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Disparate state budgets put planning in limbo

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As the state budget process enters the final stretch, where a joint conference committee will reconcile markedly different plans proposed by the state Senate and House to present to Gov. Pat McCrory for approval, the direction of some local organizations hinges on the final budget’s approach to a handful of important issues.

One of the biggest differences between the two budgets is how to cover Medicaid costs, the government insurance program for the elderly and disabled, plus poor children and their parents.

Christine McNamee, assistant director for economic maintenance at the New Hanover County social services department, suggested previous state budgets have not allocated enough money to cover program costs.

“They try to balance the budget by cutting Medicaid and healthcare costs are not going down yet. Medicaid is not growing at a much higher rate than private healthcare. Healthcare as a whole is rising in terms of cost,” McNamee said during a June 17 phone interview.

Both budgets set aside additional money for the Medicaid reserve fund, although the Senate suggested the House budget does not allocate enough. The House set aside $117 million compared to the Senate’s $206 million. McNamee sees that as a good sign.

On the other hand, changes to Medicaid eligibility in the Senate budget would cut more than 10,000 elderly and disabled North Carolinians from its rolls. McNamee said that, along with the intent to separate Medicaid from the state Department of Health and Human Services, are the biggest concerns with the Senate budget.

The budgets also approach long-awaited teacher pay raises differently. Although both chambers included a boost to teacher salaries, the amount and plans to fund it are markedly different.

The Senate would make cuts, slashing teacher assistants, transportation funding and funding to the Department of Public Instruction to pay for an 11-percent raise on average.

The Senate plan pledges to defund teacher assistants in second- and third-grade classrooms, but Mary Hazel Small, chief financial officer for New Hanover County Schools, said the cuts would have a different effect in New Hanover County.

“The state formula does not fully fund [kindergarten through third grade] now. … Currently we have them in [kindergarten through first grade]. With these budget cuts, we would lose half of them, which would be 113 [positions],” Small said during a June 16 phone interview.

Small said the Senate budget cuts would cost the county $4 million in teacher assistant funding and $350,000 in transportation funding.

Teachers would also have to relinquish tenure to receive the raise.

The House proposed a more modest 5 percent raise supported by an unconventional funding mechanism — an anticipated boost in N.C. Education Lottery revenue as a result of increased advertising.

Small said the board will meet with school administrators after a conference budget is released to plan for the 2014-15 fiscal year.

The budgets differ on other issues of local importance.

The Senate did not include historic preservation tax credits in its budget, but the House included a program similar to one in the governor’s proposed budget that would modify but extend the state credits for residential projects, set to expire in December 2014.

“The preservation community is grateful we’ve had this show of support from the governor through the house. Six months ago, it was history. Now it’s being talked about. Legislators see the advantage,” said Historic Wilmington Foundation Executive Director George Edwards during a June 13 phone interview.

Edwards estimated the tax credits have had a $45 million impact on the local community since the 1999 adoption of the state preservation credit. He said he hopes the credits do not disappear in budget negotiations.

Although the Senate budget did not extend the 25 percent tax incentive for film companies also set to expire at the end of December, a Senate bill replaces the incentive with a grant program. Despite efforts by Rep. Ted Davis Jr., R-New Hanover, the original House budget did not extend the incentives but a last-minute budget amendment added a grant program similar to the Senate’s to the budget.

Johnny Griffin, director of the Wilmington Regional Film Commission, declined to comment on the different plans until a final budget is established, calling the process “totally fluid and uncertain.”

The two chambers will begin hashing out differences between the proposals in a conference committee by June 19.

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