and we gave them a target of about $44 million and they cut teachers’ aids and all sorts of different areas in the school system to come up with that money and we have been able to replace it. And we are glad of that. And then we put the money in to fully fund the low-wealth. Low-wealth, the judge has told us we had to get some work done there and so we have tried to plug the low-wealth and we put money in mental health. Right much money into mental health. We feel like that is an area we can keep people out of jail and help with the jail problems and there are people in need in mental health and we’ve put some funds there.
And then the court system was way behind, particularly in technology but we’ve added some people in the court system and added some technology that we hope will make it better for these lawyers that we work with all the time.
Vajda: Representative Stam you did not vote for the budget. Why not?
Stam: Well the budget is a lot slimmer in that it is shorter. But it is not slimmer in reality, it is big. It is a 9.5% increase of spending next year over the current year which is just a lot of money. That is the basic reason I voted for it; I was not opposed to some increase. But if you talk to anybody on the street and they ask you, and you ask, should government continue to grow faster than population plus inflation? They will say no, no, no, and everybody running for governor says no, no; running for the Senate, no, don’t do that; running for the House, don’t do that. But we’ve now done it for the fourth year in a row and this time it was just bigger than ever, $19 billion almost.
Vajda: Representative Crawford?
Crawford: Well we didn’t spend a lot of that money, we put a lot of it in reserves, we put over $300 million into the rainy day fund. We talk about government and how much we spend. The truth is we spend a tremendous amount of money, about $120, $130 million a working day and we only had rainy day funds that would last a day-and-a-half and this will increase our rainy day funds, give us two or three days to work with in case things all go bad. We put money in repairs and renovations; we haven’t even repaired the rooftops on a lot of our government buildings so we put over $200 million there. So that is $500 million. We gave I believe it is right at $600, almost $700 million in salaries for our people so that is over a billion. Granted there is some expansion but you’ve got to have school teachers for those thousands of children who are coming into our school system that we didn’t have last year. So we’ve expanded government in some areas that are growing that we can’t, we have to fund—community college growth, university growth.
And then we put other reserves in. We put a $20 million reserve in for disasters, that is another 20 on top and a lot of it is non-recurring money, things that won’t come back to bite us in the long run and that is basically what we’ve tried to do with the budget.
Vajda: Representative Crawford let me ask you about some of the amendments. A number of them were introduced in the appropriations but one of the most controversial on the floor had to do with the disadvantaged supplemental student fund, which was introduced by Democrat Representative Wainwright. Why did you not amend, or why was there so much opposition to that amendment to help those folks? A lot of members say that it is time to help the disadvantaged students.
Crawford: Well definitely it is time to help the disadvantaged students. That issue ultimately will take about $500 million. There is $200 million recurring money. In other words money that is in the budget every year. We talked to the judge about his feelings about the low-wealth and the disadvantaged and what he felt we needed to do in the schools and we looked at what the governor had done and what the Senate had done. The $44 million that we put into the school system everybody shares in and they can go back and do some work for the disadvantaged. So basically we put $44 million in instead of $26 and the word is that the schools have a lot of discretion with that money; the truth is that money is given to them in categories and they really don’t have a lot of discretion. But they had taken that money out of teachers’ aids, classroom supplies, wherever they could find it for the last two or three years. So we felt like we were better off restoring the $44 million than trying to do the smaller amount.
Vajda: Representative Stam how do you feel about the DSSF fund?
Stam: I agree with Jim on this one. I thought in general school boards do better with some discretion in how they spend the money but we will revisit that one next year I assume.
Vajda: And one of your amendments, the Golden Leaf amendment passed. Tell me what that would do?
Stam: Well it added an additional $6.3 million for services for children birth to age three who are disabled, maybe autism or down’s syndrome, things like that. The experts told us one of the most effective programs that Health and Human Services has, and because of the rules they had in the committee we could only fund it by getting it from a source that wasn’t a tax source, so essentially this takes it away from a more money going to the Golden Leaf Foundation—it is about $70 million a year—that is accumulating surpluses like about a third of a billion that is then deposited all over the world, New York, London, Switzerland, wherever, and saying let’s invest some of that in disabled children this year.
Vajda: Representative Crawford, a Medicaid relief for counties, very controversial. The Senate did not include it in their version of the budget. Why did the House include that?
