Perdue protecting teaching jobs? Maybe, but not yet.

In her effort to keep 75 percent of a temporary sales tax increase in place to balance the state budget, Gov. Bev Perdue is boiling the budget fight down to a choice between that relatively small tax and massive teacher layoffs.

Perdue's budget, the governor said repeatedly yesterday, funds every existing state-funded teacher and teacher's assistant position. But it seems clear that other cuts the governor proposed to K-12 schools could threaten teaching jobs, even if the GOP-led legislature doesn't specifically cut teachers.

For example, Perdue recommends eliminating state funding for new school buses, for technology and for training. She cuts a number of other funding pots, including school custodians and bus drivers.

Less obvious is another issue, which WRAL's Laura Leslie wrote about last night:

Perdue's budget chief Charlie Perusse said today that in figuring the cost for “enrollment growth" students next year, the governor decided to make a change: The state would pay only for the classroom portion of the per-pupil money.

In other words:

Public schools would get only 75 percent of the per-pupil money they were expecting for their 5,300 additional students.

Laura also breaks down various position cuts (bus drivers, custodians, administrators) by district, figuring that they amounts to 38 non-classroom positions per school system.

School systems have some flexibility when it comes to absorbing cuts. But class size maximums are set by the state, which limits a system's ability to layoff teachers and shift money to other parts of their budget. But, systems can apply for a class size waiver, and in the past the state has simply OK'd mass waivers to remove size restrictions statewide for 4th through 12th grades.

But, according to the state Department of Public Instruction, that mass waiver is contained in the current year budget (the second section 7.8.(b) of this bill, if you'd like to read it). That means it's only good for this budget year, which ends June 30.

So, as we talk about protecting teaching jobs, one the key factors – if not the key factor — is what language legislators and the governor put into the final 2011-12 budget about class size restrictions.

Balance N.C.'s budget yourself

I expect the intent of this interactive budget exercise from the governor's office is to show people how difficult it can be to make budgetary decisions when you need to cut a couple of billion from the budget.

But then there are jerks like me who go through the steps in under 5 minutes, end with a $370 million surplus and think "well that wasn't difficult."

Hard to believe that allowing people to cut 20,000 state jobs with a few clicks of the mouse would somehow dehumanize the process.

Tax cuts, teachers and scholarships

No idea how you pay for all that and cut $3.7 ... wait, $2.7 ... no, $2.4 billion from the budget.

Plenty of coverage out there of Gov. Bev Perdue's state-of-the-state speech tonight. Here's my own initial shot at it.

Tillis: State $$ not always easy to find

Senate Bill 13, which scrapes a bunch of money out of various state accounts this year to help balance next year's budget, depends on a number of reserve accounts. You take money out of those accounts — or plan to put less in them at the end of this year — and there's a little more for the regular budget.

In reporting one of several budget stories in recent weeks I tried to determine how much the state had in all reserve accounts, and it took several phone calls to three state departments to understand, with really only limited certainty, how much the accounts they were responsible for had in reserve. There doesn't seem to be a place the public can find this information all gathered together, and yet "how much money does North Carolina have in the bank," seems a reasonable question.

Speaker of the House Thom Tillis said today that the process with S13 has been a similar experience, showing that it's not an easy question to answer, even if you're speaker of the house. Said Tillis:

"No, its not. And that's why we're going to keep on hammering it. Sometimes we have to ask the same people the same question more than once."

Update: Just for the record, that's like rule two of journalism.

Hyperbole on the NC budget

I imagine you've seen the news that North Carolina's expected budget deficit next year is no longer $3.7 billion, but $2.7 billion. But did you actually watch Gov. Bev Perdue's YouTube announcement on this?



It includes this line:

"And now, because of my administration's tireless commitment to defending North Carolina's business friendly climate, we are really seeing an improved economic outlook."

Gov. Perdue's administration fixed the economy. That is impressive. There's also this:

"I'm happy. But happy isn't strong enough. I'm over the top happy to announce that our estimated budget shortfall for this biennium has dropped by 30 percent."

As Greensboro's Mark Binker noted on Twitter, it's 27 percent, not 30. And "over the top happy," is dangerously close to car salesman commercial language. I've saved you so much money, IT's INSANE!

