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NC budget dance slowed as GOP leaders differ on bottom line

RALEIGH, N.C. — A big question within North Carolina state government at the start of the year was whether Democratic Gov. Roy Cooper and Republican legislative leaders could agree on a state budget after reaching a negotiating impasse two years ago.

But right now it’s the GOP lawmakers who can’t get out of the starting blocks with spending proposals.

House and Senate Republican leaders are still hundreds of millions of dollars apart on how much money they want to spend operating state government for the fiscal year starting July 1, lawmakers said this week. Two years ago, they set a bottom-line spending total in mid-March. The spending cap often signals how much revenue will be set aside in reserves or how much room there will be for tax cuts.

The bargaining has pushed back the legislature’s budget-writing schedule. The Senate, which by biennial tradition is tasked this year with passing the first version of the budget, had wanted to send its approved proposal to the House in late April or early May.

"As we've learned in previous years and others, there's no point in starting this process until we have an agreement on how much we're going to spend," Sen. Ralph Hise, a Mitchell County Republican and one of the chamber’s top budget-writers, said Thursday. "I wish we had a number today and I wish we were ready to move, but we're just not there yet."

Veteran lawmakers learned their lesson in 2015, when the two chambers — led by current House Speaker Tim Moore and Senate leader Phil Berger — passed competing budget proposals that were close to $700 million apart on spending. The two chambers and then-Gov. Pat McCrory couldn’t come up with a final spending number of nearly $21.7 billion until August, leading to an enacted budget that was 2 1/2 months late.

Moore said on Thursday that the gap between the two chambers’ proposals this year is less than $500 million. He wouldn’t get into specifics, but said the House had sent a revenue offer to the Senate several days earlier. Berger and Hise have declined to talk numbers, but Berger confirmed last week that the Senate wanted to spend less than the House.

Berger said it will take the Senate up to three weeks after a finalized number to approve its two-year budget, which will include its itemized spending, tax and policy preferences. Next, the House would pass a competing plan, followed by negotiations between the two chambers and probably Cooper, who would be asked to sign any budget. Getting a budget to Cooper’s desk by the end of June is still doable, Berger said.

“There's work happening behind the scenes,” Moore said. "But once it gets rolling, I think it'll happen pretty quick."

Since taking office in 2017, Cooper has not signed into law a traditional comprehensive state budget bill — the ones sent to him for his signature have spent less than what he proposed, particularly in education, and contained or continued business tax breaks he didn’t like. His vetoes in 2017 and 2018 were overridden by veto-proof majorities in the House and Senate. His 2019 veto was upheld because Democrats had gained enough seats to halt overrides.

Any bottom-line spending number by GOP lawmakers is likely to fall well below the $27.3 billion budget that Cooper proposed in March. The state is expected to spend about $24.5 billion this fiscal year, according to the General Assembly’s fiscal analysis agency.

North Carolina is in a strong position coming out of the COVID-19 pandemic recession, with several billion dollars in state coffers currently unencumbered. The state also will get an additional $5.3 billion between now and next year from the most recent federal coronavirus relief package.

Cooper and Republicans are likely to differ on taxes, the size of teacher pay raises and whether the state should expand Medicaid — all issues that contributed to the 2019 budget impasse. During his State of the State address last week, Cooper expressed optimism that he could sign a budget but warned there would "have to be some give and take" to make it happen.

Berger said on Thursday that the Cooper administration has made its wishes known about spending priorities.

"Hopefully we'll have a number of things that the governor wants in the budget so that those negotiations at that time will be limited to … some manageable proportions," Berger said.

Gary D. Robertson, The Associated Press