Watch the Budget Debate.

The Senate Appropriations Committee approved a $19.4 billion budget proposal Wednesday (5/25) after reviewing and rejecting several Democratic amendments. The bill (H.200) will come before the Senate this afternoon (5/31). The Senate’s budget spends $129 million more than the House budget but $473 million less than the Gov. Perdue’s proposed budget.  Republicans refuse to extend a temporary penny sales tax and an income tax surcharge scheduled to expire in June. The Senate tax package reduces the rate for all individual income tax brackets by a quarter-percentage point, dropping the rates to 5.75, 6.75 and 7.5 percent. Additionally, the measure would exempt the first $50,000 of net business income of small and start-up companies whose gross receipts do not exceed $825,000.  The Senate budget also saves the state an estimated $18 million by repealing the tax deduction for severance wages, the tax credit for recycling oyster shells, the sales tax holiday on energy-efficient appliances, among others. 

The Senate budgeted $10.7 billion for education, over $62 million more than the House proposed. The bill seeks to begin reducing class size to the targeted ratio of 1 teacher for 15 students in early grades by hiring over 1,100 teachers. The plan would eliminate funding for teachers’ assistants in all grades except kindergarten, which accounts for 13,000 positions. The Senate budget also includes $1 million to research and develop a performance-based pay model for teachers and $115 million for district school construction.

After the Senate approves its budget, House and Senate members will iron out their differences and present a final budget to Gov. Perdue in June. Perdue has said that she will veto the budget if it “undermines our schools and fails to protect the quality of our education system.”  I think you will see a veto.  Not sure if the House will have the votes necessary to override.  We’ll see.

Senate proposal raised concerns over their plan to eliminate Medicaid coverage for an array of optional services including physical, occupational, speech, and respiratory therapy, and would limit dental care to emergency cases, unless the patient is pregnant. These services would be cut mid-2012 according to the budget The Senate also proposes to dissolve the NC Partnership for Children, the central office for Smart Start, and moves supervision of Smart Start to the state Department of Health and Human Services

Workers’ Comp Moves Past Committee

The House Select Committee on Tort Reform voted to pass HB709: Protect and Put NC Back to Work on Thursday (5/26). After extensive negotiations between parties on both sides of the issue, the committee approved a consensus bill that would be the first significant workers’ comp reform in the General Assembly since 1994. One of the primary objectives of this legislation was to bring North Carolina’s indemnity costs in line with surrounding states by limiting the duration of temporary total disability (TTD) benefits. The proposed legislation would place a 500 week cap on temporary total disability benefits, increase the cap on temporary partial disability benefits from 300 weeks to 500 weeks, improve the structure, operation and accountability of the Industrial Commission, improve communication between the employer and the doctor to better facilitate employee’s return to work and ensures that both parties have equal access to medical information.