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Welcome to this week`s edition of SPINCycle.
On this week’s show we will give you our analysis of Tuesday’s runoff elections, whether we will have a new state budget July 1, discuss whether or not we are in a war for school resegregation and get our panel’s opinions about whether universities get preferential funding treatment.
This week’s panel includes: former legislator, Gene Arnold; Rufus Edmisten, former Attorney General and Secretary of State; Chris Fitzsimon, Director of NC Policy Watch and John Hood, President of the John Locke Foundation. The show will be moderated by Tom Campbell.
Tom Campbell`s Spin
If legislators want to restore the breach of trust, they must get serious about ethics and campaign reform. Check out this week’s column, “Restoring public trust”.
Heard on the Street
The scorching heat and time of year brings to mind a similar scenario that took place in Philadelphia in 1776. Then, as now, the Continental Congress was stalled in debate. Delegates were about to declare their independence from England. Our lawmakers are also seeking freedom…from dealing with continuing budget deficits, on-again, off-again federal funding on Medicaid, but mostly they want freedom from Raleigh. Our legislators are past eager in their desire to go home.
But many won’t find freedom when they return home, as most have re-election challenges and will find an unhappy electorate awaiting them. These are not good times to be a state legislator.
We heard late yesterday that a budget compromise is close but few details are being shared. Some are saying it is very possible lawmakers will have a plan to present and vote on before the beginning of the new fiscal year, however that seems a stretch, especially if they expect rank and file legislators to read the documents and have any meaningful discussion about the budget before a vote. But stranger things have happened.
There are two main hang ups, as we understand it. The first concerns the big differences in the education budget. More specifically, the discussion focuses on whether the Senate will prevail in giving Universities more money or whether the House can hold out with more funding for public schools.
A schism is developing in the education community. In years past, k-12 public schools, community colleges and the university system have maintained at least a public front of unity for education. But insiders know that both public schools and community colleges have privately chafed at an obvious bias toward universities, especially within our state Senate. That public front was shattered recently when the president of the NCAE fired a shot over the university system’s bow, accusing the system of “questionable spending.” Advocates for k-12 and community colleges are upset about teacher cuts while the university gets $9 million in in-state tuition grants for out-of-state students. They are weary of the predictable “gloom and doom” press conference and full court pressure from a swarm of lobbyists any time university funding is threatened.
North Carolina spends more than 56 percent, about 10.6 billion dollars, of our state budget on education. NC Policy Watch’s Chris Fitzsimon reported this week that about 2.6 billion of that is allocated to our university system. North Carolina needs to have a frank discussion about what are our top priorities in education. We are asking our NC SPIN panel to talk about this very subject this week on our show.
Most folks we’ve asked say the priorities should be k-12 primary education first, community colleges second and universities third, since fewer than one-third of our citizens attain a college degree. But when we ask their perceptions of how we actually prioritize education many admit that our university system appears to get top priority. Is it because they have more lobbyists, have more “good ole boys” who attended university or spend more in contributions to top legislators? This will be an interesting debate…and perhaps the start for future discussion on the topic.
Back to the budget. The other big hangup is the six month extension of the federal Medicaid assistance (FMAP) funds originally provided in the federal stimulus relief to states. North Carolina’s share of those funds will be about $480 million. As of this week, the Senate didn’t have the votes to approve that extension. To pass, all 59 Democrats and at least one Republican must vote favorably. A few moderate Democrats and all Republicans are holding out.
What to do? If the legislature has to cut another $480 million in the budget there will surely be jobs lost. Some discussion has focused on employee furloughs. A one day furlough of state employees will save about $35 million, we have heard. It would be tough to make up the entire FMAP amount that way. With 56 percent of the budget in education and another 20 percent allocated to Health and Human Services, it is only reasonable to expect further cuts in both budgets.
What we’ve got is the proverbial crap shoot. Lawmakers had hoped this would have been resolved in Washington before they had to finalize a budget but that doesn’t appear likely. We’re told the House wants to pass a budget without the FMAP money, endure the pain and have clear plans for what can be restored if the federal funds become available. The Senate prefers to pass it with the federal funds included, as some 30 other states have already done. If the funds don’t come through, the plan we hear is for Governor Perdue to have to deal with the problem in January, after the elections. If the Senate approach is adopted, the problems could be exacerbated. If lawmakers, for instance, approve a $19.5 billion dollar spending plan, then learn three or four months into that budget that the federal funds are not coming, they then have to cut the budget by the $480 million over an 8 or 9 month period instead of the entire 12 months of the budget.
Governor Perdue’s team is hoping lawmakers will do their job to resolve the issue so she doesn’t have to be the hatchet person again. Perdue has already taken the knife to last year’s budget and helped ensure this fiscal year would end without major deficits. Give her credit for being fiscally responsible in administering the budget when it became obvious that revenues weren’t matching spending. It doesn’t seem fair for legislators to knowingly pass a budget with a $480 million question mark. It is unconstitutional, for one thing. It will also be considered irresponsible.
Either way, Democrats are going to face criticism in November. But you can bet discussions are being held about which plan would make them look more or less fiscally responsible.
Elections shape up
Few were surprised that Secretary of State Elaine Marshall defeated Cal Cunningham for the nomination to run against Republican Senator Richard Burr in November. If there was any surprise it was in the 60 percent margin Marshall received. Following the defeat, Cunningham immediately threw his support to Marshall and Democrats tried to heal rifts in order to beat the incumbent, who already has more than 8 million in the bank. That might well be the determining factor in the US Senate race. Who can raise the most money? Marshall has not been a big money magnet in times past. If she cannot take her case to the public on TV while Burr is all over the tube, it might be the nail in the coffin.
