(Updated) Shutdown ahead? Perdue, Republicans are toe to toe on the budget — and far, far apart | Citizen | Indy Week
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Monday, May 9, 2011

(Updated) Shutdown ahead? Perdue, Republicans are toe to toe on the budget — and far, far apart

Posted by on Mon, May 9, 2011 at 11:03 PM

Gov. Bev Perdue at the One Voice rally sponsored by the NCAE Tuesday

(Update — 5/10: Originally, the headline on this said Perdue and the Republicans are toe to toe on the budget, which can only lead to — drumroll — a compromise. But when I raised the subject with Senate President Pro Tem Phil Berger today at his weekly press conference of a possible government shutdown if no compromise is struck, Berger smiled and said he's asked his staff to look into what happens in a shutdown. They've been thinking about it for a few weeks, he said. Later, after a good deal of discussion with other reporters about what a shutdown might mean, I again asked Berger if a compromise wasn't the obvious answer. "We intend to pass a very good budget, and we hope the Governor will sign it," Berger said.

(Because of the language in the unemployment benefits bill which is discussed below, I also asked Berger whether, if it comes to it and there is no budget deal by June 30, the Republicans would pass a temporary budget — a continuing resolution — with a short time span. His answer: It will depend on whether the legislature's GOP leaders think they can reach a final deal with Gov. Perdue within that time span.

(So, for example, they'd pass a three-week C.R. if they decided there was some chance of reaching agreement with Perdue in three weeks. The unstated converse of that — if Berger, Tillis & Co. don't think they can reach a deal with Perdue, i.e., they won't raise taxes and she won't sign a budget that cuts $700 million-plus out of education, then the C.R. they send her would not be time-limited. And if she vetoed it, as she presumably would, the result would be a shutdown.

(What happens then? Read on.)

***

The original post follows —

— a compromise.

Right?

But let's just say, for argument's sake, that the Republicans refuse to compromise, and they stick to their position that they will never — ever, ever — raise taxes.

And let's say that Gov. Bev Perdue, who isn't that dug in yet but is nonetheless campaigning furiously for a tax increase to stave off the GOP's draconian cuts to education, refuses to sign the Republicans' budget when it comes to her in June.

Are we looking then at the possibility of a government shutdown?

***

We've had a foretaste of the stalemate that might occur in the form of the Republicans' refusal to send Perdue a "clean" bill to extend unemployment benefits for 37,000 people who've lost their jobs and can't find new ones.

In mid-April, the Republicans passed a bill to extend the jobless benefits, but the GOP made it contingent on Perdue caving in on the budget. A provision in the bill said that if she hadn't signed a budget bill by June 30, the end of the fiscal year, then July 1 would dawn with the state operating under a "temporary" budget 13 percent less than Perdue's proposed budget, which itself was a 5 percent cut.

"Temporary" was defined as the entire fiscal year. In other words, sign our stingy budget or we'll make you swallow one that's even worse.

Perdue properly denounced the Republicans' bill as extortion, and she vetoed it. But the Republicans haven't backed down either. Thus, four weeks later 37,000 innocent citizens continue to be held hostage to the GOP's efforts to make Perdue blink.

***

Clearly, the Republicans were thinking ahead. They control the House and Senate, so they control the budget process up to the point that their work reaches Perdue's desk.

But if she vetoes their budget, then what? If June 30 comes and goes, the usual process is to pass a temporary budget resolution that continues spending at about the same level as in the previous year, but of course, that's a level well above what the Republicans want.

So what if the Republicans pass a "temporary" budget that, say, cuts spending by 13 percent, or 10 percent, and doesn't actually expire until there's a permanent budget? Perdue would almost certainly veto that as well.

Or the Republicans might send her a time-limited "temporary" budget that she could sign, but refuse to compromise on a permanent budget, forcing the Governor to choose between signing a series of miserly temp-budgets or else pull out the veto stamp and call their bluff.

If that happens, we'd be into the new fiscal year with no budget, and no temporary budget, and that spells:

— Well, in Washington they call that situation a government shutdown. Except that "vital" government functions don't really shut down because the courts allow the President to continue with military operations, prisons, hospitals, etc. Parks do close, however, and Social Security checks don't go out, which makes older people very, very mad. And doctors don't get Medicare reimbursements and there's no money for Amtrak, and no money for highway contractors, and pretty soon million of people are steamed.

— In Raleigh, on the other hand, there's no precedent for a shutdown as far as I know. But then, there's never been a General Assembly controlled by the Republican Party, or at least not since the 19th century.

I asked Gerry Cohen, the General Assembly's legal savant (title: director of bill drafting), about a possible shutdown, and he directed me to the state constitution, which clearly states that "No money shall be drawn from the State Treasury but in consequence of appropriations made by law" (Article V, Section 7).

"It doesn't say, 'except for this, and except for that,'" Cohen said. There's a good deal of precedent for temporary budgets, he added. The longest he can remember? He said it was about three weeks.

Not a year.

if a government shutdown should occur, a court could permit the Governor to continue vital functions like prisons, federally mandated programs, and other powers of her office by reading some meaning into her constitutional duty to (Article III, Section 5.4) "take care that the laws be faithfully executed."

Still, the legislature would have the upper hand.

Remember that the temporary 1-cent sales tax enacted two years ago at the depths of the Great Recession is set to expire on June 30, as is a smaller income-tax surcharge on wealthy taxpayers. Together, they're worth about $1.2 billion a year.

Perdue asked, in her 2011-12 budget, that a 3/4-cent sales tax be enacted in their place, about $800 million a year.

With no legislative action, however, state revenues are set to decline on July 1 by the larger number, giving the Republicans a $100 million a month tax cut for as long as a stalemate, or shutdown, continues.

Perdue's only power to make the Republicans negotiate with her? The power of persuasion — and public opinion.

But if there's a government shutdown — no schools, no universities, no football? — that power could prove to be irresistible.

Even for a Republican who vowed never to vote for a tax hike.

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