Impact of state budget unclear

Given the wide disparity in the rhetoric between Democrats and Republicans, somebody's not telling the truth about the 2011-12 state budget approved Saturday by both houses of the legislature.

It can't be a disaster of titanic proportions that will do generational damage to the state, as Democrats have argued, and be a fiscally responsible budget that fully funds all needed teaching positions, as Republicans maintain.

The $19.7 billion spending plan landed on Gov. Bev Perdue's desk after the N.C. House voted 73-45 early Saturday to pass it. Action hours later in the Senate left the Democratic governor with a decision on whether to veto the plan. She hadn't made up her mind as of Friday. The margin of approval in the House was large enough to override a Perdue veto if all five Democrats who backed it hold firm.

The budget's real impact probably won't be known for months because it is filled with flexible cuts that have to be implemented by state and local officials. Instead of specifically getting rid of teaching assistants in second and third grades, as contemplated last month, the Republican-led assembly handed bulk cuts down to local systems with directions to avoid teaching cuts.

Instead of cutting specific Medicaid health programs for the poor, the legislature told the state's health secretary to find savings. If he can't do that, he's been told to slice optional programs supported by federal funding for years, including dental care, hospice care and hearing aid subsidies.

At the bottom line, Perdue's general-fund proposal for the coming year totaled about $19.9 billion, slightly more than the legislature's nearly $19.7 billion.

Arguments over the difference are "much ado about nothing," said state Sen. Pete Brunstetter, R-Forsyth, a Senate appropriations co-chairman. It's an opinion shared by many in the new GOP majority.

"People hired us to create a budget that's within our means," said state Rep. Dale Folwell, R-Forsyth. "We wish that the state had spent within its means over the last 10 years."

But Perdue said the legislature's budget uses tricks to make the plan seem stronger and avoid the three-quarters of a penny sales tax she wants to use to avoid the deepest cuts. The legislature's budget allows the tax to expire.

To be sure, the legislature's budget was inflated by nearly $200 million simply by moving the highway patrol from the separate highway fund and into the general budget. Perdue said there's another $200 million in "technical mistakes and overestimating of savings" within the Medicaid budget.

When it comes to jobs, the two sides are working with seriously different numbers. Senate Republicans estimated their budget cuts would end about 11,500 state jobs, including 4,866 in K-12 public schools, according to a breakdown Brunstetter provided. Democrats have frequently put the number at twice that, and the North Carolina Association of Educators said more than 9,200 K-12 jobs alone will be shed.

More than 4,500 of those will be certified teachers, and more than 2,200 will be teaching assistants, according to Brian Lewis, government relations manager for the NCAE.

Republicans are "living in a fantasy," Lewis said.

But Brunstetter and other Republicans said the job losses won't be any higher than normal yearly attrition. And several key Republicans said they've talked to school superintendents who say they won't need any layoffs to implement this budget, in part because of leftover federal stimulus dollars. Democrats counter that superintendents in their districts expect significant teacher layoffs on top of what they've cut during the last two years of poor economic times.

Schools have "done more with less for two years," the governor said last week. "And there is nothing else left for them to cut but warm bodies."

Republicans are essentially betting she's wrong and have repeatedly said they're confident the cuts won't cause a public backlash after November's elections swept them into power for the first time in a century.

"I guess we'll just see when school starts who's right and who's wrong," said state Rep. Bryan Holloway, R-Stokes, an education budget writer in the House.

It's not clear how this will translate to the Winston-Salem/Forsyth County school system. Before the House and the Senate struck a budget deal this week, the system was planning for a $23.8 million state cut, which would mean losing about 260 jobs, including 110 teachers, system spokesman Theo Helm said.

"The vast majority, probably all" of those positions are currently filled, Helm said in an email.

But the budget deal moderated that cut, which the governor's office now estimates at $15.3 million. Whatever cuts that requires the system to make would be on top of the 130 or so positions it eliminated over the previous two years, going back to 2009, according to Kerry Crutchfield, the system's budget director, and the system has about $7.3 million left in stimulus money.

One option school leaders won't have is furloughs. The House and Senate budget specifically forbids them, something Perdue criticized this week despite her own aversion to ordering the unpaid vacation days after doing so in 2009 generated heavy criticism. There's also a 20 percent cut for both "More at Four" and "Smart Start," the state's early childhood education programs. "More at Four" would be transferred from control under the state board of education to the Department of Health and Human Services, which runs Smart Start.

A number of other ancillary education programs are also cut or eliminated to leave more money for teaching and avoid a tax increase. For example, the budget eliminates the state's dropout prevention grant program for an annual savings of $13.3 million

Beyond education funding, there are a number of budgetary changes worth noting in the new budget, which will take effect July 1 unless Perdue can persuade enough Democrats to side with her on a veto. They include:

•Strict new rules meant to keep the state's environmental and labor arms out of business' way. Both agencies would generally be forbidden from making new regulations beyond what the federal government requires without permission from the General Assembly.

•A review of several state agencies, with a focus on the Department of Environment and Natural Resources' regional offices, including the one in Winston-Salem. Some legislators have said DENR is not very business friendly, and they want to speed up the permitting process at these offices. Several of DENR's powers would also be stripped and transferred to other state departments under this budget.

•New fees, though not the full $100 million worth contemplated by the House budget this month. For example, local schools would be able to charge $45 for a driver-education class, instead of the $75 previously discussed. Those classes are currently free.

•Cuts to various state trust funds, which means their money will be used to help balance the budget instead of being earmarked for specific functions, including farming grants and cleanup of illegal dumping sites.

•A ban on any state funds, or federal funds that flow through the state, going to Planned Parenthood, or organizations affiliated with Planned Parenthood.

•A study on whether the state should continue requiring emissions inspections on new vehicles.