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Budget Impasse Among NC Republicans Breeds Impatience

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House and Senate Republican leaders are growing impatient as bargaining over an early milestone in the budget process has slowed work at the North Carolina General Assembly.

GOP negotiators in both chambers said this week that they remained hundreds of millions of dollars apart on a dollar amount they'd agree to spend to operate state government for the next fiscal year starting July 1. The actual difference depends on how the spending is calculated but remains small relative to the $24.5 billion projected to be spent this year.

Still, Republicans prefer setting a spending “availability” number that would narrow negotiations on a final spending plan once the Senate and House likely approve competing versions of the two-year budget. None of that has happened yet. Two years ago, the two chambers had approved their budget proposals by this week.

Now top House leaders have complained about what they call the Senate's slow pace in negotiating the bottom-line spending number and passing a budget. And since by tradition the Senate is tasked this year with passing the first version of the budget, House Republicans feel hamstrung in working on their own budget.

“They don’t seem to want to come back and negotiate,” said Rep. Jason Saine of Lincoln County, a chief House budget-writer, suggesting that senators skip finalizing a spending figure. “Were it me, I would move forward and just send the budget.”

Even House Speaker Tim Moore teased his Senate counterparts Wednesday from the chamber's dais, saying the Senate’s budget must have “gotten lost in the mail ... but I’m sure it’s going to show up sooner or later.”

Senate Appropriations Committee co-chairman Brent Jackson of Sampson County said the chamber's Republicans hope to send a counteroffer on a spending number to the House by the end of the week. Jackson defended the Senate's position on spending, saying it's worried the House wants to spend too much on long-term initiatives by using one-time revenue windfalls that can't be counted on.

“We do not want to use no more non-recurring money than we have to for recurring things,” Jackson said on Thursday.

A final spending number will determine how much can be set aside for tax reductions and key spending initiatives, such as teacher and state employee pay. The Senate wants to spend less than the House. Neither is seeking to spend as much as Democratic Gov. Roy Cooper proposed in March.

The extended stalemate has contributed to an unusual lull the past two weeks in each chamber since a key parliamentary deadline passed May 13 designed to whittle down the bills that can be considered this session. There have been few committee meetings and floor votes since.

With the delay, House and Senate are signaling their budget and tax preferences publicly.

Senate Republicans advanced a bill through committee this week that would cut income tax rates and raise deductions, at a cost of $2 billion in revenues through mid-2023. Then Jackson offered an amendment Thursday to the bill that would put another $1.4 billion in the state's rainy-day reserve account.

Saine said House budget subcommittees would hold meetings next week to discuss their own spending priorities now, rather that wait until after the Senate complete its budget bill.

Any final budget will still go to Cooper's desk. He and Republican legislators have expressed optimism that a compromise can be hammered out that Cooper can sign into law.

Cooper has vetoed the three omnibus budget bills presented to him since 2017. Two of the vetoes were overridden. A comprehensive 2019 budget was never enacted because Republicans lacked the votes for an override — leading instead to the passage of several smaller spending bills. State government continues to operate even if a budget doesn't get enacted by July 1.

"The House will be passing a comprehensive two-year budget at some point this session regardless,” Moore spokesperson Demi Dowdy wrote in an email Thursday.

But Senate leader Phil Berger raised the option of approving “mini-budgets” similar to 2019 if the two chambers can't agree on a spending limit. “It’s not the end of the world if we don’t end up passing a traditional budget,” he told WRAL-TV.

Cooper said last week that senators should go ahead and pass their budget without finalizing a bottom-line number with the House. He told reporters an updated revenue forecast in June would adjust spending capacity anyway.

The state is already in a strong financial position, with another revenue surplus expected on top of billions of dollars yet to be spent. And that doesn't include $5.7 billion in federal COVID-19 relief funds that the state could spend on some items that otherwise would be paid for with state tax dollars.