Crawford: Well that was the number one priority. Medicaid is growing at such a tremendous rate that the poor counties can’t pay the bill. And what we did was cap the Medicaid at this year’s rate so any growth in Medicaid is now going to fall on the state. I hope that is going to prod the state to figure some ways to cut some of these medical costs. But we put a cap and then we, that was $18 million of it; I think it has ended up $53 million instead of $65 but the other $35 million we’ve given to the poorer counties to help them pay this year’s Medicaid cost, to give them a little relief. And hopefully with the growth in Medicaid we can work on in the future. It has been growing at 13%, 15% a year. And most of our counties just don’t have the tax base to pay for that.
Stam: And there is a reason we ought to relieve that from the counties, we are the only state in the nation that asks counties to pay for that and yet the counties have no control over who is eligible or what is spent.
Vajda: Representative Stam, what other amendments would you have liked to have seen your fellow Republicans introduce? A 6.4% raise for all state employees? There were a number of other amendments, which ones—
Stam: Let me mention, too, Representative Dollar introduced an amendment to have a 6.4% increase for the government employees and it would have been paid for by reducing the increase from other teachers and—so they’d all be 6.4%. And the reason for that is that it has been the state employees who have taken it on the chin so badly for the last four years, getting miniscule pay raises, that we thought when this, when you finally have time for a reasonable pay raise for them, why should they be disadvantaged again by 3%?
I’ll just tell you one brief story; I have a friend who just took a job in Raleigh. He had applied with the state and discovered that he could start in private government for the same figure that if he stayed with the state for 15 or 20 years that he would finish with with the state. It is a very competitive job market that we have to meet.
Vajda: Representative Crawford, the budget has passed some of the differences between the House and the Senate include the DSSF fund, the Medicaid and some of the capital funding. What are some of the issues that you are willing to compromise when the conferees get together?
Crawford: It is going to be a tough one this time. I am not sure exactly how our conferees will work in this framework. The dollar amounts are very close in the departments and I think we will be in pretty good shape in looking at the programs. The differences I think are in the way that capital money was spent. We put $40 million in the House budget, gave it to the community college system to work with their area schools. They put several of the schools in the budget. There are just some little nuances there that we will have to work out between the two. The policy issues we took out of the budget; the Senate had quite a few policy issues in the budget. I think that is going to end up being a sticky point—
Vajda: Minimum wage.
Crawford: Well they had the minimum wage but we passed that bill; I don’t believe that one will be a sticking point for the budget. I think they will probably go on and pass our bill separately. I sure hope they do.
Vajda: What are the provisions that you think are going to be sticking points?
Crawford: Well there are just a lot of provisions, and I think the provisions as a whole will be a sticking point. I think they will want to put most of those policies back in the budget. The House preferred they have a cleaner budget and we’ve asked our committees to take the provisions that we pulled out, make bills out of them and let’s run them in the sunlight and have a little time to debate the issues.
Vajda: Representative Stam, Representative Crawford, thanks so much.
Crawford: Thank you.
Stam: Thank you.
McCullen: The Senate and House will meet jointly to reach a compromised budget.
Vajda: For more analysis on this week’s happenings Kelly sits down with three members of the Capitol Press Corps.
ANALYSIS SEGMENT
McCullen: Joining us tonight is Scott Mooneyham, Capitol Press Association, Laura Leslie, WUNC Radio, North Carolina Public Radio, and David Ingram debuting tonight. David, good to have you in tonight from the Winston-Salem Journal.
Ingram: Thank you.
McCullen: Let’s talk about the House budget. Scott, what stands out for you?
Mooneyham: Well this is a budget again that just like with the Senate the House came in and they said we are not going to do a lot of these pork projects that we’ve done in past years and they pretty much lived up to that word. The budget also, the House tried to one-up the Senate in eliminating all of these special policy provisions. This is a budget if you held the document in your hand it would be about that thick. In the past it has been about that thick. And really that is kind of one of the more interesting things going on with this budget this year is that the two sides are really trying to outdo each other to show where the process is more open, we are not doing a lot of these things behind closed doors, we are—this is a new era of openness and integrity. Of course a lot of this has been spawned by the scandals that have been going on in Raleigh.
McCullen: How about you, what stands out for you? Anything in particular that said wow, unique?
