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Vajda: Eszter Vajda, Host
McCullen: Kelly McCullen, Legislative Week in Review
Henry: Johanna Henry, Legislative Week in Review
Black: Rep. Jim Black, (D) Speaker of the House
Basnight: Sen. Marc Basnight, (D) President Pro Tempore
Crawford: Rep. Jim Crawford, (D) Co-Chair, House Appropriations
Morgan: Rep. Richard Morgan, (R) Speaker Pro Tempore
Berger: Sen. Phil Berger, (R) Minority Leader
Blust: Rep. John Blust, (R) Guilford Co.
Warren: Louisa Warren, Co-Dir., NC Coalition for Lobbying Reform
Clodfelter: Sen. Dan Clodfelter, (D) Mecklenburg Co.
Saunders: Rep. Drew Saunders, (D) Mecklenburg Co.
Gibson: Rep. Pryor Gibson, (D) Anson Co.
Capps: Rep. Russell Capps, (R) Wake Co.
Whittle: Dan Whittle, Attorney, NC Environmental Defense
Kostrzewa: Theresa Kostrzewa, Hog Industry Lobbyist
Fetterman: Lew Fetterman, Pres. & CEO, Super Soil Systems USA, Inc.
Campbell: Dr. Ray Campbell, VP of Research & Dev., Super Soil Systems USA
Williams: Dr. Mike Williams, Dir., NC State Animal & Poultry Waste Mgt. Ctr.
Tarleton: Jim Tarleton, Chief Technical Officer, Orbit
Rankin: Gary Rankin, President, Orbit
Sutton: Rep. Ronnie Sutton, (D) Robeson Co.
Moore: Rep. Tim Moore, (R) Cleveland Co.
Glazier: Rep. Rick Glazier, (D) Cumberland Co.
Kiser: Rep. Joe Kiser, (R) Lincoln Co.
LaRoque: Rep. Stephen LaRoque, (R) Lenoir Co.
Weiss: Rep. Jennifer Weiss, (D) Wake Co.
Owens: David Owens, Professor, UNC-CH School of Government
Donaldson: A.J. Donaldson, Enrolling Clerk, NC General Assembly
Brinker: Mark Brinker, Staff Writer, News & Record
Garrou: Sen. Linda Garrou, (D) Co-Chair, Appropriations Committee
Betts: Jack Betts, Charlotte Observer
Leslie: Laura Leslie, UNC-TV NC Public Radio
M: Male Speaker
F: Female Speaker
[BEGIN VIDEO CLIPS]
McCullen: The House and Senate reach a compromise on the state budget; we will crunch the numbers. The state seatbelt law could include your back seat. And state law may soon require patriotism in North Carolina’s public schools. Next.
[INTRO MUSIC]
Voiceover: Quality public television is made possible through the financial contributions of viewers like you who invite you to join them in supporting UNC-TV.
[THEME MUSIC]
Vajda: Hello everyone, I’m Eszter Vajda.
McCullen: I’m Kelly McCullen. Tonight we examine a laundry list of bills still being debated. I’ll tell you about a voluntary effort to make useful things from hog waste.
Vajda: Plus the minimum wage takes twists and turns but we begin tonight with a compromise on the state budget.
STATE BUDGET
Vajda: The House and Senate members approved adjustments to a nearly $19 billion budget after weeks of discussion and debate. Appropriations members say there is something for everyone in the bill but critics say the state’s coffers will run dry because of overspending. The two leaders of the House and Senate say this is one of the best budgets in years.
Black: We had the money to give teacher pay increases which was, has been very important over the years. We have done some all along but we did something more meaningful this time, gave the state employees a 5.5% long-overdue pay increase. I think they are very appreciative of that and of course we put more money into the judicial system, that was very important that we do that.
Basnight: So things should make North Carolina a better place to live. Not that it is not pretty darn good today; everyone wants to move here and but that cost associated with people moving in is being reflected in these increases today.
Vajda: With an extra $2.4 billion to spend, budget writers say everyone got a piece of the pie. Plus they say the bill has no pork or special provisions.
Crawford: I stand before you with the cleanest cut appropriation bill you have seen in your lifetime.
Vajda: Even some Republicans praised the bill. Many especially in the House voted for the compromise.
Morgan: The budget that is being recommended by the conferees is absolutely extraordinary for the University of North Carolina.
Vajda: Here is how the budget breaks down. The bulk went to education, including funding for K through 12 enrollment growth. Monies were set aside for the disadvantaged student supplemental funding and low-wealth supplemental funding. There is $44 million to replenish money cut from schools in past years, over $78 million for the University of North Carolina enrollment growth and $7 million for community college enrollment. Four point two billion dollars will go to health and human services, including $27 million one-time monies for Medicaid relief for all 100 counties. Ninety-five million dollars will go to Mental Health Services and Programs and about $14 million to the Mental Health Trust Fund. Almost $2 billion goes to Justice and Public Safety, including funds for a variety of new positions.
Changes were also made to several taxes, including capping the state gas tax, tax credit for small businesses and a reduction in the sales tax to 4.25%. Also the income tax for the state’s highest earners will go down to 8%.
There are also many salary increases, including an average 8% raise for teachers, 5.5% salary increase for state employees. Despite the accolades from many statewide organizations, some argue the budget is not fiscally responsible.
Berger: Good times we are going to spend it all, bad times come we have a choice between cutting spending and raising taxes, well we raise taxes.
Blust: I don’t think anybody on our side of the aisle feels that the important things shouldn’t be funded but I think what we want to see done is that the budget be thoroughly parched and that we take it from this attitude, that we fund the highest priorities first at the level they need to be funded, that we look at the next-highest priority item and fund it at the level that needs to be funded, and so on down the line.
