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Will a stalemate shut down state government?

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In a democracy, compromise is the critical art. Republicans run the General Assembly, and they're determined to cut taxes and limit state spending to levels not seen since the '90s. Gov. Bev Perdue is a Democrat, and having already whacked at the budget herself for two years because of the Great Recession, she's determined to protect public education from further "staggering cuts" by the GOP.

With the end of the current fiscal year approaching, therefore, and a new budget needed on July 1 that the Republicans will pass and the governor sign, the usual prediction would be that both sides will take a breath and meet in the middle.

But let's just say, for argument's sake, that the Republicans mean it when they insist that they will never vote for a tax increase, and they'll go to their graves before they agree to extend the 1-cent sales tax—or any part of it—that Democrats added to the budget two years ago when they controlled the Legislature. The 1-cent tax is set to expire June 30, as is a small income-tax surcharge on high earners.

And let's say that Perdue, having compromised in her own mind when she offered a budget plan with the income-tax surcharge gone and just three-quarters of the 1-cent sales tax extended, means it that she must have a tax extension and will absolutely refuse to let the Republicans decimate the schools.

The word then will not be compromise. It will be shutdown, as in government shutdown of a sort never seen before in North Carolina.

Ordinarily, even the idea of a shutdown would not be brooked by political people this far from the end of the fiscal year, first because compromise is in their blood and, more than that, because a shutdown would bespeak the total failure of the business they're in.

Yet at his weekly press conference Tuesday, Senate President Pro Tem Phil Berger not only didn't dismiss the idea, he bruited about the possibilities of a shutdown at some length and acknowledged that Republican staffers are trying to figure out how it would work.

"That [a shutdown] is a concern, quite frankly," Berger agreed when I asked him the question. "It's one of the things we've had in the backs of our minds for a number of weeks." Berger added that no one should look forward to such a thing, and that Perdue should sign the Republicans' budget.

In fact, though, the Republicans have given us a foretaste of the stalemate that may occur July 1 by their refusal so far to send Perdue a "clean bill" extending unemployment benefits for 37,000 North Carolinians who've lost their jobs, can't find new ones and whose benefits expired a month ago.

In mid-April, the Republicans passed a bill to extend their benefits, but legislative leaders made the extension contingent on a completely extraneous provision calling for Perdue to cave in on the budget in advance.

Under the Republicans' surrender terms, the 37,000 would receive their benefits, but if Perdue hadn't signed a budget bill—the Republicans' budget bill—by June 30, then she would be forced to swallow a "temporary" budget that would cut state spending even more.

How long would the "temporary" budget—the so-called continuing resolution—have remained in force? It would've been for the full fiscal year, or until Perdue did sign a budget acceptable to the Republicans.

Perdue properly denounced the Republicans' tactic as extortion and vetoed the bill. But the Republicans haven't backed down either, with the result that four weeks later 37,000 innocent and hard-up citizens continue to be held hostage to their efforts to make Perdue blink.

Clearly, the Republicans had a shutdown in mind even then.

They control the Senate by a veto-proof 31-19 majority and the House by 68-32, which is not quite veto-proof (the 60 percent needed to override a Perdue veto in the House would be 72 votes). So they can pass a budget through both houses, which they're in the process of doing.

But if Perdue vetoes it, then what?

The usual solution, when June 30 comes and goes without a budget deal, is for both houses to pass a continuing resolution that maintains government spending for a week or two—at about the same level as the previous year—while negotiations continue.

Spending at the current level, however, is not what the Republicans want. Perdue's own budget would cut spending about 5 percent from current amounts, but the budget passed last week by the House would cut it another 5 percent, and Berger says the Senate's budget will be "some lower" than the House's.

As if that weren't enough, the "temporary" budget language that the Republicans stuck in the jobless benefits bill would've called for state spending to drop by 13 percent more than in Perdue's budget—a total slash-and-burn job totaling 18 percent.

If, in the event of a June 30 stalemate, the Republicans send Perdue a continuing resolution budget that lasts for more than a few days and cuts spending by anything like 18 percent, she will be forced to veto it too, leaving the state with no budget, no temporary budget and a constitutional crisis.

In Washington, as we learned 15 years ago when congressional Republicans closed the government and President Bill Clinton didn't blink, a federal shutdown means the parks don't open and the Social Security checks aren't mailed; but the military, the intelligence agencies, the prisons and other "vital" functions continue unabated because a president's executive powers are deemed to include not wrecking the country.

I asked Gerry Cohen, the General Assembly's legal savant and bill-drafting director, what a state shutdown would mean. Cohen directed me to the North Carolina Constitution, which states, "No money shall be drawn from the State Treasury but in consequence of appropriations made by law."

"It doesn't say 'except for this, and except for that,'" Cohen said.

On the other hand, there's lot of precedent for temporary budgets, Cohen said. But the longest one he can remember lasted three weeks—not a year.

If a shutdown should occur, a state court would almost certainly permit the governor to continue vital functions like prisons and state troopers, plus any federally mandated programs, by reading life into her constitutional duty to "take care that the laws be faithfully executed."

Still, the Legislature would seem to have the upper hand, because the laws to be faithfully executed would not include the 1-cent sales tax, since expired.

But Perdue would have the bully pulpit—and the better argument—and she's already starting to use them. Extending the 1-cent sales tax would bring in about $1 billion a year, more than enough to bridge the gap between Perdue's proposed budget of $19.9 billion and the budget the House passed last week totaling $19.3 billion.

More to the point, a three-quarter-cent sales tax extension would be enough to make up the difference between Perdue's education budget ($11.3 billion) and the House's education budget ($10.6 billion).

For reference, a continuation budget—spending at the same level as now—would be $20.8 billion, with $11.9 billion of it for public schools, community colleges and the UNC system.

In a shutdown, the schools would presumably not be open. Anybody want to guess how long the Republicans would hold out when football practices start to be cancelled?

An earlier version of this column was posted to the Citizen blog May 8.

Correction (May 13, 2011): An editing error caused a sentence to be repeated in print; the correct sentence reads "Extending the 1-cent sales tax would bring in about $1 billion a year" (not $800 million).

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