This week Gov. Roy Cooper released his budget recommendations for the current fiscal year that started July 1.
Because the state hasn’t passed an actual budget bill since FY 2018-19, however, the recommendations are essentially spending adjustments because there is no actual budget to adjust.
During a continued downturn caused by the economic shutdown in response to Coronavirus, state revenues are highly unpredictable and were down by roughly $900 million in FY 2019-20 compared to the previous year.
Nevertheless, despite the uncertainty Cooper recommends sizeable spending increases, along with Medicaid expansion (again), teacher raises and a massive increase in state debt.
Below are 10 significant takeaways from Cooper’s spending recommendations:
1.) Cooper’s proposal spends $25.04 B, would increase spending nearly $1 billion
Under Cooper’s recommendations, total General Fund spending would come to $25.04 billion for the current fiscal year. According to the state controller’s office monthly General Fund report from June, total actual spending for the last fiscal year (2019-20) came to $24.06 billion, and actual spending for FY 2018-19 came to $23.67 billion.
Despite the great uncertainty and continued shutdown of part of the state’s economy, Cooper unwisely recommends increasing spending by roughly $1 billion over last year, and about $1.4 billion over FY 2018-19, good for increases of 4.1% and 5.8%, respectively.
2.) Cooper spends down all available funds, leaves no breathing room
The latest consensus revenue forecast for the current fiscal year is $23.47 billion. Cooper’s plan would spend more than $1.5 billion more than expected revenue. Bear in mind, the revenue estimates are preliminary and will be revisited in September and could possibly be worse by then.
Cooper’s plan would spend down the entirety of the approximately $1.5 billion unappropriated balance from last year to make up the difference. Committing the state to spending down all unspent reserves while relying on highly speculative revenue projection is very irresponsible on Cooper’s part.
3.) Medicaid expansion (again)
Cooper once again includes Medicaid expansion as part of his spending recommendations – despite multiple failed attempts to do so legislatively.
According to his plan, Medicaid expansion would add more than 600,000 people to an already overcrowded Medicaid program. Moreover, funding for the state share of expansion would come from a $2 billion annual hospital tax, labeled by Cooper as “provider contributions,” a burden that would ultimately fall on patients.
At a time when many North Carolina hospitals are begging for government bailouts and drowning in debt, imposing $2 billion in new “contributions” could have significant negative consequences.
4.) Pay raises for Education personnel
Cooper’s plan includes:
- $230 million for a one-time $2,000 bonus for teachers, instructional support personnel, and principals and assistant principals
- $50 million for a one-time $1,000 bonus for non-certified school personnel
- $80 million for a one-time $1,500 bonus to UNC System and NC Community College personnel
5.) $50 million increase for Leandro plan
Cooper proposes $50 million in additional funding for public schools, in accordance with some of the recommendations of the WestEd Leandro Commission. According to the plan, “Funding will be used to serve the highest needs students, schools, and school districts, including expanding funding for Children with Disabilities, Disadvantaged and At-Risk Students, and English-language learners. Provides funding to expand the Teaching Fellows program, the College Advising Corps, and to ensure students are college and career ready.”
6.) $85 million taken from school choice program
Cooper’s plan takes $85 million in “unobligated funds” for the Opportunity Scholarship school voucher program, while claiming to ensure “sufficient funding is available to continue support for every student who is currently receiving a voucher.” The move Is consistent with Cooper’s previous attempts to eliminate the popular and growing voucher program and further demonstrates Cooper’s commitment to denying low-income students access to better educational opportunities.
7.) $18 million to the One NC Fund
While repeatedly claiming to be against “corporate giveaways,” Cooper nonetheless adds $18 million in additional funding for the corporate giveaway program called the One NC Fund. Diverting millions of taxpayer dollars to politically-selected corporations while thousands of small businesses face bankruptcy due to Cooper’s shut-down orders is especially insulting to struggling small businesses.
8.) ADM hold harmless
Cooper’s plan would maintain funding to public schools at current levels, even if average daily membership (ADM) declines during the 2020-21 school year due to the COVID-19 pandemic response. Schools typically receive funding largely based on the number of students attending, but Cooper’s plan would maintain higher funding levels for schools to educate children who no longer attend. Cooper’s recommendation is shortsighted and should focus on providing assistance to parents who have shouldered much of the responsibility for their child’s academic progress.
9.) Nearly $5.3 billion in new debt
Cooper’s plan would authorize an astonishing $5.3 billion in new state debt, in spite of great economic uncertainty. If approved, the provision would more than double the current state debt total of roughly $4.2 billion. Piling on massive amounts of new state debt – even at low interest rates – burdens the state budget with higher debt payments for decades to come. The result is either crowding out spending on other state programs or increasing taxes to pay down the added debt.
The debt would be broken up into two different packages. One proposal involves $988 million in debt devoted to “healthcare infrastructure” like vaccine development and relocating Dorothea Dix Park. This would be “special indebtedness” and not subject to voter approval.
The other package would provide $4.3 billion for infrastructure projects like public school construction, UNC and community college projects, water and sewer, and affordable housing initiatives. This bond package would be put on the ballot in November 2021, during the typically low-turnout municipal elections. Doing so of course significantly increases its chances of passage, and ensures a smaller number of people voting on debt that all taxpayers will be forced to pay back.
10.) Increase maximum duration and raise maximum weekly benefit for unemployment
Cooper also proposes to increase the maximum duration of regular unemployment insurance benefits from 12 weeks to 24 weeks for new claims filed on or after October 1st; and increase the maximum weekly benefit from $350 to $500 for new claims filed. Cooper’s proposal estimates these changes would “increase payments for regular state unemployment insurance benefits by an estimated $410-$480 million.”