Vajda: The fiscal year ended last Friday but because this is an adjustment to last year’s budget the government did not shut down. As a matter of full disclosure, 45% of UNC-TVs budget is funded by the General Assembly.
VARIOUS BILLS
McCullen: Lobby reform supporters worry the Senate will adjourn without passing campaign or ethics reform measures. They gathered in Raleigh this week and urged senators to pass legislation before adjournment. The House has already passed several measures.
Warren: And we do believe that this is an issue of integrity and morality. Those are two things that really resonate with the general public, you don’t have to know the ins and outs of the politics and the government process to realize that there is a problem down here. And we do think that there will be an implication for what happens in November and there will be a further erosion of public confidence in our government process.
McCullen: Senate leaders say they are confident some reform legislation will pass this session but they say the issue is complicated so they are taking their time.
Clodfelter: These are not subjects you sort of just brush your hand or wave your hand and take lightly so we’ve got to get it right. And that takes a lot of discussion, it takes a lot of give and take, it takes a lot of re-writing and re-drafting and that is going on. Then when we’ve got things ready we bring them to committee and they roll. But the fact that we are not always meeting doesn’t mean that we are not always working.
McCullen: Late Friday afternoon the Senate approved a bill regulating election hearing communications that includes 527 organizations.
Vajda: Meanwhile House members began debating a comprehensive lobbying bill on the floor [House 1849]. The measure would ban gifts from lobbyists to lawmakers. It also sets up guidelines and definitions as to what a lobbyist is and when they have to register with the secretary of state. The bill would also establish a so-called cooling off period of one year between the time a lawmaker retires or leaves office to the time they can become lobbyists. Some members want to decrease that time to six months.
Saunders: But I believe that the bill treats a legislator as dirt. If you have a piece of property and you want to use that property for something the local folks will tell you that you can use it for the highest and best use of that property. What we are saying here is as a legislator you cannot use your skills to the highest and best use.
Gibson: The perception is that we are down here and that we are for sale, lobbyists are buying us and all this other stuff flapping back and forth. And the fact of the matter is it is not so. Representative Saunders said it completely, it is not so, we shouldn’t have any problem with the six months or for that matter zero timeline but from a legislator to become a lobbyist. But the fact is the fact, ladies and gentlemen. There is the perception that there is a problem. If you vote for this amendment you are voting for a lessening of the restriction. Thank you.
Vajda: The amendment and third reading were held off until Monday night. Another amendment that is expected to be introduced next week would take out wording that limits campaign contributions from lobbyists to lawmakers and makes it a complete ban.
McCullen: The Senate gave initial approval to a minimum wage hike but not without twists and turns on Friday. A substitute bill introduced in committee Friday morning proposed raising the minimum wage up to $6.15 an hour for workers 20-years-old and older. Later the Senate Commerce Committee re-considered the under 20 exemption; on the floor they restored original House bill language giving everyone $6.15 an hour, not just those over 20. The bill was approved on second reading with an objection to the third reading.
Vajda: House members also approved the compromise bill that requires children to get eye exams [House 2699]. The exam is different from the comprehensive eye exam put in the state budget last year. The Senate voted to repeal that exam. Under the new measure the Governor’s Eye Care Commission would adopt statewide vision screening standards. Kids who fail the original test will be referred for comprehensive exam which will not be mandatory.
McCullen: A bill to require that the U.S. and North Carolina flags be displayed in all public classrooms awaits final legislative approval tonight [Senate 700]. The measure also mandates that students recite the Pledge of Allegiance every school day. It would require that teachers instruct children about the meaning and historical relevance of this tradition. Bill sponsors say it is important that children learn about patriotism.
Capps: The Pledge of Allegiance is something that is vitally important to youngsters coming along. I think they need to know the history and the traditions of American founding fathers and what they had in mind and this is one way that I think the bill will help them to understand that.
McCullen: If approved the measure would become law immediately. Now that brings us to this week’s question of the week.
QUESTION OF THE WEEK
Should North Carolina students be required to pledge allegiance to the U.S. flag in public classrooms? Log on to unctv.org/legweek and vote. We will have responses next week.
Vajda: Now last week’s question of the week was “Should it be easier for third parties to get on the state’s ballot?” We had lots of you responding; 97% say yes, 3% say no. Thank you all to those who participated.
HOG WASTE
Vajda: A push to voluntarily cut North Carolina hog farm waste is under way. Financial incentives are offered for farmers who buy new waste management technologies. The idea is to replace traditional hog lagoons with systems which collect hog waste and make usable products like methane or fertilizers [House 2784]. A public private partnership was created, a $750,000 innovation fund. The fund will partially cover the cost of new hog waste systems.
Whittle: In the case of the grant to North Carolina that means helping to develop markets for valuable byproducts from new hog waste technologies on the ground and in the hands of farmers.
Kostrzewa: With these new technologies and these byproducts can you sell them in such a way, can we create a market for them such that a farmer could break even? We are not looking for a farmer to get rich off of these byproducts.
Vajda: The group Environmental Defense says more federal grants could come if North Carolina proves it is serious about replacing hog waste lagoons.
McCullen: Companies are already offering competing or complimentary hog waste technologies aimed at cleaning waste lagoons. Tonight we will show you two technologies deemed superior by North Carolina State researchers who lead a five-year hog waste reduction study.
Former pork processing plant owner Lew Fetterman sold his Clinton facility a few years ago. He could have easily retired but has new ideas for improving pork and hog farming quality overall.
Fetterman: I thought the least I could do is take the knowledge I learned from the industry and try to harness it.
McCullen: Fetterman created a company called Super Soil Systems. It believes it can eliminate hog lagoons or at the least make lagoon water clean enough for general farming use.
