Elderly Lose on Drug Funds

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Elderly Lose on Drug Funds
House Members Ignored

The original House budget contained a particularly bad section which provided $500,000 for prescription drug assistance to the elderly poor with incomes up to 150% of poverty, but only if they had the "right" diseases: diabetes or heart disease. On the very next page was a provision taking the assistance for AIDS patients up to 200% of poverty.

Why is AIDS more important than heart disease? Why is heart disease more important than cancer? Why is medical funding based on political pull rather than an analysis of the seriousness of the need and the most cost effective response?

When this was brought up in the budget debate, House members shocked their leaders by voting to adopt my amendment to change the budget. The House members believed that it was unfair to say that diabetes and heart disease were more important than cancer or any other life-threatening disease. They also thought $500,000 was so little it was almost an insult to the elderly. The House members voted to increase the funding for prescription drugs to roughly $7 million and to remove the provision that restricted the funds to heart disease and diabetes.

The money to be used came from the money the Governor had placed in the budget to pilot More At Four. Since Smart Start already covers children from birth through age 5, the program is clearly political and creates administrative duplication.

After the surprise vote, the Speaker simply left the podium without even calling a recess, suspending session for two or three hours to let the Governor and his friends twist arms. Finally, by violating the Speaker's rule barring amendments being introduced after 9:00 AM on the second day of the budget debate, and by violating the House rule that prohibits releasing votes until session is over, the House leaders managed to replace the More at Four funds, but the prescription drug change was left in the House budget because the majority of the House members wanted it.

But Democrat leaders didn't want it, and in the budget passed this week, the additional funds were gone. They figure the elderly will never know what happened. They're wrong!

From Bad to Worse
Budget is Worse than Ever?

Governor Easley has finally confirmed what I have said all along: the budgets passed by the 1999-2000 legislature were smoke and mirrors and guaranteed future budget problems. As reported in the September 18th Raleigh News & Observer, "Easley vowed that lawmakers would not send him a budget based on smoke and mirrors like the one they passed two years ago, which he said put the state in its current fiscal crisis." I really appreciate the Governor's support for my position.

Governor Easley, understandably, didn't like being left holding the bag for the problems he inherited. Of course, now he is responsible for helping produce an even worse budget. This is hardly a surprise since he bore part of the blame for the earlier shortfalls and the other people responsible, the Democrat leaders of the House and Senate, remain the same. Collectively, the spending addiction of the Democrat leadership is worse than ever.

As of today, I have been unable to determine what the projected total budget will be as a result of passing the budget bill. You see, it only projects general fund spending, but more and more things are receipt supported, off budget, federal pass-throughs, or paid for in some other manner. The legislature is not told what total spending will be when they pass the budget.

In fact, this year the staff was not even permitted to furnish legislators a comparison between the House budget, the Senate budget, and the Conference Report. That was not done because, according to the rules, nothing is supposed to be in the report that was not in controversy. Unless an issue was raised in the House budget or the Senate budget, it is not supposed to be in the Conference Report. We already know that rule was violated. We just don't know how often. But rules don't matter in this year's session of the General Assembly. Does anyone care?

State Employees' Pensions at Risk
Final Warning

How much risk is acceptable in state pension funds? For years, equity investments were limited to 50% of the portfolio, but the new treasurer wants to go to 65%. For years, only certain types of investments were permitted, but now the new treasurer wants to put up to 5% of the fund into "alternative investments."

Worse yet, the alternative investments do not seem to be chosen based on maximizing return to the pension fund. Instead, it appears that the treasurer is leading North Carolina down the same path Bill Clinton followed in Arkansas and that has been tried (& failed) in other states already. ETI's, economically targeted investments, in which funds are invested based on the benefits to society rather than the returns to the fund, are totally inappropriate for fiduciary investments. Yet according to a recent article in the Triangle Business Journal, if the treasurer receives the authority he seeks, he plans to invest in at least one ETI.

I don't remember ETIs as an issue in the recent campaign for treasurer. Several years ago, Weisel ran against Boyles in the Democrat primary advocating ETIs and he was soundly defeated. The public, and certainly plan beneficiaries, do not want ETIs.

When the treasurer's investment authority bill came through the House, it was plain vanilla. Mysteriously, the day before the fourth of July, when it was presented to the Senate finance committee it was a totally different bill. It was presented with a very well done presentation designed to hurry it through with little debate. Had it not been for the questions raised by Senator Hugh Webster and others that held up the bill, it could have been on the House floor for concurrence on the fourth of July.

Imagine what would have happened if the bill had passed then? How much of the state pension fund would we have lost by now? The delay occasioned by the questions on alternative investments has already had one very positive side effect.

But the question of alternative investments still remains. The House may vote on it this week. Final warning.

From Bad to Worse
Budget is Worse than Ever?

The last edition of the Raleigh Report had a lot of new readers. SEANC asked my permission to furnish copies to the attendees at their state convention. I was delighted to give my permission and even happier to be given the opportunity to speak to the convention. I felt that my comments were very well received, particularly those concerning the threat to state pension funds.

Legislators have been told that the state employee associations have signed off on the treasurer's plan for alternative investments (which was discussed in the September 3 edition of this newsletter). That is not what I was told at the convention. Somehow this isn't a surprise.

Some might have been surprised by who did attend the convention. The Governor was not invited, and the attendees were told he would be invited back when he did some of the things he promised the last time he attended. The State Democrat party chair and Democrat leaders of the House and Senate were invited, but were unable to attend. By contrast, the opening speaker was Republican party chair Bill Cobey, followed by me, followed by Senate Republican leader Patrick Ballentine.

State employees are realizing in increasing numbers that the political hires are getting the raises and the rank and file worker is getting left behind. This year's budget, now that it is finally passed, actually leaves an awful lot of state employees with less take home pay after health care costs than they had before their "raise."

State employees perform many important duties, yet it seems they have received very little consideration in recent years. I've always believed competition is good for the customer. I'm glad to see that state employees are beginning to shop around. We can do better.

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