THE VIRGINIAN-PILOT
Copyright (c) 1997, Landmark Communications, Inc.
DATE: Tuesday, February 11, 1997 TAG: 9702110260
SECTION: LOCAL PAGE: B4 EDITION: NORTH CAROLINA
SOURCE: BY DENNIS PATTERSON, ASSOCIATED PRESS
DATELINE: RALEIGH LENGTH: 73 lines
Lawmakers hope to find out in Gov. James B. Hunt Jr.'s State of the State address how he proposes to pay for his ideas.
His pet education projects come with combined cost estimates in the hundreds of millions and his requests come at a time when money is likely to be short for a combination of reasons.
In the past two years, legislators approved tax cuts that will eventually amount to more than $1 billion a year.
At the same time, state government is facing increased expenses: clean-up costs from two major hurricanes, bond issues that will add $200 million in interest costs to the state budget while revenue has been set aside for environmental clean-up. In addition, growth in the public schools alone is estimated to cost the state over $100 million next year.
``That's why we're poor this year, not because of the economy,'' Sen. Bev Perdue, D-Craven, co-chair of the Senate Appropriations Committee, told business lobbyists. ``This has been an unusual year.''
Hunt has already given legislative budget leaders a $10.7 billion plan to cover existing programs he wants to continue in the new budget year.
After his address, he is expected to outline another $131 million for continuing programs as well as his proposals for new spending.
``I have two big goals, two big things we need to do,'' Hunt told business leaders last week.
One is expanding Smart Start, Hunt's early education initiative, to all 100 counties over the next four years. The other is raising teacher salaries to the national average by the year 2000.
Smart Start, once fully implemented, will cost the state an estimated $300 million a year or more. That's roughly the amount of money the state has for all new spending this year.
Meanwhile, raising teacher salaries to the national average, legislative analysts projected last year, would require increases of 7 percent in each of the next four years. The salary increases would amount to over $1 billion, according to some estimates.
Increasing the salaries of all state employees and teachers just 1 percent now costs the state close to $70 million a year.
Hunt says he wants a four-year commitment from lawmakers for those two projects, something that is difficult to get from legislators who serve only two-year terms. And even in those two years, legislators normally are reluctant to make budget promises for the second year until they get solid revenue numbers.
The tax cuts mean less money coming in to pay for new projects, lawmakers say.
Rep. Lyons Gray, co-chair of the House Finance Committee, compared the state's situation to a family that has a limited income and must decide which bills to pay first.
Hunt has outlined $251 million in proposed budget reductions to help pay for the new spending he wants. But in many of those proposals ``we have no details,'' said Rep. Billy Creech, R-Johnston, the co-chair of the House budget committee.
Hunt proposes to save millions of dollars, for instance, by reducing the growth of Medicaid from more than 11 percent to 8 percent over the next four years.
There are two ways to make those reductions. One is to control the cost of health care, which private and public agencies have been trying to do for years. The other is to reduce the number of people eligible for Medicaid coverage.
Hunt's budget plan says the state will do both, but provides no details on how it will be done.
``I believe this session will face some difficult choices,'' Creech said.
Hunt, however, says he will be able to convince doubters after his State of the State address. The speech is unlikely to contain many details. Those will come in the seven-volume proposed state budget legislators will examine line-by-line.
``We have figured it out and we will present it to the Legislature,'' Hunt said. ``It isn't easy with government, but we can do it.''