Campbell: Fifteen years ago most everyone thought that the lagoon was the final solution.
McCullen: The Super Soils approach removes the solid waste leaving water full of nitrogen and phosphorous. Those excess water nutrients are reduced naturally, raising lagoon water to pond quality say the scientists. The company collects the solid waste, hauls it away for processing, taking advantage of nutrients traditionally unwanted, unhelpful and doctor Ray Campbell says unhealthy for hogs.
Campbell: If you were to remove most of the odor associated with swine production, you remove most of the emissions of ammonia that some people are worried about with swine production. Beyond that we think that the system will pay for itself by improving production efficiency.
McCullen: Dr. Campbell believes solid hog waste creates an unconventional profit line for the pork industry and creates a safe and needed product using 100% of what hogs naturally offer.
Campbell: We are brining it here and composting the solids and making turf fertilizers, general garden fertilizers, potting soil and container mixes.
Williams: So the fact that we have a few technologies that have met the criteria, I am very pleased and I would have to say that my expectations have been slightly exceeded.
McCullen: Orbit Energy sees animal waste as a source of methane. It is easily collected to offset an operations’ energy cost.
Tarleton: It is one of the least expensive techniques to generate energy that I know of.
McCullen: Orbit’s approach does not eliminate hog farm waste but cuts solid waste 50% while tapping a fuel source that often dissipates into thin air.
Rankin: We capture the methane and those two things, it allows you to capture the energy and methane once it is released into the air is environmentally a bad actress.
Tarleton: Materials we deal with are pretty, for the common person pretty disgusting. You’re talking about pig manure, swine, you know, cow manure.
Rankin: Different biological wastes will produce different amounts of energy. Well we can evaluate that, see how much need they have, see how much waste they generate, and help them balance it.
McCullen: N.C. State’s hog waste study administrators say the toughest challenge for greener hog farm waste management involves another very important green, cash.
Williams: It’s the most challenging component of this entire project.
Campbell: Our target is to make it as cost-effective as the lagoon system that we’ve been used to.
Williams: The environmental data speaks for itself. These projects have shown tremendous success.
McCullen: A special task force from the House could be appointed which would address implementing viable alternative hog waste technology. It would work ahead of next year’s legislative session.
Vajda: A bill that sets a price floor to help North Carolina’s dairy industry is now in the hands of the governor. The industry says milk prices can drop so low farms cannot meet production costs [Senate 1156]. The legislation would guarantee that dairy farmers receive the minimum wholesale price for milk. A special fund would make those payments. The fund would receive legislative appropriations, grants and private donations. The North Carolina dairy industry says it has lost two-thirds of its farms in the past 20 years.
SEAT BELT LAW
Vajda: Passengers in the back seats of cars may soon have to buckle up. The House passed changes to the seatbelt law Thursday in an unusual late evening session but not without several amendments and debate. Here is part of that discussion.
Sutton: I think we just need to leave the seatbelt laws in this state for private vehicles the way they are today and give the citizen a right to choose. You know we are always talking about people having a right to choose or right to make their own decision, well this is your opportunity to give the citizens of this state a continuing right to choose for themselves.
Moore: At what point do we stop having to be a nanny state and tell everybody everything they are supposed to do? The voters send us here; can’t we trust those same people to make their own decisions for the things that they want to do to protect themselves?
Glazier: But with choices come responsibility. And the responsibility and cost issue is significant here. I think our behavior when it only affects us is one thing. And in that circumstance I agree with Representative Moore and the other representatives who have spoken and with Representative Sutton. And in that circumstance government’s role is very, very limited indeed. But when the conduct we are talking about costs us all and can kill then I think it is time for the government to be involved.
Kiser: This is a proposal that is impossible to enforce. Have you ever looked into the back seat of the car? You can’t see whether someone has a seatbelt on but the reality of the whole thing is this, that you only get charged with a violation of the seatbelt when you get another violation or an accident. And if you will ask most any law enforcement officer that he will agree with you.
LaRoque: There were some words that were written in a document 230 years ago talked about life, liberty and pursuit of happiness. I think it all kind of goes along the lines of individual freedoms. When you are 18-years-old you can serve your country, you can vote, you can do other things. It seems to me like if you want to sit in the back seat of a car and not wear a seatbelt at your own peril that ought to be your choice. We heard things about safety and how much safer it is. I guess if we all wore helmets in the car we would reduce our amount of brain injuries. Same way we do when people ride bicycles.
Weiss: This bill is all about compliance. Currently as I told you about 86% of the people riding in the front of a car wear their seatbelts and about 38% of us riding in the back of a car wear seatbelts. If this were the law you would see that compliance rate go way up and it would probably be what the front seat compliance rate is. And that would mean we would be saving a lot of lives and a lot of money.
Vajda: The measure passed on the floor of the House. Under the bill fines would remain the same as for front seat seatbelt violations and law enforcement could begin issuing warnings beginning this December 1st. Tickets would be issued beginning July 1st of next year.
McCullen: The Senate easily passed the long-negotiated cable deregulation bill Thursday afternoon [House 2047]. The vote was 48 to 0. This bill will introduce competition for cable television and video services in many areas. It is predicted telephone companies will quickly enter cable TV’s market. Some cable companies already offer telephone service on their own. The state would assume the negotiation over local television franchises and collect the taxes. It would also assume customer complaint issues.
The Senate unanimously passed the governor’s DWI Task Force recommendations Wednesday afternoon. This bill covers many aspects of prosecuting DWI cases; it regulates kegs, and sets rules for how drunk driving checkpoints must be administered [House 1048]. It creates new felony charges for hurting or killing someone when the suspect is under the influence. The House must concur with the Senate’s changes or the bill differences will be negotiated.