Leslie: I think probably the amount of similarity between the three different versions of the budget. I mean you know in past years you’ve had a little more gamesmanship on some special provisions and policy provisions and aside from what you were talking about in terms of trying to one-up each other on the sunshine coming into the process, they are strikingly similar budgets, all three of them. And so I think the message that I am really getting for the first time, well they say this every year, “We want to get out of here,” right? But this year I actually buy it. And that is a little different.
McCullen: Do you think they will be out of here about when? Would you even venture a guess?
Leslie: I would hate to venture a guess on that one. I mean a reasonable amount of time, as Speaker Black says you know, well that depends on your definition of reasonable. But I think the aim is really to get out in early July.
Mooneyham: I would say that without a lot of special provisions, that is one thing that will be less in controversy. They can resolve their differences a lot easier when there is a lot less in the budget.
McCullen: How has this budget process progressed as it went through the House in the last couple of weeks?
Ingram: It has been very smooth. It helps that they have more than $2 billion in a surplus this year thanks to more money coming in, mostly from the income tax and from real estate sales. And that has allowed them to make very few cuts in really anything while meeting the wish lists of a lot of constituents. You know you see teacher pay raises in this budget, we see a lot of capital spending, we see growth in several different areas, several different departments, even the State Board of Elections got a few more positions in this House budget so. I mean I think the hang-ups here are going to be whether there are any special provisions in the final budget and another one will be how to spend this capital money. The UNC system is hoping to spend several million dollars to plan some new projects in the future and that could lead to a big price tag down the road.
McCullen: Scott one cut coming could be tax cuts. What has the House done? What has the Senate done?
Mooneyham: Well both of them have tax cuts in their budget, which is why you saw I think for the first time in a couple of years you saw significant numbers of Republicans, especially in the House, vote for the budget because these tax cuts are there. The, you know these aren’t substantial tax cuts. I mean—well of course obviously the people who did it would argue that point but when you look at maybe the House total is $180, $200 million. The Senate is a little bit more. Both of them begin scaling back the sales tax increase that was put in place in 2001. The upper-income tax increase that was done at the same time, the Senate scales it back a little bit more than the House does in this budget. But obviously, I am not surprised at all that they put these tax cuts in there. It makes it more palatable to everybody.
McCullen: What did the House remove that the Senate had proposed in its budget Laura?
Leslie: In what terms?
McCullen: Well there were provisions in there added or?
Leslie: Oh special provisions? Oh, especially well for example there was the minimum wage which was a separate bill in the House and has already passed the House but which the Senate ruled in. Also the eye exam which the act that would repeal the eye exam bill from last year, that was also in the Senate not in the House. And there was one more big one—do you remember what that was?
Ingram: You got the eye exam—
Leslie: We got the eye exam.
Ingram: The landfills.
Leslie: The landfills.
Ingram: Moratoriums.
Leslie: Moratorium, right, that was the third provision that raised some eyebrows. It sort of showed up in that Senate budget and we were kind of “Where did that come from?” And so the House stripped that out right away, too.
McCullen; Those provisions stripped in the budget, how many are stand-alone bills right now, David?
Ingram: I believe that all three of them are. They are in various stages of getting passed. And this goes back a little bit to what Scott mentioned with the one-upsmanship. The Senate has been threatening to vote on banning, repealing the eye exam program. There is a landfill bill out there, too. And that might be one of the things that we will see. Those are some of the things that we might see toward the end of the session here.
Mooneyham: Another thing about this is too the Senate, by including a few provisions, few policy provisions, they got Republicans, the Senate Democrats, the Democrats who lead the chamber, they got Republicans on the record voting against some of those policy provisions. I think they knew from the outset that the House was going to strip out some of these things. You know the talk had been around since the start of the session. But I think they went ahead and did that knowing, you know the Senate is going to come back and approve the minimum wage in one form or another. But now they’ve got some Republicans on the record voting against the minimum wage increase. They’ve also got, you know for, there were far fewer Republicans in the Senate who voted for the budget now they’ve also got them voting against a tax cut. The House Republicans, a lot of them recognize the political dangers that they could face voting against this budget and went ahead and voted for it even though it increases spending a lot. They didn’t like that but hey, that, the tax cut far outweighs that.
Ingram: And I think one of the other provisions we could see come November will be the Senate budget had some provisions about tougher monitoring for sex offenders. And just because a Republican voted against the budget doesn’t mean they are against tougher monitoring for sex offenders but we will see if that is brought up come November.
