The General Assembly will have some surplus money to spend this year, but there are many worthwhile projects competing for funds and some legislators are in favor of additional tax cuts, Orange County legislators told faculty and staff earlier this month.
Currently the state is projected to have $267 million in recurring revenue and $242 million in non-recurring revenue during the upcoming short session of the General Assembly, Rep. Joe Hackney said.
If all the recurring money was used for a salary increase, he said, there would be enough for a 4 percent increase. Each 1 percent raise costs $66.5 million.
But, he said, there are court cases pending that could reduce available funding, including intangible tax refunds and federal and state retirees' income tax cases. For example, costs to provide intangible tax refunds range from $143 million to $501.8 million, depending on which method of refund is chosen, he said.
Tax cuts
Rep. Anne Barnes said there would have been $495 million more to spend if the legislature hadn't cut taxes.
"Maybe you benefited personally from these tax adjustments, but it does negatively impact our ability to provide, among other things, decent salary raises this year," she said.
Barnes said there was talk about additional tax cuts this year.
"Specifically, the repeal of sales tax on food at $84.5 million per one cent removed," she said. Other cuts being discussed, she said, include corporate tax (from 7.77 to 7 percent means a loss of $96 million) and soft drink tax (another one-quarter cut equals $9.6 million).
Sen. Fred Hobbs said pay raises for state employees and faculty were competing against an ever-dwindling pot of money and the many other worthwhile projects that are critical to North Carolina. He cited the cleanup of the Neuse River as one.
Barnes said, "In the upcoming session, look for more talk about downsizing and maybe even some significant cut in agency budgets in order to finance these tax cuts and promises made regarding salary increases." As to salaries, she mentioned specifically Chancellor Michael Hooker's request that the legislature match funds produced by special tuition increases and the governor's call for raising public school teacher salaries to the national average by the year 2000.
If the increase in teachers' salaries starts in the short session, she said, the first installment would cost about $220 million to $240 million.
Smoke and mirrors
When the short session begins May 13, Barnes said, it may be smoke and mirrors time again.
"Watch for some of these tax repeals and salary increases to take effect in a time in the future," she said. "That is a favorite election year tactic: Promise them everything and give it to them at a later date."
But what will the legislature do for money at that later date, Barnes questioned.
Sen. Teena Little said the legislature was going to be looking closely at programs throughout state government to make sure they are providing services to citizens. If a program is not doing its job, she said, then it needs to be changed, revamped or eliminated.
The legislature, just like individuals, must set priorities on how to spend its limited dollars, she said.
Salary plan
In response to a question about how to make state employee salaries a top priority, Hackney said there needed to be a salary plan that mandated money for increases. The legislature approved a salary plan but never appropriated funding.
To get it funded, he said, state employees need increased political muscle. Barnes said state salaries weren't a top priority for all legislators since many districts did not have many state employees.
Two problems exist for getting the pay plan funded, she said. It takes a lot of money to get it started, she said, and it limits the flexibility legislators have in the future.
"They don't want to give up that flexibility," Barnes said. "How much of an increase state employees get is something the General Assembly can decide if they need to fudge to get a little more money for something else. If it is cast in stone, then they won't be able to fudge on it."
Barnes, Hackney and Hobbs all indicated they supported funding the pay plan.
Privatization
All four legislators said they did not have any information on the study of privatization of certain state jobs, including housekeeping, since none were on that study commission.
Barnes and Hackney indicated they were not in favor of privatization. It may appear to save money, they said, but there was more to being an employer than the bottom line.
"I think an employer like the state of North Carolina should think about the loyalty of its employees, the value of employees, the families of employees and ... what kind of service you get when you contract for it," Barnes said. "I am sure there are areas in which contracting for services would be appropriate. I don't think housekeeping is one of those areas."
Little said she hadn't made a decision yet on privatization, but she felt there were some jobs where it could work and others where it wouldn't.
Tuition
Barnes and Hackney also did not favor higher tuition and did not vote for the special provision that allowed Carolina and N.C. State to increase tuition to provide for faculty salaries and libraries.
Hobbs and Little did support the provision, they said, because it was the only way that the research institutions could get needed influx of new money.
In answer to a question on whether the legislature was planning to reduce the university's management flexibility, Little said the legislature wasn't reducing flexibility, but was scrutinizing programs to make sure they were working. If they aren't, she said, then state dollars needed to be put where they could be useful.
Barnes said the University needed to be vigilant because there were always legislators who wanted to micromanage it.
"I think the people with newfound power haven't had their go at you yet," she said. "I think that is happening now."
The legislature has no business managing the UNC system, she said, but it did have the right to have the university be accountable.
"Micromanaging the university is a very bad idea, but there will always be legislators in power who want to do that; so keep worrying," she said.
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