Well speaking of bills, Eszter, we spent so much time tracking bills from when they are filed to well the trip to the committee onto the floor and eventually to a vote.
Vajda: But what happens after that and where does the bill go and how does the new policy get from the legislative chambers to you and I? Well Johanna Henry tracked the answers down for us.
HOW A BILL BECOMES A LAW
Henry: Ask North Carolinians about their state lawmakers and what they do and you will get a lot of this:
M: You don’t know, nobody knows. Nobody knows what is going on.
M: I don’t know.
M: I’m not even sure even really what’s going on with it.
Henry: Nobody knows what is going on? That can’t be right. The legislature passes laws and changes policies that affect many aspects of our lives. We know when minimum wage goes up or down, when the school calendar changes and that there is a new beer on tap at the local bar with a higher alcohol content than before. All of these are brought to you by your General Assembly. So do people just not care? That is not it either. When we asked outside the main post office in Benson if folks thought staying informed about state government was important, this was the answer every time:
M: I just don’t.
Henry: You don’t care?
M: Nah.
Henry: Do you think it really affects you, what they do?
M: Well they are going to do what they want to anyway, the way I feel.
Owens: Anything the legislature does of consequence is going to have effects. I think one of the real challenges is helping people understand what those impacts are going to be in a timely fashion so that they can make their views known to folks.
Henry: David Owens has been a faculty member at the UNC School of Government for 18 years. He says getting the word out about new laws and policies is always a challenge. So let’s go back to just after the Senate and the House vote on a bill. What physically happens to the bill after it is passed?
Donaldson: And then we get the big stamp. A stamp I like to use. Makes you feel a little more powerful, the big stamp.
Henry: That is where A.J. Donaldson comes in. He is a 20-year-old undergraduate student at Central Carolina University. He is also the enrolling clerk. It is his job to bring a clean copy of a bill to each of the presiding officers. Lieutenant Governor Beverly Perdue and the Senate and House Speaker Jim Black for them to sign. It is a job he takes very seriously because the copies must stay clean.
Donaldson: It just seems like an umbrella technique when it is raining, you know, I’ve got to have it in my jacket, you know I’m walking and I’ve got an umbrella in my arm here and I am trying to make it to the session without it being rained on because it is hard to sign a bill if it is wet.
Henry: After the bills are signed, Donaldson stamps them.
Donaldson: Give it a stamp.
Henry: And the ones that need a signature from the governor head to his office. The governor has 10 days to sign them into law. Some are then added to general statute. That is the permanent law that applies to everyone in the state. So that is how the physical laws get in the books, but how do employers know they now need to pay a higher minimum wage, principals know they need to adjust next year’s school calendar, or bartenders know they can stock beers with a higher alcohol content? It is a group effort. One way lobbyists and legislative liaisons report back to their associations and then the association like Beer and Wine Distributors for example put out a newsletter. The UNC School of Government also plays a huge role.
Owens: The institute has had a role of taking the actions of the General Assembly and explaining those to the folks that are affected by that legislation, particularly people in local government, in state agencies who have to implement the changes that the General Assembly has adopted.
Henry: David Owens is the self-described middle man. He and his colleagues write newsletters, summaries of the new law, teach classes and try to get the word out any way they can. And that is another way the information trickles from lawmakers to law abiders, through the media, especially the print media.
Binker: Newspapers tend to be a lot of people’s starting point.
Henry: Mark Binker is a Raleigh-based reporter for the Greensboro News and Record. He covers the actions of the legislature for readers back in Greensboro. His paper and others around the state have historically filled a vital role in keeping the public informed of new laws coming their way.
Binker: I think what the advantage that newspapers have and have had and to some extent will continue to have is we can explore things in a little bit more depth, whereas a 30-second radio spot or you know, minute and a half on the TV news can go so far we can offer a little bit more context, more background.
Henry: But newspaper circulation is shrinking. According to journalism.org the steepest decline started in 1990. That has left many previously informed citizens in the dark or turning to other forms of news.
Owens: Some of the research I’ve done I’ve had occasion to be looking at newspapers from the ‘40s and ‘50s and there was a lot of coverage, there were a lot of newspapers, a lot of detailed coverage of what the legislature was doing and public policy debates.
Henry: A really good way for the public to keep up with what is happening at the General Assembly is through their web site. You can search online at North Carolina General Assembly, go to their website. You can look up a bill either by its number or by a key word, say “minimum wage,” then all the bills on that topic pop up along with their status and who voted for them. Many we spoke with didn’t realize exactly what happens before a bill turned law affects their lives. But not everyone; some folks we found understand it takes good lawmakers to make good laws.
F: I tell you what, I, my hats are off to them because you know a lot of times we don’t think about what these people are having to go through and when we vote, you know, we should stand behind our representatives, we should support them. That is the way I feel.
Vajda: And a final note, if you every have a question about legislation and how it affects you, both legislative libraries man a hotline just to answer your questions. You can call (919) 733-7778 or (919) 733-9390.
BUDGET COMPROMISE
McCullen: For legislative reaction to this week’s budget compromise Eszter talks with Senate Appropriations Co-Chair Linda Garrou and Senate Republican Minority Leader Phil Berger.
Vajda: Senator Berger, Senator Garrou, thanks so much for being here. Senator Garrou let’s start with the overall picture of this budget. Just give me sort of the highlights.
Garrou: This was a great budget for North Carolina, a great budget for education, for families, for teachers, a great opportunity to move the State of North Carolina forward.
Vajda: Senator Berger many have hailed this budget as being the best in years. Why vote against it?