Leslie: The fastest method of political suicide is to vote on a budget bill because whatever you vote on there is always going to be something in there somebody can pick out and say, “You supported, you know, a teapot museum.” Or “You voted against monitoring sex offenders.” Yeah.
McCullen: That brings up your point Scott that this is what this budget was about, not having any of that, any of those special provisions in there. How would it, when the House strips out a provision like the minimum wage yet there is a stand-alone bill, do politics get involved with the stand-alone bills to hurt their chances just because they were removed from the budget?
Mooneyham: Well I mean they can and in things in the past you’ve seen that. I don’t think that really comes into play that much this year. In previous years there has been a lot of, I mean a lot of the main budget fights once the budget negotiations progressed beyond how much are we going to spend on this item, how much that? A lot of the fights in the final hours are about these policy provisions.
McCullen: The House budget also of course addresses public education rather strongly. How does it size up with the Senate offerings?
Leslie: This is one of the things I think could also get sticky behind closed doors in conference committee because you’ve got these three different areas in education to fund. One would be to send back the discretionary cuts that they have been making to all the school districts; that is about $44 million I think statewide. There is also disadvantaged student funding, the supplemental funding, which goes sort of per capita to different districts based on their disadvantaged student ratios. And then there is low-wealth schools which goes to actual LEAs so there are three different ways to send money back and the House, the governor, and the Senate have each picked two out of three but they are not the same. So it is going to be interesting. I am sure they will come to some agreement and probably we will see a split within these three funding areas to make sure that everybody is getting a chunk. But it could get a little sticky. I think we saw some of that on the House floor the other day when we saw that big debate happen about whether or not $26 million of that discretionary cut reversion should go into disadvantaged student funding instead. And of course that amendment failed. But it was still a pretty passionate argument.
McCullen: How sticky could it get Scott, just that one—
Mooneyham: You never know what is going to come up that the two sides might disagree about vehemently. You know another issue that is going to pop up though is this Medicaid. And the House has provided a cap for counties that they are spending, they are providing $18 million this year and assuring them that their cost won’t increase in the future. There is also $35 million of one-time money for the counties. The Senate did not include that in their budget and they haven’t filed a bill yet but they have been talking about an actual swap of the counties’ responsibility for Medicaid—and that is I think $540 million—in exchange for that the counties would give back the state one penny of the sales tax. Now that is a pretty difficult sell for some counties that have low Medicaid populations, that are wealthier, that receive a lot of sales tax money, particularly the wealthy counties on the cost and some of the more metropolitan counties in the Piedmont.
McCullen: How well have Governor Easley’s recommendations been followed by the House version of the budget?
Ingram: They have been again really almost as similar as the House and Senate have been themselves. He spent more money on capital projects, a lot of big projects around Raleigh got money. There is a new building for DENR, Department of Environment and Natural Resources. There is money for the art museum in there and he got I think his biggest wish list items, especially teacher pay.
I think another issue that we could be looking at as we head into conference here is I have heard some concern already about next year’s budget. Because May revenues weren’t as high as expected, expectations are low for June and if the Federal Reserve keeps raising interest rates there is concern about a recession.
Leslie: I mean there is already a hole in this budget because of the way that the funds are used. Recurring funds, or non-recurring funds used to recurring obligations, like new positions.
Mooneyham: I would say one thing though, both of these chambers put a huge amount in reserves and in the eight years that I’ve been watching this, this is about as much as we’ve had go into reserves as any time. The state is, they are, obviously you are always worried about what revenues are going to do in the future and the legislature is about to put the staid on the best financial footing that it’s been in four or five years.
Leslie: Still though I mean if, I mean yeah, the reserves are what, maybe $500 million total between repairs, capitals, and rainy day? But I mean when you are looking at a total budget of close to $19 billion that is not a large percentage.
Mooneyham: I think there are already those several hundred million dollars in those reserves right now.
McCullen: Which is part of the debate probably going on with those that vote on these budget issues.
Leslie: I’m sure.
McCullen: Thank you so much for joining us here tonight on Legislative Week in Review.
Vajda: That is going to do it for our show. Thanks so much for watching everyone. I am Eszter Vajda.
McCullen: I am Kelly McCullen. Have a great weekend.
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