Gov. Josh Stein vetoed a bill that would allow North Carolina taxpayers to claim a tax credit for donations to nonprofits that hand out school scholarships.
The legislature passed House bill 87 last week, opting-in to a federal voucher program that allows full reimbursement of donations of up to $1,700 to approved nonprofits. The tax credit was part of the mega-bill that cut taxes for the wealthy and social welfare programs that President Trump signed into law on July 4.
North Carolina Republican legislators argued last week that the tax credit was easy to support because it wouldn’t cost the state anything.
Democrats said the tax credit was more evidence that Republicans are turning their backs on public schools while favoring private schools.
Stein said in his veto message Wednesday that he supports magnet schools and accountable charter schools.
“Congress and the Administration should strengthen our public schools, not hollow them out,” Stein’s message said. “Cutting public education funding by billions of dollars while providing billions in tax giveaways to wealthy parents already sending their kids to private schools is the wrong choice.
“However, I see opportunities for the federal scholarship donation tax credit program to benefit North Carolina’s public school kids. Once the federal government issues sound guidance, I intend to opt North Carolina in so we can invest in the public school students most in need of after school programs, tutoring, and other resources. Therefore, HB 87 is unnecessary, and I veto it.”
The Hechinger Report, a news site that focuses on education, reported that it’s possible public school students will be able to use the money. Foundations connected to public school districts may find a way to harness the scholarship money, according to the report.
The bill passed the Senate along party lines, where Republicans hold a veto-proof supermajority.
The House passed the bill with a 69-47 vote. House Republicans are one vote shy of a veto-proof majority. On this bill, Democratic Reps. Carla Cunningham of Mecklenburg and Shelly Willingham of Edgecombe voted with Republicans.
Stein signed the stop-gap budget legislators passed last week, though he criticized it. The budget does not include raises for teachers or state employees, or allow the increased pay from step increases that are part of existing salary schedules.
Some House Democrats objected to the budget, which they argued shorts the state’s Medicaid program.
House and Senate Republicans have not yet agreed on a comprehensive budget for the fiscal year that started July 1.
“This Band-Aid budget fails to invest in our teachers and students, fails to keep families safe, fails to value hardworking state employees, and fails to fully fund health care,” Stein wrote.
“With federal cuts on the horizon, the legislature’s forced $319 million cut to Medicaid will be particularly painful. Despite these serious reservations, I am signing this bill into law because it keeps the lights on.”
Included in the stopgap budget is $600 million to cover increased expenses in the Medicaid program. More than 3 million North Carolinians use Medicaid health insurance.
The $600 million falls short of what the Stein administration said is needed.
Rep. Donny Lambeth (R-Forsyth)Rep. Donny Lambeth (R-Forsyth), a House budget writer, said last week that legislators wanted to look more closely at the state Department of Health and Human Services numbers. Figures produced by legislative staff and those DHHS produced conflict, he said. Even if the $600 million is not enough, Medicaid won’t run low on money until spring, he said. That will give legislators more time to examine costs and, possibly, make program adjustments.
DHHS said in an email Wednesday that the budget shortfall leaves the agency with the options of cutting optional services and/or reducing provider rates.
DHHS Secretary Dev Sangvai said in a statement that the $319 million shortfall is a “serious setback” for the nationally recognized program.
“The forced cuts from the budget shortfall threaten care for those who need it most and include some of North Carolina’s most vulnerable populations,” his statement said.
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