Berger: Well the reason I voted against it is notwithstanding the fact that we spend a great deal of money and there are a lot of things you can talk about being good when you spend a lot of money. The problem I have with it is the amount of money that is spent. What we are doing is we are increasing spending by almost 10% in the general fund at a time when inflation is 2% to 3% overall. And so we are growing government at rates that are unsustainable but probably the bigger problem with the budget is the fact that there is a structural deficit built into the budget of over $400 million that actually grows to about a billion dollars by the time we get here next year and that is because there are a number of things that are considered non-recurring expenses that we do every year, things such as increasing appropriations to the universities and to our public schools for class size increases for the increases in enrollment and the ABCs for education and then generally there is going to be a cost of living increase or something for employees. So by the time we get back here next year that $400 million structural deficit is going to be about a billion dollars and I think we should have done more to address that, especially at a time when we had a $2.4 billion surplus.
Vajda: Senator Garrou?
Garrou: If you take our surplus and look at what we did, certainly you know we did savings to the savings reserve account, R&R, repair and renovations, we put $200 million back in the Highway Trust Fund, we gave the taxpayers almost $200 million tax relief, we paid back the pensions fund. There are a number of those kind of things that we did that are important to get us back on sound footing. And certainly we do have non-recurring dollars paying for recurring issues and that is a very, very much a concern of mine. And a lot of that deals with the fact that the tax is temporary and we began that process of taking it off this year and we will take it off next year. My hope is that when we come back into the long session we will have an opportunity to look carefully at some of the expenses that we’ve occurred over the years and make some decisions about are they things that we want to continue on? So I hope that we will have a chance once we go back into long session that we can address some of those issues that Senator Berger speaks about.
Vajda: Are there any issues on the top of your mind that you think you will be addressing specifically?
Garrou: Not specifically but I just think to take a look at some of the programs that have been going on for a long time. We had an amendment in our, provision in our budget that we would do a G-pack study because of an agreement with House that we wouldn’t do special provisions that dealt with policy; that study was taken out. But it certainly is our intention that a study will be done of a way of really processing that and helping us get some information that is helpful and useful. You know not just saying well we are going to start it at zero. But what we can do, what are agencies that need to continue to exist, how is the best way to run them, how to do efficiencies in some of those issues? And that is certainly something I am very, very interested in.
Vajda: Is that something you agree with Senator Berger?
Berger: Those are things that Republicans have been talking about for a number of years now and I am glad to hear that the majority at this point is interested in that. I just think it is something that should have been done a long time ago. And of course again getting back to the spending, what we are looking at is we could have done some of that this year, we could have increased spending not by 10% but maybe by 6%, which is double the rate of inflation and still done a lot of the things that are done in this budget simply by prioritizing what is important to us. And so I am some concerned that we spent the entire $2.4 billion and granted a lot of good things, and taxpayers got about 8% of that $2.4 billion. And so I am just thinking that the priorities that are being set at the present time are not the ones that we need to set. And hopefully if we were able to do the G-pack study we will be able to get at some of the problems that we’ve been talking about for a long time.
Vajda: You said some good things. What are some of the good things in the budget that you saw?
Berger: Well good things that we’ve been talking about that we’d like to see. Senator Garrou mentioned paying money back to the Highway Trust Fund. You know we’ve since 2001 taken hundreds of millions of dollars out of the Highway Trust Fund and we’ve on a recurring basis increased the transfer from the Highway Trust Fund to the General Fund from $170 million to $250 million. And at the same time we are seeing road problems, maintenance problems, we are seeing problems with an inability to build roads. And so putting $195 million back into the Highway Trust Fund is a good thing. I wish they had looked at that on a recurring basis and stopped the ongoing transfer from the Highway Trust Fund which they didn’t do but putting $195 million in there is a good thing. Putting something in the budget for Medicaid was a good thing for the counties but it is only $27 million and again that is not on a recurring basis, it is not something the counties can count on down the road. Also on Medicaid there is a provision where the state actually reaps a benefit from the fact that the federal government is taking over Medicare Part D which is the prescription drug coverage and so for those people on Medicaid who are also eligible for Medicare Part D, the federal government is going to start picking up some of those expenses but that savings really was not shared with the counties as I think it probably could have been.
Garrou: I think it is important that we not just apply a band aid to our county issue. We need to look very carefully at what we can do to take that burden off of the counties. And we’ve been meeting with the county commissioners and talking to them about a process that we could do that. But I think it is important also to remember that in North Carolina we provide an awful lot of things to the counties that other states don’t provide. We have our power bill which paves roads in the cities and in the communities. We do a lot more for our schools and our teachers that other states are not doing. So we need to look at those things as a whole picture. You know certainly if we had, if we could print money like the federal government could do we could go back and pay back some of these things.
And speaking of the feds, we know that the federal government continues to send mandates to the state, send mandates to us requiring us to do things, accomplish things, and not, and cutting back on funds that are coming to the state. So the state is sort of being squeezed in the middle; it is like having your parents and your children and you are being squeezed to provide things and the folks in the county—because I am the one in the grocery store on the weekends—are saying to me this is something that we need to do. So we need to look at all those things carefully.
But there are no simple solutions and it is a step-by-step process and I, you know, I can say I wish that things had been done differently 10 years ago but I wasn’t here. I think we made a really good faith effort this year of providing some salary increases to teachers because we’ve got to get our teacher salaries up to keep, retain good teachers. As far, and in addition to state employees. We continue to be a training ground for state employees and we lose them to other folks. They’ve done a good job with that. Our university system has been such an outstanding jewel for us; most states would look at North Carolina and look at our university system and our community college system, we need to get our public school system to the same great strength that we have in those other two things and so this was a good time to use some of this one-time money to make some of these investments for the future and I believe it is going to pay off.
Additionally let me just say we have, we’ve been very cautious with our estimates of gross that we’ve done in the last couple of years and we will continue to do that. And so that ends up with some additional money at the end of the term.
