NC Senate budget proposal hits schools, Medicaid By GARY D. ROBERTSON Associated Press Writer

RALEIGH, N.C. — The Senate's version of the North Carolina state government budget cleared key committees Tuesday despite significant cuts to health and public education programs and confusion among lawmakers and lobbyists as to how they would be carried out.

The Senate Appropriations Committee approved the plan that narrows a $3.4 billion budget gap for next year in part through spending reductions, federal stimulus money and $500 million in tax increases. It passed the chamber's finance and pension committees later Tuesday.

Budget writers said the plan would seek to get the unemployed back to work by providing funds to train students in still-growing health care sectors and inject funds into small towns seeking help with economic development projects.

"We believe with this budget, we're attacking the (bad) economy in North Carolina," said Sen. Linda Garrou, D-Forsyth, co-chairwoman of the Senate Appropriations Committee. She made her remarks at the beginning of more than three hours of debate.

But the tax details won't be added to the budget before it's heard on the Senate floor as early as Wednesday. Senate Democrats who control the budget process said the details - which are likely to include higher cigarette and alcohol taxes and possible taxes on some services for the first time - are still being worked out, frustrating Republicans.

"There's a half-a-billion per year ... tax increase in there and nobody know what taxes they're talking about," said Senate Minority Leader Phil Berger, R-Rockingham. "For members of the Senate to vote for a budget proposal that has that kind of provision just strikes me as being irresponsible."

The $20.05 billion spending plan for the coming year, coming three weeks after Gov. Beverly Perdue offered her own two-year proposal, would save money by laying off 712 state workers and keep another 910 positions vacant for the fiscal year starting July 1.

Perdue and the North Carolina Association of Educators oppose a Senate provision that would increase the average size of public school classrooms by two students through the 2010-11 school year, at a savings of $322 million annually.

But child care advocates are worried about a provision that would essentially phase out the More at Four program, which provides free, high-quality preschool to 32,000 at-risk 4-year-olds, and merge it with an initiative that sets ratings for child care programs.

"We're trying to look at some efficiencies there but we also believe strongly it's important to prepare our children to go to school," Garrou said Monday. "We decided that this was a good year to look at combining some of these areas and try to make it more efficient."

More at Four, which receives $85 million from state lottery profits, would lose $40 million but take in $37 million in stimulus funds.

Roz Savitt, a lobbyist with the North Carolina Childcare Coalition, said the provisions were confusing but appear to erode the value of More at Four.

"In the end, it's less money and lower standards," Savitt said. "No. 1, it's going to hurt children."

The budget also left providers of personal care services for Medicaid patients living at home scrambling to block a $55 million cut in state funding.

Combined with federal matching dollars for Medicaid, the proposal would reduce the $361 million program for next year by 60 percent, according to legislative staff.

Workers assist patients with bathing and other tasks. The reimbursement cost of about $15 per hour is much less than the cost for Medicaid if that patient must be sent to a nursing home, lobbyists for service providers said.

"It defies logic," said Tim Rogers, chief executive officer of the Association for Home & Hospice Care of North Carolina. "We cannot balance the budget of the state of North Carolina on the backs of 84-year-old grandmothers."

A recent audit of the personal care services program found that more than 40 percent of the cases reviewed shouldn't have qualified for the service, said Sen. Bill Purcell, D-Scotland, co-chairman of the health budget subcommittee.

Rogers said those findings were misleading and that doctors and registered nurses must sign off on such personal care treatment.

Purcell said it's not surprising that the industry is unhappy with such a cut given the state's bad fiscal situation.

"Who's not upset right now?" Purcell said.