While effective management is certainly part of spending less money, the real lesson here is that budget projections always depend on the people making them, the assumptions they make, and what they want you to know.

So $3.7 billion is seldom $3.7 billion, for a number of reasons, not the least of which is some times people want things seem worse than they are.

At any rate, it's (said to be) $2.7 billion now, for reasons Binker breaks down here. Throw in $800 million in further current year savings the governor and legislature will probably get together on eventually, and nearly $600 million from a "quarterly assessment ... levied on all licensed N.C. hospitals," which is AN ASSESSMENT NOT A TAX DON'T CALL IT A TAX, and suddenly you're down to $1.3 billion or so without breaking a sweat.

Following the governor's announcement yesterday, Senate President Pro Tem Phil Berger put out a short statement:

“We are pleased the economy is showing signs of life. But we are alarmed Governor Perdue is declaring ‘mission accomplished’ before the real work is done.”

But Perdue never said "Mission Accomplished" in her announcement. In fact, she makes it clear there's still work to be done, saying:

"But let me be very direct, we still have a very steep budget hole to overcome."

Finally, the governors office said Perdue announced the change on YouTube rather than to the press so everyone could get the news at the same time.

The video has 840 views as of today. That's not everyone, and you can't ask an Internet video follow up questions.

N.C. Medicaid budget cuts: How much can you hit the helpless?

I'm working on a piece about Medicaid and potential Dept. of Health and Human Services budget cuts in N.C., and one paragraph from a conversation with Dept. Secretary Lanier Cansler says quite a bit.

EPSDT stands for Early and Periodic Screening, Diagnosis and Treatment, a federal law requiring Medicaid to "provide all medically necessary health care services to Medicaid-eligible children."

EPSDT - that's not optional, and if a child needs a dental service we have to provide it, period. So any of these cuts would be adults, and we don't cover adults from 19-65 unless they are disabled or pregnant women. We have categorical eligibility. We serve kids up to 19, and seniors above 65. But between that, you have to be disabled, pregnant or "medically needy" where every dime you have gets eaten up by medical costs. But health care reform would change that, saying anyone under 138 percent poverty is covered by medicaid. that's why expect 200,000 new enrollees in 2014 due to health care reform

Get that? He says the only people you can really hit with cuts to optional Medicaid programs are pregnant women, people who've been disabled and senior citizens.

Unfortunately the full article will be much longer than this. Also, if you've ever been not sure why state governments are complaining about how much "Obamacare" will cost them (it's OK, friend, if you don't fully understand Medicaid), the last sentence from Secretary Cansler explains it.

New hospital "assessment" pitched to help balance NC Medicaid budget

It looks like North Carolina hospitals are willing to tax themselves to generate new money that can be used to draw down more federal funding and boost Medicaid payments.

It would be done through a fee described in S 32, which calls for an "assessment" of an undefined percentage on "total hospital costs." It's not clear how much this would generate. Hugh Tilson, a senior v.p. for the N.C. Hospital Association, said those figures are being worked out.

Update: The associations' working figures assume this would raise about $216 million, with $43 million available to help the state balance its general fund and the rest to draw down federal Medicaid funding at slightly higher than a 2-1 match,** as opposed to the 3-1 match that has been paid in the recent past.

That would help hospitals avoid Medicaid reimbursement cuts, though there's no guarantee to hospitals or doctors that passing this bill will keep the state from going that route, too.

"Provider cuts are still on the table, even with this," said state Sen. Pete Brunstetter, R-Forsyth and one of the bill's primary sponsors.

Sen. Brunstetter also said the North Carolina Hospital Association requested the bill, which he doesn't consider a new tax.

"It's a voluntary assessment," Brunstetter said. "It's been requested by the hospitals. ... A tax is an involuntary payment to government."

Even so, this would represent a new pot of revenue as the state deals with an expected $3.7 billion budget deficit for the coming year. And this "assessment" sounds very much like something Gov. Sonny Perdue proposed in Georgia last year and called a "provider fee."