Vajda: Senator Berger?
Berger: Well to a certain extent it depends on your perspective as to whether or not mandates are good things or bad things I expect. Everybody complains about the mandates coming from the higher level to the lower level but nobody seems to be concerned about the mandates that we place on counties. For instance the raise that is given to teachers creates a $160 million mandate on our counties. And because there are a number of teaching positions that are paid for with county funds and so those counties are now going to have to make up that $160 million because of the mandate that this budget places on the counties.
I agree with Senator Garrou it would be good to take a more comprehensive look at things because you know our educational system really is in a lot of trouble. We graduate 66% of ninth graders, four years later only 66% graduate. So we are failing one-third of the students at this time. Only a small percentage of our students, I think it is 29% in the fourth grade, are reading at a proficient level. We get an “F” from the NAEP in terms of our educational system. I have some concerns about how we decide that we are going to put more money into education when what we are doing now apparently is not being very successful and I wonder if we ought not look at changing some things as opposed to just adding more money to the system.
Vajda: Let me ask you about the educational funding because the bulk of it in the budget went to education but it also included funds from the lottery. Now what if the lottery money does not come in? How can you ensure that some of those programs get those funds?
Garrou: The Lottery Commission has a reserve that will make sure that additional monies if it is needed, that it will be there to replace that money.
Vajda: Senator Berger there are two appropriations co-chairs on the House side, there aren’t any on the Senate side. What part of the process did you and other Republicans have in this budget process?
Berger: You mean Republican co-chairs on the House side, not on the Senate side?
Vajda: Republican co-chairs, yes.
Berger: Well as far as the involvement of Republican senators, this budget was put together very much like budgets in the past that most of the details were decided before it came to light for most members. No Republican members were part of that smaller group that put things together. There were some Republicans that were put on the conference committee. My understanding is that they were informed as things were ongoing. But ultimately the final decisions were made as always behind closed doors and the details were basically revealed to people and told the vote. So the involvement in terms of should we spend this much or should we spend that much? Those decisions pretty much were made before any Republicans had any input.
Garrou: That sounds so simple, you know decisions were made and people told how to vote when I’m spending a couple of weeks up here. Six, the door to 612 was open—we were looking for people to come sit in and participate. My door has been open to folks on both sides of the aisle. If you have questions about the budget or you have a concern, come see me. I am a pretty accessible person. I am happy to talk to people about what is in the budget, what their issues are. I’ve had Republicans come sit down with me and talk about how important it was that we raised teacher salaries, that we do some of these things and I think we’ve tried to accomplish those issues.
Berger: And if I could, I don’t mean to imply that Senator Garrou or anyone else has not when someone has asked the question been forthcoming as to where they are. What I mean is that as far as the process is concerned we don’t have a committee meeting where a proposal is put forth. Our target this year in terms of overall spending is going to be $18.9 billion. All in favor “yes,” all opposed, does somebody have another number that they want to work with? We basically are given a number. There is really no serious debate over whether that is the right number or the wrong number. The same thing with the projected spending levels. There is a number that is put out there and these are the numbers that are worked with. And the information that we get is in terms of, well the Senate’s position is this, the House’s position is that. We are discussing those things. And that is what I mean in terms of building a budget; we really don’t do it the way most people think it is done.
Vajda: Senator Garrou I was on the sixth floor for a lot of that time and yes, 612 was open but there were times that it was closed, the House was in there and the senators were in another room. Why did you feel that it was necessary to keep some of those meetings closed to lobbyists and lawmakers and media members?
Garrou: You know we just, this is such an issue because—and I find it very interesting that we hear this so much and then when we open the doors no one was there. So we really saw that people like to discuss that it is closed doors but when you really get down to it, it is long, it is boring, it is tedious, it is complicated and a lot of people just aren’t interested. I can tell you we’ve spent a lot of time and good faith effort trying to make a budget that would move North Carolina forward and I believe we did this.
Vajda: Senator Berger a final word?
Berger: Well I just think that the process could be more open in terms of participation, in terms of voting on specific issues. As far as the budget is concerned, you know I just really think that as we look back on this budget and we look at the structural deficit within the budget, it is just setting us up for another round of problems just like we had in 2001.
Vajda: Thank you both for stopping by.
McCullen: The governor must sign the bill before it becomes law.
Vajda: For more on this week’s happenings Kelly sits down with members of the Capital Press Corps.
ANALYSIS SEGMENT
McCullen: Joining us tonight on Legislative Week in Review Jack Betts from the Charlotte Observer and Laura Leslie with North Carolina Public Radio. Good to have you both back on the set on this show tonight. What, I was going to say what a week, what a Friday. We are going to talk about the minimum wage and what happened Friday afternoon but let’s set the table for how this issue has played out this past session. Jack set it up for us.
Betts: Kelly the wheels kind of came off Friday over a bill to raise the minimum wage. You will recall that the Senate’s version of the budget proposed raising the minimum wage by a dollar. The governor had earlier proposed an 85 cent increase but he is fine with a dollar. The House wanted to keep non-budget items out of the budget bill and did but came up with its own bill to increase the minimum wage by a dollar. When it came back to Senate commerce things really fell to pieces in a display of legislative back and forth that really represented the worst of the legislature, that was marked by confusion and anger and controversy and some, a little bit of profane speech on the sides, not during the committee session, over the creation of what appeared, certainly appeared to be a second tier of wage earners.
McCullen: Laura you were there. What was the issue in there that really set things off?
