Legislators miss fiscal year deadline for passing state budget

To celebrate the new fiscal year Tuesday, state legislators had no finalized budget for 2014-15 and little to show for weeks of negotiations.

North Carolina operates on a biennial budget, and policy analysts have said starting a budget’s second year without finalized provisions is historically common for the state.

But the state’s Republicans, who seized control of both legislative chambers in the 2010 elections, had promised to avoid dragging out budget negotiations like Democrats in years past, said Rob Schofield, a spokesman for the left-leaning N.C. Policy Watch.

“They’ve found out the same things that past leaders have found out, and that’s that democracy is tough and complicated stuff,” he said.

But there is no threat of a government shutdown. Last week, state budget director Art Pope issued instructions for state agencies to calculate their state funding for July with the 2013-15 budget enacted last year as a starting point.

Historical precedent

Mitch Kokai, a spokesman for the conservative-leaning John Locke Foundation, said budget deliberations almost certainly missed the fiscal year deadline under past Democratic leadership.

“The uncommon thing is to finish the budget in time before July 1,” Kokai said. “I think we’ve gotten a little spoiled by the fact that Republicans have been able to do that in recent years.”

He said state agencies and local governments can better plan their individual budgets when the legislature finalizes the state budget by July 1 — otherwise, they may have to guess the levels of state funding.

Proposals about K-12 education, such as what teachers will be paid and how many teachers can be hired, have been particularly divergent during this year’s budget deliberations, Schofield said.

He said he thinks the failure to reach a budget compromise by July 1, while not a tremendous failure on the Republicans’ part, indicates an ideological divide within the party.

Tom Carsey, a UNC-CH political science professor, said in an email budget stalemates under one-party control are not uncommon, and N.C. Republicans have limited experience governing with unified control of the governor’s office and legislature.

“Governors have to respond to the state overall, whereas legislators have to pay particular attention to their districts,” he said in the email. “Now, the challenge is to find common ground within the various factions within the GOP to govern.”

Election year

Kokai said he thinks the upcoming November elections have factored into budget deliberations — but to what extent, he isn’t sure.

“I think if you see the stalemate continue much past the Fourth of July, then the electoral factor will become a much bigger deal,” he said. “Thom Tillis will not want to be sticking around in Raleigh, and other legislators who face some competition in the fall will feel the same way.”

Many legislators are running unopposed in this year’s elections, but those who aren’t will want to return home to campaign, Kokai said.

Tillis, a Republican and the current N.C. Speaker of the House of Representatives, is running for U.S. Senate against Democratic incumbent Kay Hagan.

“He needs to get out of town,” Schofield said. “The Senate knows that. They can just hold things up and hope that he’ll concede to their point of view.”

UNC system implications

Charles Perusse, UNC-system chief operating officer, said legislators finalizing the budget after the new fiscal year has few effects on the system’s operations.

“From our standpoint, we’re really operating business as usual,” he said.

“We don’t spend a lot of our appropriations in July so from that standpoint, the timing helps us.”

The system is hopeful the final budget will grant it flexibility in adjusting out-of-state tuition rates originally mandated by the legislature last year, Perusse said.

If the system receives such flexibility, the out-of-state tuition increase at UNC-CH would be 11.7 percent instead of 12.3 percent, a difference of $169 dollars.

Perusse said most system schools bill students for fall semester in mid to late July, but if legislative action results in changing tuition rates, schools can send additional bills in the fall or reduce the spring semester’s bill.

Stephen Farmer, UNC-CH vice provost for enrollment and undergraduate admissions, said system schools have initiated their own tuition increases for most of the past decade.

“It would really surprise me to see our proposing anything approaching the increase that was imposed this year,” Farmer said.

He said last winter, UNC-CH submitted its own tuition proposal based on competing universities’ tuition rates, including a 2.5 percent out-of-state tuition increase of about $700.

The University struggled, but succeeded, in funding financial aid to keep up with a 12.3 percent out-of-state tuition increase, he said.

“We believe both in accessibility and excellence.”

Contact the desk editor at state@dailytarheel.com.