McCrory Embraces JLF ‘Reverse Logrolling’ As Cost-Cutting Tool | Eastern North Carolina Now

    Publisher's note: The author of this post is CJ Staff, who Print Columnists for the Carolina Journal, John Hood Publisher.

Budget savings are mandated until legislature enacts adjusted budget

    Raleigh — The two chambers of the General Assembly have been unable to agree on their budget adjustments for the 2014-15 fiscal year, which begins Tuesday. Until they do, the administration of Gov. Pat McCrory has employed a fiscal tool also endorsed by the John Locke Foundation as a way for state agencies to move forward until a deal is completed.

    McCrory's budget director, Art Pope, on June 23 directed most state agencies to prepare for the new fiscal year by adopting a budget technique, known as "reverse logrolling," which had been outlined a week earlier in a John Locke Foundation Spotlight report. "Logrolling" is a budgeting technique under which each chamber negotiates with the other to include specific line items in the final spending plan — choosing the higher spending level enacted by each chamber.

    As outlined in a memo from Pope to department heads and fiscal officers, each state department and agency would reverse the logrolling process, operating under the lower of the two chambers' previously approved figures for individual budget line items. Unlike the status quo, which would allow state government to operate at 2014-15 budget levels agreed to during last year's budget debate, reverse logrolling would impose immediate cuts to agency and department budgets.

    The General Assembly last year passed a budget that will keep state government operating until June 30, 2015. But during this year's budget adjustment (or short) session, McCrory and legislative leaders have proposed a number of fiscal measures requiring new legislation, led by pay increases for K-12 public school teachers and state employees. Until the General Assembly and the governor enact that legislation, Pope's directive will take effect.

    Pope's memo notes that vacant state positions that would have been cut in the proposed 2014-15 budget would not be filled, and teachers and other state employees would not receive pay raises or step increases.

    Moreover, unless or until a new budget becomes law, the University of North Carolina system faces a $19.8 million budget cut and the Department of Public Instruction may lose 30 percent of its funding.

    In an exception to the reverse-logrolling practice, the memo said the McCrory administration would restore 7,400 teaching assistant positions that were eliminated in the Senate's budget plan.

    The JLF Spotlight report, from director of fiscal policy studies Sarah Curry, identifies savings that would lead to a General Fund budget of $20.6 billion for 2014-15. That would free up $667 million, more than enough money to cover teacher pay raise proposals while leaving the state budget with a surplus.

    "The state Senate's teacher pay plan would cost more than $468 million, meaning lawmakers could fund that plan and still have a surplus of $198 million," said Curry. "The House's teacher pay plan would cost $177 million. Legislative budget writers could fund that plan and have a larger surplus — nearly $490 million."

    Curry endorsed reverse logrolling for House and Senate budget negotiations. "Rather than one set of budget negotiators accepting particular programs or higher levels of spending from their counterparts, with the expectation that those counterparts will do the same, legislators should agree to accept the lower spending numbers for each departmental budget," she said. "After all, a majority in at least one chamber already has decided that the lower spending figure will satisfy citizens' needs under current budgetary constraints."

    Reverse logrolling makes sense when budget writers are searching for ways to address high-priority items, Curry said. "With lawmakers committed to increased spending for teacher pay and Medicaid, revenue constraints will not support higher spending in other areas of the budget."

    Curry details a department-by-department list of potential savings tied to the reverse logrolling approach.

    For example, the total education budget would be $11.281 billion in 2014-15, roughly $19 million less than the Senate plan and $275 million less than the House's proposal. State Health and Human Services spending would total $5.072 billion using the reverse logrolling technique. That's almost $33 million less than the House plan and $193 million below the Senate budget.

    The Senate proposed an 11.2 percent average pay increase for teachers who agreed to give up tenure, officially known as "career status." The House proposed 5 percent average raises without addressing teacher tenure.

    "Reverse logrolling before the incorporation of a teacher pay increase would allow legislators more flexibility when discussing spending priorities," Curry said. "Legislators would have an opportunity to modify aspects of their respective proposals to include increased teacher pay or assemble desirable components of both plans into one. A reverse logroll also would allow enough money to be set aside in savings and reserves to avoid any unforeseen shortfalls in the next fiscal year."

    "Our analysis shows that, even with a teacher pay increase and the need to cover a Medicaid shortfall, the legislature still would have many options for crafting a budget that continues to make improvements in public education, reform Medicaid, create jobs, and lower unemployment," Curry said. "If budget conferees use the reverse logroll method and leave their chambers' pride at the door, then everyone will benefit from the large surplus — taxpayers and state government alike."