Capital Goods - June 2011

This business about the budget
By Scott Mooneyham

Back in January, leaders of the new Republican majority in the General Assembly spoke of working in partnership with the Democratic governor. They talked about bringing a businesslike approach to lawmaking. They pledged to put together a state budget — the chief task of any state legislature — well before the July 1 start of the state’s fiscal year. The Democratic governor sounded just as conciliatory. She told reporters that she didn’t know how to spell the word “veto.”

Five months later, a lot of that talk turns out to be, well, just talk. Gov. Beverly Perdue has mastered her spelling lesson, vetoing five bills by the end of April. Just before swatting three of them, she told an audience in Winston-Salem that she had been given a quart jar of red ink for her veto stamp. After she nixed a legislative fix for the state’s ailing employee health-insurance plan, House Speaker Thom Tillis questioned her leadership. “Tell us what you want,” he said.

Perdue and new Senate leader Phil Berger traded jabs over jobs. She accused GOP lawmakers of wasting time on kooky ideas — such as creating a state currency, subject of a bill filed by one legislator — rather than putting people back to work. Berger’s response: “The one job that Gov. Perdue is worried about is her own.” Failing to overturn two of her early vetoes, Republicans responded with a move many political observers saw as ill-conceived — tying an extension of unemployment benefits to an unrelated measure restricting the governor’s budget-negotiating ability. Perdue vetoed it anyway.

All this portends a long, hot summer in Raleigh. It’s not that Tillis, Berger and other GOP leaders haven’t tried to back up their words with action. They’ve been busy — at times, maybe too busy. Some legislation they’ve taken up, including gun-related measures and undoing local ordinances, has appeal for the party’s conservative core but probably won’t win over moderates and independents who decide elections. Still, they’ve stayed on track to put together a budget plan by early June and pushed ahead with an ambitious agenda that includes business-friendly tort reform and workers’ compensation changes.

Tillis, with a background as an IBM management consultant, works the House hard. Long days, packed with committee meetings and lengthy floor sessions, have become the norm. In keeping with his corporate mentality, where middle managers make the trains run on time, he and his key lieutenants have done more delegating, which means more of the budget has been crafted in the open. But it has led to decisions that have left folks scratching their heads. One example: a provision that would shut down state historic sites and a regional museum, all for $2 million in savings in a $19 billion state budget. The decision was ultimately overturned.

Politics isn’t, and never will be, like business. Even if he wanted to, Tillis can’t fire the subcommittee chair who put together the museum-closing proposal. Tillis could take away the budget-writing post, but that might undermine his own support as speaker. Unlike corporate CEOs, legislative leaders earn their positions with the votes of people they later attempt to direct.

Then there’s the governor with her veto power. At this point, many people in and around state government expect Perdue to veto whatever budget bill the legislature puts in front of her. Disagreements between the two sides are deep and fundamental. She wants to keep the temporary penny sales-tax increase adopted two years ago. That would allow the state to avoid a proposed cut to public education of $1.3 billion when measured against expected growth and $211 million less than last year’s spending. Republicans have made clear they have no intention of raising taxes, but, so far, they’ve been unable to muster Democratic support when it comes to overriding Perdue’s vetoes. The GOP has a veto-proof majority in the Senate; it needs four Democrats to override one in the House. If anything, the vetoes have seemed to unite Democrats.

Five Democrats did vote with Republicans May 4 for a House budget plan, perhaps aiming to be key players in final negotiations. But an impasse still looms. GOP leaders say a standoff could lead to a shutdown of state government. The rhetoric ignores a history of stopgap budget measures and the broad budgetary powers granted to the governor under the North Carolina constitution. Republicans also stand to gain something from a stalemate: the expiration of those hated 2009 tax hikes. Without legislative action, they expire July 1. What they aren’t likely to get is a legislature that, come midsummer, looks like the efficient and effective institution promised back in January.

Scott Mooneyham is the editor of The Insider, www.ncinsider.com.