RALEIGH — House and Senate Republicans made a key breakthrough in the stalled North Carolina government budget talks Wednesday by agreeing to earmark another $323 million for possible Medicaid cost overruns.
The Senate’s budget negotiators accepted the House’s offer — the midpoint of best- and worst-case scenarios presented by fiscal analysts — for pending Medicaid provider claims and potential expenses for the coming year. The amounts are closer to what the Senate originally proposed in its budget.
Budget talks have been deadlocked over the past three weeks because the Senate disagreed with Medicaid numbers offered in the House budget and Gov. Pat McCrory’s proposal. As a result, the fiscal year began Tuesday without adjustments to the second year of the two-year budget, such as sizeable teacher pay raises.
“We have for a number of weeks now had Medicaid as a real sticking point,” Senate leader Phil Berger, R-Rockingham, told reporters, but he added, “I think the House moved significantly toward our number.”
While the two sides still haven’t decided whether to expand lottery advertising to generate additional funds for education, the Medicaid resolution means they’re nearly in accord on how much money they’ll have to spend for the new fiscal year. That will open the door for second-tier House and Senate negotiators to work out scores of differences on agency spending within their rival $21.1 billion budgets.
The delays raised the political rhetoric between lawmakers and the governor, but Berger declined to cast further blame Wednesday: “There’s no need in pointing fingers at this point.”
No quick resolution of the budget was expected — the Senate adjourned Wednesday afternoon for the July 4 holiday. House Speaker Thom Tillis, R-Mecklenburg, said the chamber wouldn’t hold regular business next week to give negotiators time to work, meaning final budget votes wouldn’t occur until at least the following week.
The agreement on Medicaid came during a rare negotiating session in a committee room that was open to the public. Historically, negotiators have met behind closed doors, often shipping spending offers back and forth between conference rooms.
Conference committees such as those on budget negotiations aren’t required by state law or chamber rules to be open. Senate Republicans held budget committee meetings in the past two weeks to attempt to poke holes in budgets written by the House and McCrory. The governor would be asked to sign any final budget bill into law.
The House and Senate were about $250 million apart in their original plans for Medicaid, the federal-state health plan for 1.7 million residents. Both plans would spend more than $3.6 billion in state funds, a number approaching 20 percent of the entire state budget.
Legislators and McCrory have had a harder time calculating Medicaid spending because of problems with a pair of new computer systems handling Medicaid invoices and enrollment applications. The problems also meant lawmakers lacked detailed information about Medicaid usage.
The Senate took a more conservative approach to Medicaid, citing repeated shortfalls in the hundreds of millions of dollars in three of the past four years. The House and the governor adopted a rosier outlook.
Senators recently took the worst-case scenario offered by fiscal analysts at the General Assembly — a cash influx of $150 million to handle pending claims carried over from the previous fiscal year and $228 million for the coming year. Rep. Nelson Dollar, R-Wake, senior chairman of the House Appropriations Committee, offered a middle ground of $137 million for pending claims and $186 million in the coming year.
“Let’s find a way to meet in the middle,” Dollar said.
Sen. Harry Brown, R-Onslow, the Senate budget’s chief negotiator, accepted the numbers. The $186 million would remain in a reserve fund.
The two chambers were still at odds late Wednesday over the North Carolina Education Lottery. The House wants to double the advertising budget for the lottery to 2 percent of sales, which analysts project would generate $29 million more in the coming year. The Senate wants to leave it at 1 percent.
House Republicans didn’t sound wedded to their ad expansion proposal, which also would include new restrictions on ad content.
“It would certainly be helpful to our budget to have it,” Dollar said, but “if we don’t have it, then we don’t have it.”