By Rose Hoban

Senate leader Phil Berger (R-Eden) outlined his chamber’s plan for spending in the coming two years Tuesday afternoon, with a $22.9 billion plan that focuses on tax cuts, increasing teacher pay and mostly tweaks to health and human services spending.

The plan represents a 2.5 percent increase from last year’s $22.34 billion budget, which is about half of the budget increase proposed by Gov. Roy Cooper when he rolled out his budget in March.

“Our philosophy is that the budget should only grow by a certain amount, even if you have additional money available,” Berger said. “You end up growing a recurring number to the point where if you have a recession or you have a slowdown in the economy, you don’t have the funds available to meet the obligations that you’ve set forth.”

The growth in the budget is about $705 million. Last week, the state budget office announced a $580 million surplus from the 2016-17 budget.

Pre-K, mental health tweaked

Two HHS items received attention from Berger and Senate majority leader Harry Brown (R-Jacksonville) during their press conference Tuesday: Funding for NC Pre-K and cuts to the fund balances held by the state’s mental health managed care organizations.

Brown said this budget adds $18 million to the Pre-K budget, enough to add 1,150 slots this year and a total of 2,350 new slots next year. This will cut the waiting list in half for at-risk children.

But the big ticket item is about $69 million cut in FY 2017-18 from the state’s mental health local management entities called LME-MCOs. In addition, $101 million would come out of the fund balances in FY 17-18.

In the last biennium, lawmakers trimmed $152 million per year from those reserves held by North Carolina’s LME-MCOs. The concern was that those organizations were holding onto the cash given to them by the state, rather than using the money to create new services and initiatives to treat people with mental health problems.

“We are concerned about the cash reserves that are being built up,” Brown said. “There is an effort to try to claw back some of those resources.”

Brown said that across the state’s six LME-MCOs there’s still about a billion dollars held in those reserves.

“And that’s after we’ve tried to almost force the LME-MCOS to give that money up. So, in this budget there is a smaller clawback… but again, I think the message is ‘spend the money.’”

Leza Wainwright, who runs Trillium Health Resources, said the prior cuts meant her agency lost about $40 million. She worried that further cuts to her organization’s fund balance would derail plans to create sober living units, which she says is part of Trillium’s response to the state’s opioid overdose crisis.

Gov. Cooper also cut fund balances in his budget, but by smaller amounts. His budget also stated the money would be moved to specific needs in the community services system.

A third big ticket item is stashing $150 million into a reserve account for use by the state as North Carolina transitions to a new Medicaid system in coming years.

Devil in the details

The budget document, which was posted just before midnight Tuesday evening, provided more details to what Senate leaders laid out in the afternoon. Those details included:

  •    Eliminates funding for the Wright School, a facility that provides structured learning for kids with severe emotional and behavioral problems. The school would be closed by the end of the September. This is at least the sixth time the school has been eliminated in the Senate budget.
  •    Allocates $500,000 to create a pilot program in Wilmington to re-direct people with mental health issues from emergency departments to more appropriate community-based services.
  •    Creates a mechanism to raise the age at which 16 and 17 year olds are charged as adults for misdemeanors to 18 years old.
  •    Extends a moratorium on licensing “special care units” in adult care homes targeted toward people with Alzheimer’s disease.
  •    Repeals hospital certificate of need laws by 2025. Before that, the budget document makes allowances for freestanding ambulatory surgical and eye surgery facilities.
  •    Makes sweeping changes to North Carolina’s child welfare system, which includes creating regional social service agencies to replace the current system of county-based systems.
  •    Implements new federal standards for the definitions of “elevated blood lead level” and “confirmed lead poisoning” used in North Carolina, introducing more stringent standards.
  •    Shortens the time frame for appeals to termination of parental rights for children in the foster care system from 180 days to 65 days.

During the biennium, each chamber takes turns “going first” with their budgets. This year is the Senate’s turn, and chamber leaders plan to have the final bill completely passed and sent to the House by the end of the week.

Then it’s the House’s turn to decide how to fund the state for the coming year. Eventually, the two chambers will have to agree on a final budget to send to Gov. Cooper for his signature.

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Rose Hoban is the founder and editor of NC Health News, as well as being the state government reporter. Hoban has been a registered nurse since 1992, but transitioned to journalism after earning degrees...