Others called it a hospital "bed tax," and its passage was one of the biggest controversies of the 2010 legislative session. The difference here may be that the N.C. Hospital Association supports the assessment/tax/fee as a way to increase Medicaid provider fees, whereas Georgia hospitals fought it until Perdue threatened them with massive provider fee cuts.

With that support here in N.C. and Senate Appropriations Co-Chairman Brunstetter and seven-term Democratic Sen. Daniel Clodfelter as its primary sponsors, this bill would seem primed to move.

Just which hospitals stand to gain the most from the assessment and subsequent re-investment of federal dollars is not clear. In Georgia the money essentially flowed from wealthier hospitals to those that served a higher percentage of Medicaid recipients. The fee was also apparently much higher in Georgia, with the 1.6 percent tax expected to generate nearly $400 million a year in state funds alone.

The N.C. bill would charge the fee to many hospitals, but exempt public teaching hospitals,** rural "critical access" hospitals, state-owned hospitals and several types of smaller, specialty facilities, such as rehabilitation centers. Whether any of those exempt facilities would be eligible for higher payments funded by the fee is something I'm working to confirm, but I understand the critical access facilities would benefit.

** CORRECTIONS: A couple of changes from the original post here - according to Don Dalton with the NC Hospital Association, only public teaching hospitals would be exempt, not private ones. Mr. Dalton also said the federal matching rate has changed, and is now a bit more than 2-1, not 3-1 as I initially noted these rates have been.

Rucho: We'll fix "100 years of disaster"

Plenty of politicians excel at hyperbole and condescension. But there's always one guy in the room who takes it to a whole other level. These are excerpts from a speech state Sen. Bob Rucho, R-Mecklenburg, gave today on the Senate floor during a Senate debate on cutting business development incentives:

"I'm overwhelmed by the passion from our colleagues in the back row about their interest in jobs. Where were you last time when we debated this during the budget? ... Here we are, a situation where we've got double-digit unemployment ... and, yet, last debate, where were you? You said, "We just gotta keep spending." ...

I want you to take responsibility for the way you've all led this state in the past 10 and 12 years because of the fact that you spent us to death. And now, when we have to make some tough decisions, you're crying about $75 million. ... What this is, is the first step to a pathway that the majority party in this senate is going to show you and the rest of the state in the business environment which way we're going so you really understand how to put an economy back together again.

Pay attention, this is what y'all should have done when you had the turn. And unfortunately you didn't, and the people are distressed about it. And they were distressed in the election ... Now do you take full blame for the recession? No. But you sure aggravated it. When you added, what, a billion dollars in new taxes? ... You punished the people that are working. OK? You made it harder for the businesses to expand and grow and maybe even survive for that matter. You also used $1.6 billion in stimulus money. One-time money for ongoing expenses. How many of you said no to that?

Let's put the blame where it needs to be. Don't come back now and (be) crying about jobs. ... You will see over the next period of time a continuation of a policy Sen. Berger, Sen. Apodaca and all the leaders in this Senate will bring forward that will put this state on the pathway to prosperity.

Hang on, it's going to take us a little time to recover from 100 years of disaster. But guess what? We're going to go ahead and we're going to show you how to do it. You're welcome to join us, or you can cry about it.

Friendly guy, huh? But he leaves me with questions.

Why would someone live in a state that he believes has been a disaster for a century? How has North Carolina managed to do so well in Forbes and Site Selection rankings for business friendly states? Why does Georgia, where the Republican-run legislature didn't implement a $1 billion tax increase to help balance the budget, have an even higher unemployment rate than North Carolina?

And since Sen. Rucho is chairing the Senate Redistricting Committee, should we expect a man who clearly feels Democrats are very bad for North Carolina to oversee the "fair" redistricting process Republican leaders have promised?

Update: WRAL has video of Rucho's speech on its @NCCapitol site. And WRAL reporter Laura Leslie, a veteran at the state capitol, notes this:

(Rucho's) comments tend to be fairly pointed, but I’ve never heard him go off on a tirade like he did today. In fact, I’ve never heard anyone in that chamber go off like that.

Can sales tax increase surf GOP wave?

It will be interesting to see whether a sales tax expansion, to tax services, can pass in North Carolina over the next two years. It died in Georgia, at least in part, because it was tied to the elimination of property taxes.