Leslie: I have to say this is the first time in this building I have ever got tape that the FCC would not let me air, let’s put it that way. It was definitely set off. What set it off I think was a misunderstanding perhaps to put it politely between what the Senate leadership had indicated to some people apparently would pass, which would be the House bill, the one dollar increase for everyone. And what was ruled out this morning in the commerce committee meeting which was a proposed committee substitute that would have allowed employers to pay 18 and 19-year-olds less money than a 20-year-old. Effectively $4.25 an hour, which would leave them in much worse shape than they are originally in but you add onto that the fact that there were a numbers and percentages and statutes flying around that committee table that were not in reality what the numbers or statutes were. People were being misinformed. People were confused and people were very, very angry at the end of that meeting when that committee substitute passed.
McCullen: For folks who don’t know committee substitutes, the House bill is what a one paragraph bill that said raise the minimum wage?
Leslie: Right.
McCullen: The Senate bill raised the minimum wage and then added something, correct?
Leslie: Right. That little extra something, that second tier that Jack mentioned that said if you are under 20 we can pay you $4.25.
McCullen: Jack, who would be the people confused by all this? I mean the bill is on paper—do they have surprises in committee sometimes?
Betts: Well sometimes sure, in this building especially late in the session after the budget is passed and the Capital Press Corps have learned to watch out for shenanigans. In this case the Senate was interested in a bill where they could both claim to raise the minimum wage by a dollar and also give a break to businesses that employed really young workers. The trouble is creating that kind of second class of worker created a good many people think some legal problems.
Leslie: Yeah I think that is not, that is something I haven’t actually heard anybody say but I am pretty sure that is not legal out of federal law to say that you can pay an 18-year-old or 19-year-old less than a 20-year-old. That is called age discrimination. You can do that by class, for say a full-time student or a learner, an apprentice. But you can’t single out somebody by their numerical age and decide that is how you are going to pay them. And you know the interesting thing is this stuff is already in state law; there are provisions for full-time students to be paid 90% of the minimum wage and for learners and apprentices. So this whole thing when you look at it was kind of a tempest in a teacup but apparently not when the 20-year-old provision came out, that just sort of is what blew the top off. And that is the closest to mutiny I think I’ve seen the Democratic caucus in the Senate in a long time.
Betts: And it was a reminder of what happens when you sometimes spring loose a new proposal without fully vetting it, without having a good bit of good information and widespread understanding of what is going on, these kinds of things happen in the Senate. Friday afternoon they were very quickly on the floor convened a meeting of the Commerce Committee to take that second tier of workers back out of the bill.
McCullen: We’ve had some House members who have fought tooth and nail for a stand-alone, single paragraph bill. What did this do to them? What did you see when they show up in committee and there is an extra paragraph there exempting the under 20-year-olds?
Leslie: There was just open fury. I mean especially on the part of Alma Adams who, you know who has been championing this wage increase for a long time. Also Alita Coleman was there expressing disappointment and frustration. Reverend William Barber was there with the NAACP. You know they all felt as though they had been told that they were going to see the House bill pass the Senate and when they got there they saw something completely different. And there was a lot of sense of betrayal, there was a lot of anger and a lot of confusion around the table. As we were saying a lot of numbers were flying around. That is the explanation we got when they came back out of that Commerce Committee meeting, that second one that was so hastily called. Some furious back peddling, a caucus meeting and then next thing you know there is an open declaration that we received some information that wasn’t correct and now we decided that perhaps we should have stuck with the House bill in the first place. Now you figure out what really happened.
McCullen: So the first place Jack is a bill with a single paragraph that raises the minimum wage to $6.15 an hour for everyone. Is that too brief?
Betts: It was what it was back to in the Senate and the Senate gave tentative approval to it though Friday afternoon.
McCullen: Does this mean that the House and Senate will bridge the gap or will there still be some friction about this attempt to add a provision, Laura? It is a questionable call of course but—
Betts: There are always things that create friction between the House and the Senate. You know the rivalries in state government are not just between the legislative and executive branch but intramural between Democrats and Democrats.
Leslie: And you know I think this is, I mean this is the time of session when you get the leadership in both chambers sitting down to look at the list of bills that they need to work with and I think this is one of those bills that was high on the House’s priority and you know, and after what happened today intentional or not intentional, I think it would be very difficult to imagine that some of the House members would not feel as though they had been disrespected by the Senate so I suspect this is one more thing that is in that chasm between those leaders.
McCullen: So very quickly the bill is back to its original House language, it is on the Senate floor, what happens now?
Leslie: Monday night I’d say it probably passes. If it made it the second reading it is likely to make the third.
McCullen: And it will make the third reading. Another vote, another passage Laura and then to the governor for his signature?
Leslie: And we anticipate that the governor will sign it, yes I expect that.
McCullen: Let’s talk about the budget Jack. Overall how well the agency is treated in this $19 billion compromise?
Betts: Well I, the agencies, particularly the ones that have responsibilities for public schools and community colleges and universities and the court system particularly are thrilled to death. They got significant increases for almost a billion dollars more for schools, they got $44 worth of cuts from a couple of years ago restored, they got full funding for the first time for the low-wealth schools formula which affects 80 school districts. They got $20 some million for the disadvantaged student supplemental funding. So they are pretty happy. The courts are ecstatic—they’ve been ignored for years, almost certainly because the Democratic-controlled legislature didn’t like some of the decisions coming out of the judicial branch and so they starved them on such things as equipment and deputy clerks and magistrates and judges and assistant prosecutors. Now the courts are getting well to some extent; they will need a lot more in the future. So all of those folks did pretty well, taxpayers also got a little bit with about half of the so-called temporary tax of 2001 being cut again, the sales tax increase will be cut a quarter a penny and the top rate on income taxes will be cut a quarter percent so there is a lot in there that is good.
Leslie: It is hard not to have a lot good as Senate Minority Leader Phil Berger said. You’ve got $19 billion to spend; you’ve got to do something good with it. It is hard not to, right?