Over on the Republican side, former WSOC sportscaster Harold Johnson handily defeated Tim D’Annunzio, the loose canon candidate, in the controversial 8th Congressional District. Political insiders are predicting that Johnson will defeat one-term incumbent Democrat Larry Kissell, especially since the State Employees are on the warpath trying to field a third-party candidate.
In the 13th, longtime Raleigh fixture Bernie Reeves suffered a big defeat against a newcomer, Bill Marshall. Republicans believe they can take the seat and may be willing to put money and muscle behind the effort. Marshall, while outspent, demonstrated he understands grass roots, retail politics.
The sides are set. The players are in place. Let’s see what transpires over the summer. If the elections were held today, most all insiders believe the GOP will take control of the State Senate, stand a fighting chance of doing the same in the House and will likely retain the US Senate seat. They may pick up one or two Congressional seats in North Carolina.
Our NC SPIN panel will give you their views on the runoffs on this week’s show and will keep you posted on events throughout the campaign.
“The days of pay-to-play are over”…or are they?
The State Senate’s ethics and campaign reform was trotted out Monday night with bold proclamations from Senate Majority Leader Martin Nesbitt. "The days of pay-to-play are over," Nesbitt boldly proclaimed. "This is all about good government and transparency. We think government works better when the public can see what’s going on."
This statement was humorous because the legislation that was proposed was all drafted behind closed doors with no public input. The public couldn’t see what was going on in this legislation. Perhaps if they had, Nesbitt wouldn’t have so much egg on his face this morning.
There is speculation that Senate Democrats wanted to include the public financing extension for Council of State elections because they knew Republicans would never vote for this provision. Democrats could then make a campaign issue about Republicans voting against ethics reforms. But the plan backfired for many reasons. It didn’t go far enough in the opinion of most to reform ethics and campaign laws. The public financing part of the bill was way off the page with Republicans. From Monday night until Wednesday afternoon, the GOP (through Americans for Prosperity) went to work through a campaign of robocalls in closely contested Senate districts, urging voters to call their Senator in protest of a further “tax” to pay for elections. Nesbit and Senate Democrats panicked and pulled the bill before it went to the floor for debate and a vote. That dog won’t hunt.
Senator Nesbitt has just re-learned a basic lesson in politics. You can call a pig a horse but it doesn’t make it so. The Senate’s ethics and campaign reform bill didn’t come close to ending pay-to-play and there was such tepid support for the “reforms” that Democrats had to withdraw the bill.
Legislators have had long enough to get serious about ethics and campaign reform. The Senate bill didn’t do the job. Are they going to leave town without addressing the issue?
If ever there was further evidence needed why people don’t trust elected officials, this latest under the cover of darkness move by the Senate is proof. Be sure to read my “My Spin” column this week, “Restoring Public Trust.”
The Senate has passed a bill that would extend the video poker ban to video sweepstakes parlors across the state. The House appears ready to follow suit.
The media has been pointing to ads run on NC SPIN by the Entertainment Group of North Carolina that touts the possibility of $500 million in tax revenues if the state would license and tax the games instead of banning them. The ads are gaining traction with the public, but not politicians, so about 500 people marched on the legislature this week to encourage the legislature to make video gaming (aka video poker) legal and get the cash revenues for the state.
We’re told the cards are stacked. For some months there has been speculation that the state lottery is involved in scuttling video sweepstakes. Some believe there is a method to their madness that calls for reintroducing the subject in 2011 with the lottery running the games.
Swipe fees hurting small businesses
Much is said about helping small businesses, but when truth is told, little is done to help this essential sector of our economy. More than 7 out of every 10 jobs is created by small, closely held businesses in our state, but our economic development policies and most laws benefit larger corporations.
Fran Preston is the longtime head of the North Carolina Retail Merchants Association, an organization that works for 25,000 retail merchants in our state, from the largest chain to the smallest mom ‘n pop store. Yesterday she had an interesting op ed column in The Charlotte Observer about a problem retailers are encountering that customers don’t know about. Every time you or I give a store a debit card, the card provider charges that retailer a “swipe fee.” Preston says those fees have quadrupled in recent months, primarily because Visa and Mastercard own most of the debit card market and can get away with the fees.
Retailers either swallow the costs, thereby reducing their profits, or pass them along to customers, through increased costs. Preston is encouraging us all to urge our Congressional delegation to pass legislation that will keep these swipe fees “reasonable and proportional.” Read Fran’s op ed piece.
Public Private Partnerships
Two years ago the Emerging Institute’s Forum dealt with our nation’s and our state’s growing need to replace and repair our infrastructure. The Forum didn’t end with the presentations. For over a year, a high level business committee on infrastructure has been meeting, with a goal of addressing how to repair and expand public infrastructure. Traditional ways of funding and project management will not help in what has been projected to be more than $30 billion in needed repairs and expansions.
This week that committee released the results of their report, urging our legislature to initiate a study commission that will investigate expanded public private partnerships in our state. Senator Clark Jenkins and Representative Deborah Ross were on hand for the press conference. Read the committee’s report and stay tuned to NC SPIN for more discussion on this important topic.
Until next week, watch out for the SPIN!
Claire Cox-Woodlief, Editor
Tom Campbell, Publisher
In our Heard on the Street column we mistakenly used the wrong name for Republican Bill Randall, who won in the 13th Congressional District.
We ask Mr. Randall’s and your forgiveness.