McCullen: You know Senator Berger also brought up a point that this budget despite being good to agencies in many people’s opinion has built-in deficits that we will be seeing almost immediately. Explain—how can that be if the budget is balanced Laura?
Leslie: There is balanced and then there is balanced, you know. We had $2.4 extra billion to play with this time. And that probably won’t be the case next year because the economy is starting to soften a little bit and the way that our tax system—we have a pretty antiquated tax structure in North Carolina. The way it is set up our budget will always be unstable because it is going to correspond a lot to the economy. So you know we could be in trouble if the economy takes a downturn. But even so we’ve got a hole in it because of recurring and non-recurring money. We’ve used some of our bonus basically to pay some of our bills and then what are you going to do when the next bill comes due?
McCullen: So Senator Berger is not wrong?
Betts: He is not wrong. And the fiscal research division of the legislature has forecast this future hole. But it has done so in the past accurately but we also know that this budget includes hundreds of millions of dollars for the rainy day fund so there is appropriate use of one-time money; you put it aside for some future disaster like a budget shortfall because you used too much non-recurring money. We also in North Carolina usually budget personnel at 100% knowing full well that we might use, what 10% more or less than that depending on the year. So there are all sorts of blue smoke and mirrors tricks that come into play every year during the budget making process. So it is accurate to say that we, well, may have a hole next time but it is also accurate that many lawmakers believe that something good will happen or that we will find a way to deal with it because the state’s constitution requires that the budget be balanced.
Leslie: But you know just to play devil’s advocate, I mean this has happened periodically and cyclically in the last 20 years—we get money, we spend it. This year was 10% bigger than last year, that is a lot of growth for a year. And so we do this boom and bust thing, we spend, spend, spend and then we have to come in and have a crisis and seize money from this and that, you know.
Betts: This is the biggest increase I can recall and I’ve been here practically since the end of the Civil War it seems like sometimes and they just had a lot of money and couldn’t stand the temptation not to spend a lot of it, I will have to say in appropriate places on education, courts, things that needed doing.
Leslie: I was going to say absolutely. I mean the way that it was spent was overall smart and wise and there was so little pork in this. It is amazing to me that they had this big pot of money and were able to resist the temptation to do a lot of pork with it.
Betts: That may be the single accomplishment of the legislature so far is producing a budget that is not loaded down with messy pork barrel projects or murky special provisions that change substantive law without adequate debate.
McCullen: Yeah the smoking ban aside, smoke ‘em while you’ve got ‘em is essentially what it seems like the philosophy is. But is it sustainable for those necessities that they said they have finally fully funded? Is that where they look to next if the budget comes up short, Jack?
Betts: Well the last time the budget came up short in 2001, launching kind of an extended period, they raised taxes. And the difficulty in spending all the money that comes in when you can is that you may have to go back and raise taxes or cut spending. In 1991 when the biggest previous shortfall came about, they were $1.2 billion short, they raised taxes $600 million, cut spending $600 million and nobody was happy. And they will probably do something like that in the future when, you know, when the bill comes in way higher than we can afford.
Leslie: Everybody loves Santa but those January credit cards bills, oooh, you know.
McCullen: Anybody lose on this budget? Anybody? Anything?
Leslie: Ronnie Sutton lost. He wanted a fire truck but he didn’t get it. There were a handful of projects. Some people call them pork other people call them wise investments. And there were a few that got left on the shelf. In that struggle between the House and the Senate in terms of what belonged in the budget, some things ended up in earmarks but there were a few things that didn’t get done this year that I think some folks are going to be a little unhappy about.
Betts: And the counties won and lost; they wanted a lot of state help with their Medicaid costs and in the Senate version I believe got something like $54 million; when the negotiators finished with the House version it was half of that. That is money that the wouldn’t otherwise have had. They are glad to have the $27 million or whatever it is but it is not as much as they had hoped for a month ago.
McCullen: There were some headline making provisions that were left out. The landfill moratorium did not make it, did it not?
Leslie: It was not in the bill and the Senate wanted it there, the House did not, and we’ve heard that the House has said that they will take it up. But with time ticking down and a lot of bills on the counter it is hard to say exactly what is going to make it onto the floor.
Betts: Well the House wants its ethics bills and the Senate is going to want that landfill bill—I imagine you’ll see a little bit of tugging. Like that minimum wage, did we talk about that?
McCullen: You know every rumor out there is next Friday is going to be the last Friday, next Friday is going to be the last Friday, so we will have to see.
Betts: It won’t be next Friday.
McCullen: Were there any campaign ammunition created by passing this budget Jack for the upcoming election?
Betts: There always is. There always is and this is the tough one. Republicans are unhappy that the Democrats didn’t repeal all the temporary taxes of 2001 and they are unhappy that overall the budget goes up by 10%. But Democrats are okay with that. They cut, they trimmed those tax increases from 2001 so they can say honestly that they began cutting taxes and they can also point to where the money went, to things that are popular in North Carolina, particularly education spending has always been something that the public understood and supported. So I don’t think they are in much jeopardy over this budget.
McCullen: Quickly Laura, which is more potent, the spending increases or the tax cuts when you go out there before voters?
Leslie: It depends on what voters you are talking to I think. But the tax cuts in the bigger scheme of things are really not particularly sizeable. One thing that I think will get a lot of attention is that gas tax cap for the year; gas prices are back up again and I think a lot of people will be very happy about that.
McCullen: All right thanks so much Jack and Laura for being on Legislative Week in Review.
Vajda: That is going to do it for our show tonight. Thanks so much for watching. I am Eszter Vajda.
McCullen: I am Kelly McCullen. Have a wonderful weekend.
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